How Will the One Big Beautiful Bill Shape Your Legacy?

The One Big Beautiful Bill Act is now law, "permanently" setting the estate tax exemption to $15 million for individuals and $30 million for couples next year.

But businesses and wealthy households should not rest on their laurels.

On one hand, the timing of President Trump's domestic spending bill removes a great deal of uncertainty.

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Americans now have the rest of 2025 to digest and prepare for the changes in the One Big Beautiful Bill (OBBB), compared to when the Tax Cuts and Jobs Act (TCJA) was passed into law in December 2017 and we only had a handful of days.

No one likes uncertainty. It's worth looking back to the end of 2020, after President Biden's victory at the polls. Families scrambled to call their estate attorneys. They rushed through massive gifts, transferred assets and finalized trusts in case the exemptions, which were doubled under the TCJA, would be rolled back to the 2017 exemption amount of $5.49 million, or even lower.

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That haste created the risk of missed opportunities and rash decisions. Now, investors face the risk of complacency. The temptation to put off estate planning may feel stronger now than before.

But this is the perfect time to take advantage of the opportunities that the new tax Act offers. This could be the most consequential tax package passed in decades.

We have a rare window of predictability and the chance to learn how the consequences of these changes might impact our financial lives.

Planning without pressure?

The estate tax exemption is only "permanent" in the sense that it does not have a built-in expiration date, as it did when introduced by the TCJA. Political power swings like a pendulum between two parties, so there's no guarantee it will never change again.

Trump's OBBB passed through the budget reconciliation process on tight margins, and it is not out of the question that a future administration could undo the changes with even narrow majorities in both houses of Congress.

But if it does happen, it won't happen tomorrow. We tend to see clients put estate planning on the back burner when uncertainty disappears. They assume they have all the time in the world. And then life intervenes.

Building a sophisticated estate plan takes time. Drafting, reviewing, revising and getting comfortable with the terms of your plan isn't something you want to rush if you don't have to. Do the work now, while you have the luxury of time to craft a thoughtful strategy.

Even if you already have an estate plan, it is worth reexamining it anyway. Many were drafted under old exemption limits, and outdated documents may have unintended consequences as a result of changing legislation.

For example, an estate plan drafted in 2011 may have been designed to capture the $5.49 million exemption in an irrevocable trust for federal estate tax purposes but might now automatically receive far more of a decedent's assets. That's especially true after years of market gains.

Giving with intention

The OBBB provides a strong impetus to review your financial structures. But beyond the tax benefits, it's equally important to ensure your estate plan aligns with your evolving goals and objectives. Your current plan may not be in sync with these objectives if it hasn't been updated in a while.

A giving strategy should reflect more than just tax savings. It's also an opportunity to create a legacy that continues many generations into the future.

When kids and grandkids inherit money without context, they tend to also inherit confusion. They don't know where the money came from, what it means to the family or what it's meant to support. This can create conflict and deter your legacy.

Although it's important to make sure your heirs understand what they will inherit, they should also understand how their inheritance can be used to carry on family values.

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So before you transfer dollars, transfer meaning. What does this wealth represent? What do you want it to support? What legacy are you trying to leave, not just financially, but emotionally and culturally?

We encourage our clients to start talking to their heirs from a young age about values and the history of how the family wealth was built. While you can optimize every part of your estate plan to take advantage of the new tax laws, it could still fall short of your intentions if your values are not shared with your loved ones and successors.

Other pertinent provisions

There are far too many changes in the OBBB to cover in a single article, but I want to highlight just a few others that are of interest to our clients.

The benefits of permanent tax brackets and estate tax exemptions allow families to remove some of the biggest wild cards in their long-term plans. They can strategize around known income tax rates when structuring trusts, planning retirement distributions or evaluating strategies such as Roth conversions.

There are now tighter limits and caps on charitable giving deductions for those who itemize, including a 35% cap on the benefit and a floor of 0.5% of income. This makes it more important to align charitable gifts with planning windows and income flows. Donors may want to frontload gifts or use strategies like donor-advised funds more carefully.

On the business side, the permanent 100% bonus depreciation rate for property assets, such as machines and factories, allows for immediate expensing of capital investments, such as equipment, which helps business owners optimize cash flow and defer taxes during profitable years.

This is especially helpful for entrepreneurs or family-owned firms reinvesting in operations.

The Section 199A pass-through deduction for qualified business income will be permanent, with a slight increase in certain cases. This supports a wide range of LLCs, S corps and sole proprietorships and is particularly important for families with business ownership in their wealth mix.

Don't look at the OBBB as a reason to take your foot off the pedal. Instead, take advantage of what its provisions can offer, and the time and clarity to plan your estate strategy.

You have the peace of mind that comes from the elimination of some short-term uncertainty.

You can prepare to transfer your values along with your wealth.

And most importantly, you can watch your family grow and enjoy their prosperity while you're still with them.

Neither RBC Wealth Management, a division of RBC Capital Markets, LLC, nor its affiliates or employees provide legal, accounting or tax advice. All legal, accounting or tax decisions regarding your accounts and any transactions or investments entered into in relation to such accounts, should be made in consultation with your independent advisors. No information, including but not limited to written materials, provided by RBC WM or its affiliates or employees should be construed as legal, accounting or tax advice.

RBC Wealth Management, a division of RBC Capital Markets, LLC, registered investment adviser and Member NYSE/FINRA/SIPC.

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