On July 4, 2025, a new tax law — Section 70106 of H.R. 1 — was signed into effect. Nicknamed the “Big Beautiful Bill,” this legislation dramatically increased the federal estate and gift tax exemption to $15 million per individual, or $30 million for married couples, indexed for inflation.
The law is being marketed as “permanent,” but as any estate planner will tell you, “permanent” in tax law often just means until the next administration or Congress changes course. And with that uncertainty comes both opportunity and risk.
This post outlines how the new exemption works, how it impacts estate planning, and what proactive steps individuals and families — even those below the $15 million level — should consider taking now.
What Is the Estate and Gift Tax Exemption?
The federal estate and gift tax exemption is the amount you can transfer, during your life or at death, free of federal estate or gift tax. Under prior law, this exemption was expected to drop to roughly $6–7 million per person in 2026. The Big Beautiful Bill overrides that reduction and locks in a much higher threshold.
As of 2025:
- Individuals can transfer up to $15 million tax-free.
- Married couples can transfer up to $30 million with proper planning.
- These amounts are adjusted annually for inflation.
This change gives high-net-worth families a rare opportunity to transfer significant wealth without gift or estate tax — but only while the law remains in effect.
Why This Matters — Even if You’re Not Worth $15 Million
While the headlines talk about $15 million, this law isn’t just relevant for the ultra-wealthy. In fact, if your total net worth — including your home, retirement accounts, business interests, life insurance, and other assets — is approaching or exceeds $5 million, you should be paying attention.
Here’s why:
- Your estate may grow beyond the exemption with time, appreciation, or inheritance.
- A future Congress could reduce the exemption — even retroactively.
- Many older estate plans were drafted under older, lower exemption laws and may no longer work as intended under current rules.
In short, this is the time to plan, not just for today’s tax code, but for tomorrow’s uncertainty.
Key Estate Planning Considerations Under the New Law
1. Expanded Gifting Opportunities
With a $15 million exemption, individuals can now:
- Make large gifts to children or grandchildren.
- Fund irrevocable trusts to shield future appreciation from estate tax.
- Take advantage of strategies like GRATs, IDGTs, SLATs or family limited partnerships.
These strategies are now viable for a much broader range of families — not just those with $20M+ estates.
2. Risk of a Future Rollback
Just because this exemption is labeled “permanent” doesn’t mean it’s politically safe. A change in leadership could bring a return to lower exemptions — or worse, a clawback on past transfers.
The current law creates a window of opportunity. Once it closes, your planning options may be more limited — or more costly.
3. Review Outdated Documents
Many wills and trusts drafted before 2018 were built around much smaller exemptions. As a result:
- Formula clauses may accidentally direct too much to bypass trusts or credit shelter trusts.
- Trusts may no longer reflect your actual intent under today’s tax structure.
- Key planning flexibility — such as disclaimers or basis planning — may be missing.
A review of your existing plan is essential to ensure it still functions under the new exemption levels.
4. Coordinate Estate and Income Tax Planning
With the exemption so high, some families may now choose to hold appreciated assets until death to preserve the step-up in basis — avoiding capital gains for heirs.
Tax-efficient planning now involves more than just avoiding estate tax — it means aligning your gifting, asset titling, and trust structure with income tax consequences for your beneficiaries.
What Should You Do?
If your net worth is anywhere near or above $5 million, it’s time to act. Here are practical steps to take:
- Review your current estate plan for outdated structures or assumptions.
- Evaluate whether older trusts still serve your goals — or if new tools may be more effective.
- Work with an experienced estate planning attorney to create a plan that protects your assets and gives your family flexibility in the future.
We Can Help
At Davis & Davis LLP, we help families across Los Angeles, the San Fernando Valley, and throughout California understand how changing tax laws affect their estate plans — and what they can do now to protect their wealth, preserve family harmony, and minimize future taxes.
If you’re wondering whether this law affects you, or if your current plan is up to date, we’re happy to review your documents and provide guidance on next steps.
Contact us today to schedule a confidential consultation.
