Leveraging One Big Beautiful Bill Act for Advanced Tax and Estate Planning Strategies

The One Big Beautiful Bill Act (OBBBA) introduces new tax-planning opportunities that financial advisors can leverage through various strategies. One key provision permanently raises the federal estate and gift tax exemption to $15 million, providing a valuable window for clients holding tax-heavy assets to consider redistribution or reallocation. This elevated exemption creates a significant gifting opportunity amid historically low federal estate and gift tax rates. Advisors are encouraged to approach OBBBA-related client discussions by focusing on nontax factors such as generational gifting, charitable giving plans, long-term care provisions, and spousal income strategies. Flexibility in estate planning is also crucial, particularly for clients needing estate equalization or those with blended families and special-needs dependents. These strategies may include repositioning inefficient assets and diversifying tax exposure to optimize estate outcomes. Annuity products play a strategic role under OBBBA’s framework, as demonstrated by example cases. For instance, a high-income client in New York facing combined federal and state/local tax burdens might benefit from repositioning taxable assets into nonqualified annuities. This approach helps manage the state and local tax (SALT) deduction phaseout that applies to incomes exceeding $250,000, providing strategic tax deferral and retirement income benefits. Another application involves clients with long-term care concerns; by using nonqualified annuities with chronic illness riders, clients can access accelerated death benefits if chronic or terminal illness occurs. This structure supports tax-deferred growth while diversifying tax risks and protecting wealth from market volatility. Additionally, this setup allows legacy planning flexibility, enabling beneficiaries to manage inherited annuity distributions effectively. The article also highlights the broader retirement asset landscape, which topped $43 trillion in early 2025. It discusses an IRA maximization strategy where clients can rollover qualified plans into qualified single-premium immediate annuities (SPIAs). These SPIAs provide guaranteed payments that fund life insurance premiums and can assist with managing required minimum distributions (RMDs), thus mitigating tax liabilities from multiple asset sources and varying tax treatments. Overall, OBBBA’s provisions offer multiple tax and estate planning opportunities for advisors to tailor strategies that enhance client wealth management and legacy planning. The act impacts estate, gift, income, and long-term care tax planning, making it a pivotal tool for advisors addressing complex client needs in the current tax environment.