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Client Update: Trust & Estate Tax Changes Under the One Big, Beautiful Bill Act (OBBBA)

October 21, 2025

CLIENT UPDATE

Trust & Estate Tax Changes Under the One Big, Beautiful Bill Act (OBBBA)

By Attorney Mark Bartram

I am very pleased to have recently joined Sheehan Phinney’s Trusts & Estates Group. My practice focuses on helping individuals and families design and implement strategies that preserve wealth, minimize taxes, protect assets, and achieve legacy and charitable planning goals. With extensive experience in estate planning, and fiduciary and trust administration, I look forward to supporting Sheehan Phinney clients in navigating complex planning opportunities.

As I join the firm, I am excited to share some updates on significant federal trust and estate tax changes that will shape planning for high-net-worth and ultra-high-net-worth clients. The President signed the OBBBA (Public Law No. 119-21) enacting some of the most significant federal transfer tax laws in over a decade. Most provisions take effect on January 1, 2026, giving clients a critical planning window through the end of 2025.

Key Provisions

  • Higher Estate, Gift, and Generation-Skipping Transfer Tax Exemptions. The Act increases the lifetime estate and gift tax exemption to $15 million per individual beginning in 2026, with adjustments for inflation starting in 2027. The top federal tax rate remains 40 percent, and portability between spouses continues to apply. The generation-skipping transfer (GST) tax exemption, which shields transfers to grandchildren and later generations, will also rise to $15 million per person and be indexed for inflation beginning in 2027. These higher exemption amounts provide a more stable and generous baseline for families seeking to transfer wealth during life or at death while minimizing exposure to federal transfer taxes.
  • Changes to Charitable-Giving Rules. Starting in 2026, the rules for claiming charitable deductions are being restructured. For taxpayers who itemize deductions, Charitable contributions will only be deductible to the extent they exceed 0.5 percent of adjusted gross income (AGI). The familiar percentage limits for different types of gifts (such as the 60 percent AGI limit for cash contributions) will continue to apply. For taxpayers who do not itemize, a new above-the-line deduction of up to $1,000 for individuals or $2,000 for married couples filing jointly will be available for cash donations to qualifying public charities. Donations to donor-advised funds, supporting organizations, and private foundations are excluded.
  • New “Trump Accounts” for Children. Beginning in 2026, families will be able to establish new tax-favored custodial savings accounts called Trump Accounts. These accounts are designed to help families save for education, home purchases, or small-business investments. Each child under age 18 may receive up to $5,000 in contributions per year, from parents, grandparents, or others. The U.S. Treasury will make a one-time $1,000 seed deposit (by election) for children born between 2025 and 2028. Contributions qualify for the annual gift-tax exclusion and count toward a donor’s annual exclusion amount for that beneficiary, similar to gifts made to other custodial or trust accounts.

 

Planning Considerations

The One Big Beautiful Bill Act provides a higher and more permanent framework for wealth-transfer and charitable planning beginning in 2026. Individuals and families should consider:

  • Reviewing estate plans and trust structures to ensure they reflect the new $15 million exemption levels.
  • Evaluating charitable-giving strategies before the new adjusted-gross-income thresholds take effect.
  • Incorporating Trump Accounts into family savings or gifting strategies once available.
  • Reviewing ownership and succession planning for business interests that may qualify for the expanded QSBS rules.

I look forward to working with Sheehan Phinney clients to navigate these opportunities and ensure strategies are tailored to protect and grow family wealth.