Impact of the One Big Beautiful Bill Act on Estate Planning for Seniors

The estate tax landscape has undergone significant changes with the introduction of higher federal exemptions, impacting estate planning strategies for seniors. Chad Cummings, a certified public accountant and attorney at Cummings Law, explains that the newly enacted One Big Beautiful Bill Act (OBBBA) sets the federal estate tax exemption at $15 million per individual and $30 million for married couples, effective January 1, 2026. This adjustment means most seniors will avoid federal estate taxes upon death.

However, Cummings notes that this federal relief does not extend to state-level estate taxes, which may still apply. States like Massachusetts and Oregon, for instance, levy taxes on estates valued as low as $1 million. Seniors residing in multiple states should carefully determine their legal domicile, as it can significantly affect the estate taxes their heirs might face.

Furthermore, Cummings advises that beneficiary designations for accounts such as IRAs, 401(k)s, and life insurance typically override directives in wills. As such, seniors should frequently verify and update these designations to ensure they align with current intentions.

Charitable Giving and New Regulations

Starting in 2026, the OBBBA will introduce a 0.5% Adjusted Gross Income (AGI) floor for itemized charitable deductions, implying donations below this threshold are non-deductible. However, Qualified Charitable Distributions (QCDs) from IRAs for individuals aged 70 and a half or older can circumvent this limitation. Cummings suggests that frequent donors consider QCDs for their tax efficiency.

These adjustments necessitate a re-evaluation of estate plans to align with the evolving federal and state tax environments and assess their impact on charitable giving strategies. Seniors should consider these changes carefully in their estate planning processes to ensure optimal compliance and benefits.