A carefully designed and properly drafted estate plan acts as a blueprint for protecting assets, guarding your wishes, supporting family members, and achieving charitable goals. For families with significant wealth, federal transfer taxes are one of the most important considerations when building a plan. With the enactment of the “One Big Beautiful Bill Act” (OBBBA), the federal estate and gift tax system has shifted again, offering new opportunities for Florida families. The Vero Beach attorneys at Kulas Crawford & Smith examine how OBBBA shapes the future of estate planning in Florida.
Federal Gift and Estate Tax Fundamentals
Federal law imposes taxes on wealth transfers during life and at death through a unified system of estate and gift taxes. The two are connected, meaning lifetime gifts are combined with the estate at death to determine a total taxable amount. Although Florida does not impose a state inheritance or estate tax, residents remain subject to federal regulations. With the top federal transfer tax rate set at 40 percent, the potential impact can be dramatic. Imagine someone who transfers $5 million during life and dies with $15 million in assets. The $20 million total could result in $8 million in federal taxes without exemptions or deductions, greatly reducing what heirs and charities ultimately receive.
The Lifetime Exemption Before OBBBA
Federal law provides relief through a lifetime exemption that allows a certain amount of wealth to pass free of estate and gift tax. This exemption applies to both lifetime gifts and assets included in the estate. Originally set at $5 million, the exemption was significantly increased under the Tax Cuts and Jobs Act of 2017 (TCJA). For 2025, the exemption stands at $13.99 million per person and $27.98 million for a married couple. Consider once again the $20 million estate discussed above. After applying the exemption, only $6.01 million would be taxed, producing about $2.4 million in tax liability instead of $8 million. This illustrates the importance of the lifetime exemption in preserving wealth. Prior to OBBBA, the higher exemption was set to expire in 2026, returning to $5 million adjusted for inflation. That looming sunset made 2025 a crucial year for advanced planning.
Key Changes Under OBBBA
On July 4, 2025, OBBBA was signed into law, making major changes to the transfer tax system. The most important update was the permanent extension and expansion of the exemption. Beginning in 2026, the exemption increases to $15 million per person, with inflation adjustments tied to 2025 as the new baseline. This change offers relief for those who had already exhausted their $13.99 million exemption in 2025. Starting in 2026, they will gain additional tax-free gifting capacity. For wealthy individuals, this creates a renewed opportunity to reduce taxable estates while transferring wealth strategically.
Married Couples and Portability
The new law preserved portability, which allows a surviving spouse to use a deceased spouse’s unused exemption. This means a couple can protect up to $30 million beginning in 2026. For example, if a spouse passes in 2026 having used $10 million of his or her exemption, the remaining $5 million can be transferred to the survivor, providing $20 million in exemption capacity. Portability remains a vital tool for married couples seeking to minimize tax exposure.
Planning Across Generations
The Generation-Skipping Transfer (GST) tax exemption now matches the new $15 million exclusion, making it possible to pass wealth directly to grandchildren or later generations while bypassing intermediate taxation. Tools such as dynasty trusts can preserve family wealth for decades. Since the GST exemption is not portable, careful planning is essential to take advantage of it.
Income Tax Provisions for Trusts
OBBBA also made permanent the individual and trust income tax brackets established under the Tax Cuts and Jobs Act, with continued inflation adjustments. For Trustees managing irrevocable trusts, this predictability simplifies long-term planning and reduces uncertainty when deciding whether to distribute income or retain it in the trust.
OBBBA and Your Florida Estate Plan
Although OBBBA provides higher and permanent exemptions, strategic planning remains critical. Political shifts could result in future changes, and the risk of losing favorable provisions always exists. High-net-worth families in Florida should consider techniques that leverage the enhanced exemption while it is available, including:
- Spousal Lifetime Access Trusts (SLATs): Remove assets from the taxable estate while maintaining indirect access through a spouse.
- Dynasty Trusts: Protect wealth from estate taxes and creditors across several generations.
- Grantor Retained Annuity Trusts (GRATs): Facilitate the transfer of appreciating assets at reduced tax cost.
- Irrevocable Life Insurance Trusts (ILITs): Create liquidity to pay estate taxes without inflating the estate itself.
Consulting with an experienced Florida estate planning attorney is the best way to determine how OBBBA influences your unique situation and to ensure that wealth passes efficiently to future generations.
Can We Help You Incorporate the OBBBA into Your Florida Estate Plan?
To learn more, please join us for an upcoming FREE seminar. If you would like assistance incorporating the provisions of the OBBBA into your Florida estate plan, please contact an experienced Vero Beach estate planning attorney at Kulas Crawford & Smith by calling (772) 398-0720 to schedule a consultation.
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