On July 4, 2025, President Trump signed H.R.1“The Big Beautiful Bill” into law. This broad tax-and-spending reconciliation package solidifies and extends the Tax Cuts and Jobs Act (TCJA) enacted in 2017. Additionally, the sweeping implications of the legislative package touch economic policy, immigration, Medicaid, renewable energy tax credits and many other areas. As it relates to individual clients of BrownWinick’s Trust and Estates Practice Group, the primary items of note include:
- The federal unified credit against estate, gift, and generation-skipping transfer tax has been moved up slightly to $15M per individual. In turn, this means that married couples can transfer up to $30M during their life or following their death without paying federal estate or gift tax. This taxation level is permanent and is scheduled to rise with inflation.
- The current federal income tax rates enacted under the TCJA are extended and made permanent. There was no change to the income tax basis “step-up” at death.
- There will be a federal tax deduction for state and local taxes up to $40,000 but with a phaseout for income levels above $500,000. The structure replaces the $10,000 deduction for state and local taxation under current law.
- “Trump Accounts” will be available for children under 18 with the potential for up to $5,000 annual contributions. The guidance regarding the implementation and structure of these new accounts remains limited.
Among the implications for individual trust and estate planning in light of the new legislation are:
- The requirement to aggressively transfer significant assets before the end of 2025 has generally ended. For clients with projected balance sheets in excess of $15M (single) or $30M (married), current gifts can still have a significant benefit by moving future appreciation out of the taxable estate while acting as a hedge against a changing tax environment in the future.
- For clients with projected balance sheets less than $15M (single) or $30M (married), retaining assets until death likely has some tax benefit through the income tax basis “step-up” at death.
- Estate plans should be reviewed to optimize tax and non-tax planning objectives. Transferring assets to the correct recipients at the correct times is still the primary goal of personal succession planning. Planning for incapacity continues to be an important component of any comprehensive individual succession plan.
- Asset protection structures remain viable and underutilized. Irrevocable life insurance trusts (ILITs), spousal access trusts (SLATs and SLANTs), domestic asset protection trusts (DAPTs) and similar structures may be particularly useful.
- Irrevocable trusts that are not “grantor” trusts for income tax purposes may have increased value by having separate federal income tax deductions for state and local tax liabilities. These advantages are likely more valuable to our clients who have exposure to significant state and local tax burdens.
- The conversion from “traditional” to “Roth” individual retirement accounts can continue to make cents (pun intended) with the extension of the current federal income tax environment.
Please don’t hesitate to reach out to discuss your personalized succession plan with a member of the BrownWinick Trust and Estates Practice Group.
