I have promoted my business as values-based estate planning. And for the most part, I have seen it as my job to help my clients identify and express their own values. In the context of estate planning, this might be prioritizing charitable giving or developing structures for passing one’s assets to their family in amounts and in manners that are consistent with the giver’s beliefs. I have helped clients navigate disputes with family members in the probate process and try to preserve relationships even when there are disagreements about a loved one’s legacy. For some of my clients that means talking about forgiveness, forbearance, and peacemaking, sometimes even at the cost of individual monetary enrichment. I hope that I have helped these clients make decisions that reflect what is most important to them.
How do I express my own values in my work as an attorney? I was thinking about this today as the Senate passed the so-called “One Big Beautiful Bill”. I was thinking about this in the context of explaining some elements of the bill to clients and the public at large in my capacity as an attorney. Often law firms will send out updates and explanations about pending legislation, and I wondered if I should do the same. I could explain the proposed adjustments and expansion of the estate tax exemption and how that could impact or affect my clients as they do their planning. And I will provide that information lower down in this essay.
But it would be a disservice to my own values and my own ethics to focus only on how the OBBB might impact my clients for their estate planning purposes. That is because the OBBB is an awful, immoral piece of legislation.
The OBBB, as passed by the Senate today, would devastate healthcare for many people in our country, especially the poorest among us. It would make SNAP benefits (food stamps) harder to access. The OBBB would radically expand the violent, cruel, anti-immigrant actions of this Administration by exponentially increasing ICE’s budget and earmarking more than $40 billion for construction of detention facilities in the next four years. The OBBB would roll back previous efforts to slow and impede climate change. And the OBBB would exacerbate wealth and income inequality in our nation by privileging the wealthiest among us with ever-larger tax breaks.
I cannot in good conscience write or speak about the estate planning outcomes of the OBBB in isolation from the larger outcomes of the bill. I desperately hope it fails.
That said, the OBBB extends what had been temporary adjustments to the estate and gift tax from the 2017 bill. As part of the Tax Cuts and Jobs Act of 2017 the amount that an individual could pass exempt from estate and gift taxation over a lifetime (and at their death) was roughly doubled from about $5.49 million to about $11 million. As structured, this amount was indexed to grow each year, so that by 2025 an individual could gift or bequeath $13.99 million in assets free of federal estate and gift tax. (This amount is doubled for married couples who can coordinate gifts and assume their spouse’s unused tax exemption.) To comply with budgeting and legislative rules that impact how many Senate votes are needed to carry a bill, this dramatic expansion of the estate and gift tax exemption was set to sunset at the end of 2025. This would have snapped the exemption back to about $7.14 million per individual (double for married couples). Instead, the OBBB continues and expands this exemption from the TCJA amounts. That is, if the OBBB were signed into law as it is currently written, an individual could gift or bequeath $15 million (married couples $30 million) before the imposition of federal estate and gift taxation. This exemption amount also would be indexed to inflation and grow, but this provision would no longer have a sunset provision. It would be a permanent change to the tax code. (At least, until a future Congress created a new law.)
On the one hand, and on the very narrow issue, having a permanent change to the tax code makes estate planning (and tax planning in particular) more straightforward and predictable. I’m on board with that. The ever-growing exemption frees more and more estates from taxation, keeping most people from having to incorporate wealth transfer tax planning into their overall estate plan. Accordingly, my interest in keeping things simple for people is attracted to this.
Even so, I am deeply worried about the continuing expansion of the estate tax exemption in a time of growing wealth inequality in this country. The estate tax is just one element of this problem, and arguably not even the predominant element. Personally, I believe that the exemption is too expansive. I think the earlier, pre-2018 amount (adjusted for inflation) was closer to the right amount that should be allowed to pass by gift or by estate free of transfer taxes. Reasonable people might disagree about this, and I respect people’s different views on the intricacies of the estate tax.
As I think about this bill and I think about my role as an attorney and counselor to my clients, I want to communicate that we should think not only about how some piece or other of legislation will affect “me” but how it will affect “us”. And when the “us” is our communities and our nation, the OBBB is a wrecking ball.
Regardless of whether the OBBB passes or fails on its way to becoming law, I will keep helping clients create estate plans that honor both their financial goals and their moral commitments, and I will keep trying to build a practice that reflects my own commitments to justice, compassion, and shared prosperity.
I hope the OBBB fails.