$15 Million Estate Tax Exemption Under the OBBBA

For years, estate planning attorneys warned their clients about the “sunset cliff” — the scheduled halving of the federal estate and gift tax exemption on January 1, 2026. The Tax Cuts and Jobs Act of 2017 had doubled the exemption, but that increase was temporary. Families with estates in the $7–$14 million range scrambled to make large gifts and fund irrevocable trusts before the deadline.

Then the One Big Beautiful Bill Act eliminated the cliff entirely. Effective January 1, 2026, the federal estate and gift tax exemption is now permanently set at $15 million per individual — $30 million for married couples with proper planning. The annual gift tax exclusion remains $19,000 per recipient. And the top estate tax rate stays at 40% on amounts above the exemption.

This is the highest exemption in U.S. history. For the vast majority of Texas families — including most in Montgomery County and The Woodlands — the federal estate tax is no longer a practical concern. But that does not mean your estate plan is up to date. Plans drafted under the old sunset assumptions may now distribute your assets in ways you never intended.

At Griffin & Cain, Attorneys at Law, we help families across Montgomery County create and maintain estate plans that work under current law. If your plan was drafted before the OBBBA passed, call us at (936) 441-2999 for a review.

What the OBBBA Changed — And What It Didn’t

The key changes are straightforward. The federal estate and gift tax exemption increased to $15 million per individual in 2026. This is permanent — it will not sunset. Starting in 2027, the exemption will adjust annually for inflation. The annual gift tax exclusion remains $19,000 per recipient per year. The top tax rate on amounts above the exemption remains 40%.

What did not change: Texas still has no state estate tax, no inheritance tax, and no gift tax. Texas voters approved constitutional amendments in 2025 that permanently prohibit these taxes at the state level. So for Texas residents, the only death tax exposure is the federal estate tax on amounts above $15 million.

For context, fewer than 0.1% of estates nationally owe any federal estate tax. For a married couple with $30 million in combined exemption, the threshold is extraordinarily high. Even in The Woodlands and the Lake Conroe corridor, where home values, investment accounts, and business interests can accumulate, most families are well below the federal line.

Why Plans Built for the Sunset Still Need Revision

Here is the problem. If you had an estate plan drafted between 2017 and 2025, your attorney likely included provisions designed to work under two scenarios: the exemption staying high, or the exemption dropping to approximately $7 million. Many plans used “formula clauses” that automatically funded trusts with the “maximum amount that can pass free of estate tax.” When that number was $13 million, the formula worked one way. Now that it is $15 million, the formula shifts — and if the exemption had dropped to $7 million, it would have shifted dramatically in the other direction.

Overfunded bypass trusts

Many married couples’ plans include a bypass trust (also called a credit shelter trust or B trust) that is funded at the first spouse’s death with the maximum exemption amount. Under the old plan, this trust might have received $13 million, leaving the balance to the surviving spouse outright. Under the new $15 million exemption, the bypass trust could absorb $15 million — potentially leaving the surviving spouse with less outright access to assets than intended.

If your plan uses a formula clause tied to the estate tax exemption, review it with your attorney to confirm the surviving spouse will have adequate access to funds.

SLATs sized for a $7 million cliff

Spousal Lifetime Access Trusts (SLATs) were one of the most popular strategies for clients racing to use their exemption before the expected sunset. Many clients made large gifts — $5, $10, even $12 million — into SLATs in 2024 and 2025 to lock in the higher exemption. Now that the exemption is $15 million and permanent, these clients may have used exemption they did not need to use. The gifts are not reversible, but the planning around the SLAT — including access provisions, trustee designations, and investment strategy — should be reassessed.

Charitable planning assumptions

Some estate plans include charitable components designed to reduce the taxable estate below the exemption threshold. If your plan was built around a $7 million sunset, the charitable element may have been sized to shelter assets that are now fully exempt without the charitable deduction. You may be giving away more than necessary to achieve a tax outcome that no longer applies.

Estate Planning Is About More Than Taxes

The $15 million exemption removes estate tax anxiety for most families, but it can also create a dangerous complacency. People hear “estate tax doesn’t apply to me” and conclude they do not need a plan. That conclusion is wrong for several reasons:

Probate avoidance. Without a will or trust, your estate goes through the Texas probate process — a public, court-supervised proceeding that takes time and costs money. Even Texas’s relatively streamlined probate system involves filing fees, attorney fees, and months of court supervision. A revocable living trust, properly funded, avoids probate entirely.

Guardianship for minor children. If both parents die without naming a guardian in their will, a judge in Montgomery County Probate Court decides who raises your children. That judge does not know your family, your values, or your preferences. A will is the only legal document that allows you to name a guardian.

Beneficiary coordination. Your retirement accounts, life insurance policies, and bank accounts pass by beneficiary designation — not by your will. If your will says “everything to my wife” but your 401(k) still names your ex-wife from 15 years ago, the ex-wife gets the 401(k). Beneficiary coordination is one of the most commonly overlooked elements of estate planning, and it has nothing to do with taxes.

Incapacity planning. A comprehensive estate plan includes a statutory durable power of attorney and a medical power of attorney — the documents that allow someone you trust to manage your finances and make medical decisions if you become unable to do so. Without these documents, your family must petition for a guardianship through the courts — a process that is expensive, time-consuming, and emotionally draining.

What Texas Families Should Do Now

If you do not have an estate plan, the new exemption is irrelevant to the immediate urgency of getting one. You need a will, a trust (if appropriate for your asset level), powers of attorney, and coordinated beneficiary designations. This protects your family regardless of your net worth.

If you have an existing plan drafted before 2026, schedule a review to confirm that formula clauses work correctly under the $15 million exemption, that your beneficiary designations on all accounts match your will or trust, that your powers of attorney are current and sufficiently broad, that your trust language complies with the updated Texas homestead provisions, and that your plan still reflects your family situation — marriages, divorces, births, deaths, and moves since the plan was drafted.

If you made large lifetime gifts (SLATs, GRATs, or outright gifts) in 2024–2025 to beat the expected sunset, meet with your attorney to discuss whether any adjustments to the trust administration or your remaining estate structure make sense under the permanent $15 million exemption.

Talk to a Montgomery County Estate Planning Attorney

Griffin & Cain offers flat-fee estate planning services for families across Montgomery County. Whether you need a new plan from scratch or a review of an existing plan built under different tax assumptions, we can help you get current quickly and affordably.

Call (936) 441-2999 to schedule a free consultation. We serve families in Conroe, The Woodlands, Magnolia, Willis, Huntsville, and the Lake Conroe area from our office in Conroe.

Griffin & Cain, Attorneys at Law, PC

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