In this installment of our ongoing series on the One Big Beautiful Bill (OBBB), we shift our focus to estate planning—a topic that has become even more urgent for affluent retirees.
While estate taxes may seem like a distant concern, the changes proposed in this bill could significantly alter the landscape. Whether you plan to pass down a sizable estate or just want to be proactive, now is the time to pay attention.
What’s Changing?
Under current law, the federal estate and gift tax exemption is $13.61 million per person (or $27.22 million per couple in 2024). That means most estates won’t owe federal estate taxes—for now.
But the Big Beautiful Bill proposes letting that exemption sunset at the end of 2025, effectively cutting it in half. This would bring the exemption back to around $7 million per person (adjusted for inflation), exposing more estates to potential taxation.
If you live in Massachusetts, this is even more important: the state estate tax kicks in at just $2 million, and there’s no portability for married couples. That means strategic planning is essential.
Who Should Be Thinking About This?
You don’t have to be ultra-wealthy to be affected. Consider the following:
- If your total estate—including your home, retirement accounts, and life insurance—exceeds $2 million, you could already be subject to Massachusetts estate tax.
- If your estate exceeds $7 million ($14M for a couple), you may face federal estate tax exposure in 2026 if the exemption shrinks.
- If you plan to gift assets during your lifetime, now may be the time to act.
Planning Moves to Consider Now
Even if you’re not currently over the $2 million (Massachusetts) or $7 million (federal post-sunset) thresholds, it’s important to consider where your estate may be in 10, 20, or 30 years—especially if you’re in your 50s or early 60s.
Example: Let’s say you’re 60 years old today with $3 million in assets (including a home, retirement accounts, and brokerage accounts). If your investments grow at a modest 5% annually, your estate could be worth over $13 million by age 85. That would put you well over both the Massachusetts threshold and the projected lower federal exemption.
Potential Strategies:
- Begin gifting now to shift future appreciation out of your estate.
- Set up a trust to hold appreciating assets like real estate, private equity, or growth-oriented investments.
- Use a donor-advised fund to reduce taxable income in high-income years while supporting charitable causes.
- Consider estate equalization if you’re married, to fully utilize both spouses’ exemption amounts—especially important in Massachusetts, which lacks portability.
Being proactive while you’re still in the “window” of higher federal exemptions and compounding runway can result in significant estate tax savings for your heirs.
- Use Your Lifetime Gift Exemption While It Lasts
- The current high exemption allows you to gift up to $13.61 million during your lifetime without triggering federal gift tax.
- Gifting now “locks in” the exemption even if it’s later reduced, thanks to IRS guidance.
- Set Up or Fund a Trust
- Consider irrevocable trusts for transferring assets outside of your estate.
- Spousal Lifetime Access Trusts (SLATs), Grantor Retained Annuity Trusts (GRATs), or charitable trusts may be suitable.
- Review Your Beneficiary Designations and Titling
- Make sure your estate plan coordinates with your retirement accounts, life insurance, and real property.
- Massachusetts-Specific Strategy
- Consider gifting strategies, credit shelter trusts, or even revisiting your domicile if your estate nears or exceeds the $2M threshold.
- Married couples in Massachusetts may benefit from estate equalization strategies to maximize use of the $2M threshold per spouse.
Don’t Wait Until 2026
The sunset of the federal exemption isn’t automatic—it requires Congress to act (or not act). But planning as if it will happen gives you more flexibility, especially when it comes to gifting or setting up trusts.
This is especially relevant for Boston-area retirees with real estate appreciation and concentrated portfolios. A modest estate can quickly become taxable at the state or federal level with a few decades of growth.
Coming Up Next
In our next post, we’ll look at how Social Security and Medicare could be indirectly affected by the Big Beautiful Bill—and what steps you can take now to manage your income-related costs.
Want help reviewing your estate planning strategy in light of the new bill? Let’s connect.
Evergreen Wealth Management provides flat-fee financial planning and investment management to individuals and families preparing for or living in retirement. Based in the Boston area, we specialize in helping clients create tax-efficient retirement income strategies that support the life they want to live.
The information contained herein is for educational purposes only and should not be construed as specific tax, legal, or investment advice. You should consult with a qualified tax professional or estate planning attorney before making decisions based on the content of this article. Evergreen Wealth Management is not a tax advisor or legal firm. All examples are hypothetical and intended for illustrative purposes only.