How the New Tax Law Affects Your Estate Plan

Good afternoon,

I wanted to share a summary of recent changes to federal estate and gift tax laws and exemption limits with you. These updates may not affect everyone – but they’re significant enough that all estate planning clients should understand how the new rules might impact their existing plan.

First, remember that while Tennessee has no state estate tax or inheritance tax (these were fully repealed in 2016), there are certain federal estate and gift taxes that can still come into play, depending on the value of your estate. With the new One Big Beautiful Bill Act (OBBBA) signed into law on July 4, 2025, the federal estate, gift, and generation-skipping transfer (GST) tax exemptions have been permanently increased to $15 million per person ($30 million per couple), indexed for inflation, starting in 2026. (This prevents the previously scheduled “sunset” of the exemption back to around $7 million per person at the end of 2025, which is great news for a lot of people!)  This means that your estate will not have to pay these types of taxes unless your estate is valued above these limits. The current levels of $13.99 million for an individual, $27.98 million for a married couple will hold through the end of 2025.

Most Tennesseans won’t be subject to federal estate tax under these new limits, but estate planning isn’t just about taxes. If your existing trust uses outdated exemption formulas or tax-driven terms, it may no longer align with your goals. Feel free to reach out if you’d like to schedule a time to review your documents or talk through your options.

Warm regards,

Kristen Harvey