President Trump signed the One Big Beautiful Bill (OBBB) on July 4 and ended years of uncertainty about the estate tax. And as a result, for almost everyone, the estate tax is gone.

Background

In 2010, President Obama raised the estate tax exemption to $5 million, indexed for inflation - a big increase at the time. In 2017, Trump doubled it to $10 million, also indexed for inflation. This led to this year's exemption of $13.99 million.

Trump's tax cuts were set to expire at the end of this year, which would have dropped the estate tax exemption to $7 million in 2026.

OBBB $15 million

The OBBB locks in the estate tax exemption in 2026 at $15 million per person ($30 million for married couples), indexed for inflation. And it does not sunset in a few years. This is a permanent change. 

What This Means for You

Less than 1% of Americans have an estate greater than $15 million, and less than 0.2% have an estate greater than $30 million.

Unless you are super rich, there won't be an estate tax.

This means when you design your estate plan to protect your family, you can focus on your unique planning goals without worrying about the estate tax.

Probate is Not Estate Tax

But don't be lulled into complacency. Many people believe that if their estate doesn't have to pay an estate tax, they can avoid probate.  Not true. The estate tax is completely separate from probate.

Estate Tax threshold: $15 million

California Probate threshold: $184,500 and/or own a home

If you own your home or have other assets worth more than $184.500, your estate will be subject to probate. California probate is very expensive and can take at least a year to grind through the probate court system.  

But with a living trust estate plan, you can avoid probate.

Good News, But Still Work to Do

The good news is that the OBBB eliminates the estate tax for almost everyone. And it's permanent.

But you still need an estate plan so you can:

• Avoid probate
• Establish how you want your assets distributed
• Authorize people you trust to manage your assets and make health care decisions for you if you can't
• Protect your family

If you're ready to finally set up your living trust estate plan or update your existing plan, let us know. We'd be glad to help.