Creating an estate plan involves more than drafting a handful of legal forms and storing them in a secure location. A well-constructed plan functions as a comprehensive roadmap designed to protect assets, provide financial security for loved ones, and achieve philanthropic objectives. For families and individuals with substantial wealth, one of the most significant factors to consider is how federal transfer taxes can impact the size of the legacy left behind. With the passage of the “One Big Beautiful Bill Act” (OBBBA), the federal transfer tax framework has shifted yet again, creating new estate planning opportunities. With that in mind, the attorneys at Legacy Care Law Firm explain how the OBBBA influences estate planning in New Hampshire.
Federal Gift and Estate Tax Overview
The federal government imposes taxes on the transfer of wealth during life and upon death through two interconnected systems known as the gift tax and the estate tax. These two systems are unified, meaning the total value of taxable gifts made during life is combined with the value of property included in the estate at death to calculate a cumulative tax obligation.
Although New Hampshire does not impose a state-level estate tax or inheritance tax, residents remain fully subject to federal regulations. With the highest federal estate and gift tax rate sitting at 40 percent, the impact on a large estate can be considerable. Imagine an individual who gives away $10 million in assets during their lifetime and retains another $15 million at death. Without deductions or exemptions, the combined $25 million would be exposed to federal estate and gift taxes, resulting in a tax bill of $10 million. That tax burden dramatically reduces the amount ultimately available to heirs, charitable organizations, or other intended recipients.
The Role of the Lifetime Exemption Prior to OBBBA
Fortunately, federal law offers relief in the form of a lifetime exemption, which allows a certain amount of wealth to pass free of estate and gift tax. This exemption applies to both lifetime transfers and assets included in the decedent’s estate. Historically, the exemption amount was relatively modest, originally set at $5 million under prior law. The Tax Cuts and Jobs Act of 2017 (TCJA) significantly altered that landscape by temporarily increasing the exemption amount. As of 2025, the federal lifetime exemption stands at $13.99 million per individual or $27.98 million for a married couple. To illustrate its value, consider the earlier example of the $25 million estate. Applying the current exemption means that only $11.01 million remains taxable, creating a federal estate tax liability of approximately $4.4 million instead of $10 million. That difference underscores how essential the exemption is for preserving family wealth. Prior to the enactment of OBBBA, the expanded exemption was scheduled to sunset on January 1, 2026, reverting to pre-2018 levels of $5 million, adjusted for inflation. This would have left many affluent families facing a significantly larger tax liability, making 2025 a critical year for advanced planning.
What Changed with the One Big Beautiful Bill Act?
The legislative landscape shifted again on July 4, 2025, when the One Big Beautiful Bill Act became law. This sweeping legislation made several key changes to the federal transfer tax system, the most important of which was a permanent extension of the higher exemption amounts. OBBBA not only retained the expanded exclusion but increased it further by setting the basic exemption amount at $15 million per individual starting in 2026. In addition, the inflation adjustment base year was reset to 2025, which ensures that future increases will build upon the new baseline. For individuals who have already used all or most of their $13.99 million exemption in 2025, this adjustment offers welcome relief. Beginning in 2026, these taxpayers will have additional exclusion capacity, enabling them to make more tax-free gifts or reduce their taxable estates. This change creates a renewed opportunity for high-net-worth individuals to transfer wealth strategically and minimize future estate tax exposure.
Married Couples and Portability
The new law left the rules regarding portability for married couples intact. Portability allows a surviving spouse to claim the unused portion of a deceased spouse’s exemption, creating a combined shield of up to $30 million for a married couple beginning in 2026. For example, if you are married and your spouse passes away in 2026 having used only $10 million of his/her lifetime exemption, the remaining $5 million would “port” over to you, giving you a combined lifetime exemption of $20 million. This feature remains an essential tool for families who wish to protect a large estate from federal transfer taxes while maintaining flexibility in how they structure their estate plans.
Multi-Generational Planning
The Generation-Skipping Transfer (GST) tax exemption also matches the basic exclusion amount, increasing to $15 million per person in 2026. This alignment provides robust planning opportunities for those interested in multi-generational wealth transfers. Establishing dynasty trusts or other structures designed to bypass intermediate generations can help preserve family wealth for decades. It is worth noting that the GST exemption remains non-portable, making careful planning imperative to capture the full benefit.
Impact on Trust Planning and Income Tax Rates
OBBBA also addressed income taxation of individuals and trusts by making permanent the income tax brackets introduced under the TCJA, with inflation adjustments continuing each year. For Trustees managing irrevocable trusts, this permanence provides greater predictability for future tax obligations on trust income. Predictable tax brackets allow for more informed decisions regarding distributions and asset retention within the trust.
The certainty provided by these provisions is particularly beneficial for those using irrevocable structures, such as Spousal Lifetime Access Trusts (SLATs) or Grantor Retained Annuity Trusts (GRATs). These strategies often involve long-term commitments, so knowing that both estate tax exemptions and income tax brackets will remain stable for the foreseeable future can reduce risk and enhance planning efficiency.
How OBBBA Shapes Estate Planning in New Hampshire
Although OBBBA significantly reduced the urgency created by the previously scheduled sunset of the higher exemption, proactive planning remains essential. Congress has the authority to modify these laws at any time, and changes to the political landscape could lead to a reduction in the exemption amount or other revisions to the tax system. Acting now allows families to lock in available benefits while they remain certain. As such, high-net-worth individuals and couples should explore sophisticated strategies to leverage the enhanced exemption. For families whose estates approach or exceed the $15 million threshold, implementing one or more of these techniques can dramatically reduce tax exposure and ensure that wealth passes to intended beneficiaries rather than to the federal government:
- Spousal Lifetime Access Trusts (SLATs): Designed to remove assets from the taxable estate while still providing indirect access to trust funds through the beneficiary spouse.
- Dynasty Trusts: Structured to provide long-term protection against estate taxes and creditor claims across multiple generations.
- Grantor Retained Annuity Trusts (GRATs): Useful for transferring appreciating assets to beneficiaries at a reduced gift tax cost.
- Irrevocable Life Insurance Trusts (ILITs): An effective tool for creating liquidity to cover estate taxes without increasing the taxable estate.
The One Big Beautiful Bill Act represents a significant milestone in federal tax policy, reshaping the estate planning environment for individuals and families in New Hampshire. While the new law provides substantial opportunities for tax-efficient wealth transfer, it also underscores the importance of timely action. Working with an experienced estate planning attorney is the best way to evaluate the impact of OBBBA on your personal circumstances.
Do You Have Questions About How the OBBBA Impacts Estate Planning in New Hampshire?
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about how the OBBBA impacts estate planning in New Hampshire, contact our estate planning attorneys in our North Andover, Woburn, and Beverly offices at (978) 969-0331. Our Salem and Nashua, New Hampshire office can be reached at (603) 894-4141.
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