The recently enacted “One Big Beautiful Bill” (OBBB) has permanently reshaped the estate planning landscape for high-net-worth individuals and families. With federal estate, gift, and generation-skipping transfer (GST) tax exemptions now locked in at $15 million per individual ($30 million per married couple), this legislation delivers both clarity and urgency.
The implications of the OBBB are significant. While the increased exemptions offer expanded planning opportunities, they also introduce risks if existing strategies are not reviewed and updated. Below are four critical areas that deserve immediate attention.
1. Top Off Your Lifetime Gifting—Even If You Previously Reached the Limit
Previous Context: Before the OBBB, the exemption had reached $13.99 million in 2025 but was scheduled to sunset to approximately $7 million in 2026. Many families had already used the full exemption under the assumption that it would decrease.
New Law: The exemption is now permanently set at $15 million per individual. This provides an additional $1.01 million per person in capacity—$2.02 million for married couples who had previously maxed out their exemptions.
Recommended Action:
Consider “topping off” your lifetime gifts to make use of the newly available exemption. This may include:
- Transferring appreciating assets to irrevocable trusts
- Making strategic gifts to children, grandchildren, or other beneficiaries
2. Review Formula Clauses in Wills, Revocable Trusts, and QTIPs
Previous Risk: As recently as 2011, the exemption was $5 million per person. Many estate plans from that era contain formula clauses that allocate assets based on the exemption amount in effect at death.
New Challenge: With the exemption now at $15 million, those clauses could unintentionally:
- Disinherit a spouse or child
- Overfund a bypass trust
- Create an unintended liquidity imbalance
Recommended Action:
Conduct a full review of all estate planning documents. Focus on:
- Wills and revocable living trusts with formula-driven bequests
- QTIP trusts with outdated allocation language
- Family dynamics and whether the current documents reflect your intentions under the new law
3. Use New Exemption Capacity to Pay Off Split-Dollar Life Insurance Receivables
Many families utilize split-dollar life insurance arrangements that include receivables owed back to the donor, business entity, or grantor.
New Opportunity: The increased exemption can be used to:
- Gift assets to the trust to satisfy outstanding receivables
- Simplify or unwind older structures
- Potentially limit inclusion of life insurance proceeds in the taxable estate
Recommended Action:
Coordinate with your advisory and insurance teams to:
- Identify policies with split-dollar receivables
- Determine whether gifting strategies can settle those obligations efficiently
- Align policy ownership and funding with your estate objectives
4. Shore Up Life Insurance Policies Held in Irrevocable Trusts
Many irrevocable life insurance trusts (ILITs) were funded based on outdated assumptions about interest rates and policy performance.
New Strategy: Use the expanded exemption to:
- Inject new capital into underperforming ILIT policies
- Replace or restructure outdated insurance contracts
- Preserve the long-term purpose of the trust—such as providing estate liquidity or legacy funding
Recommended Action:
Initiate a life insurance audit to:
- Assess the sustainability of current policies
- Evaluate premium adequacy and performance assumptions
- Explore whether new contributions can enhance leverage and protect the trust’s objectives
Final Thoughts: Clarity Has Arrived, But Action Is Still Required
The passage of the One Big Beautiful Bill creates a moment of clarity for wealth transfer planning—but it is not a reason to delay. Documents, strategies, and insurance structures built around prior exemption levels may now be outdated, misaligned, or suboptimal.
At Lindberg & Ripple, we help successful families navigate the complexities of evolving legislation with confidence and foresight. Now is the time to take action—while the opportunities are clear and the window is open.
Let us help you align your estate plan with this new law and preserve your legacy for generations to come.
File# 4693237