The Sunset That Never Came: What the One Big Beautiful Bill Means for Your Texas Estate Plan in 2026

The Plan That Ran Out of Problem

In the fall of 2024, David and Patricia Morales sat across from their financial advisor in a Frisco conference room and received what felt like an urgent warning. David's orthodontics practice had grown to an estimated value of $3.8 million. Their home in Stonebridge Ranch had appreciated to $1.2 million. Their combined investment and retirement accounts added another $2.9 million. All told, the Morales estate was approaching $8 million — comfortably below the 2024 federal estate tax exemption of $13.61 million per person, but uncomfortably close to what the exemption was scheduled to become in 2026.

Under the Tax Cuts and Jobs Act of 2017 (TCJA), the estate tax exemption had been temporarily doubled. The operative word was temporarily. The TCJA included a sunset provision: on January 1, 2026, the elevated exemption would expire, and the exemption would revert to the pre-TCJA baseline — projected to land around $7 million per person, adjusted for inflation. For a married couple, that meant a combined exemption of roughly $14 million, down from the 2025 level of nearly $27.98 million.

For the Morales family, the math was uncomfortable but manageable — until their advisor walked through a scenario where the practice appreciated to $12 million by the time David retired. At that point, with a sunset exemption, a meaningful portion of the estate could be exposed to the federal estate tax rate of 40 percent.

The advice was to act. David established a Spousal Lifetime Access Trust — a SLAT — and transferred $3.9 million of investment assets into it before the end of 2024. Under a properly drafted SLAT, the transferred assets are removed from David's taxable estate. Patricia, as beneficiary, retains access to the trust's income and, under certain conditions, its principal. The cost, between attorney fees and the financial restructuring, was approximately $15,000. The Morales family left feeling like they had done something smart.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law. The sunset never came.

What the One Big Beautiful Bill Actually Did

Congress had been watching the 2026 sunset deadline approach for years, and the legislative maneuvering that produced the One Big Beautiful Bill Act (OBBBA) ultimately resolved it decisively. Effective January 1, 2026, the OBBBA permanently increased the federal estate, gift, and generation-skipping transfer tax exemption to $15 million per person — and indexed it for inflation going forward, using 2025 as the base year.

For a married couple, the combined exemption is $30 million. Unlike the TCJA, which carried a built-in expiration date, the OBBBA's exemption has no sunset. It is intended to be permanent law, not a temporary doubling subject to legislative renewal.

The practical effect in Texas is significant, and for most families, it is entirely favorable: the federal estate tax has receded from a planning priority to a planning edge case. The overwhelming majority of Texas estates — even those with substantial real estate, business interests, and retirement accounts — fall well under the new threshold.

Texas compounds the good news. The state repealed its own estate tax in 2015, and Texas currently imposes no estate tax and no inheritance tax. Texas families deal exclusively with the federal rules. At a $15 million per-person exemption and zero state estate tax, a couple with a $20 million combined estate owes nothing to either Austin or Washington on the assets they leave behind.

The Question David Actually Asked

When the Morales family heard about the OBBBA, David's first call was to his estate planning attorney. His question was direct: Did we waste $15,000?

The honest answer was more nuanced than either yes or no — and understanding why gets to the heart of what Texas estate planning should look like now that the federal estate tax is effectively off the table for most families.

The SLAT David created still exists, and it still does things that have nothing to do with estate taxes. The $3.9 million transferred into the trust is now legally separate from David's personal assets. If the orthodontics practice faces a malpractice suit, or if a business dispute produces a judgment creditor, the assets inside the trust have meaningful protection that his personal accounts do not. That protection didn't become irrelevant because Congress changed the exemption. It was never about the exemption.

Moreover, the IRS confirmed through its 2019 anti-clawback regulations (T.D. 9884) that gifts made under the TCJA's elevated exemption — including David's 2024 transfer — are protected. Even if the exemption had dropped, those prior gifts would not have been clawed back into the taxable estate. With the exemption now permanently at $15 million, those gifts are fully covered regardless.

But the deeper point is this: David's $15,000 bought planning that solved a problem which, for his estate size, may have never materialized. The planning wasn't wrong — it was calibrated to a risk that turned out to be smaller than projected. That distinction matters for how Texas families should think about the year ahead.

Who Still Has a Federal Estate Tax Problem

The OBBBA does not make estate tax planning irrelevant. It raises the bar at which it becomes urgent.

At $15 million per person — indexed upward each year for inflation — the families for whom federal estate tax is a genuine near-term concern are those whose total assets currently approach or exceed that level, or whose assets are on a trajectory to reach it within a foreseeable planning horizon. In practical North Texas terms, that includes:

• Business owners with rapidly appreciating enterprises. A Dallas-area commercial real estate developer whose portfolio is currently worth $12 million but growing at 8 to 10 percent per year could cross the $15 million threshold before the end of the decade, particularly if the inflation indexing doesn't keep pace with Texas real estate appreciation. Advance planning — GRATs, IDGTs, qualified opportunity zone investments — remains valuable.
• Families with inherited or multigenerational wealth. A Plano family where the first-generation estate was well-managed and has been compounding for decades may be approaching a level where the $30 million combined exemption is relevant math, not theoretical math.
• Closely held business owners with illiquid estates. Even at $15 million, the payment mechanics of the federal estate tax matter. An estate that is predominantly a family business — illiquid, hard to value, and not easily sold — may have a taxable estate that can't write a check to the IRS without forcing a fire sale. IRC § 6166 installment payment elections and life insurance funded trusts remain important planning tools for these families, regardless of the higher exemption.
• Ultra-high-net-worth families whose combined estate exceeds $30 million. For these families, the OBBBA raised the floor — it didn't eliminate the ceiling. Advanced strategies (SLATs, GRATs, dynasty trusts, charitable remainder trusts) remain productive and arguably more so, since the elevated exemption enables larger gifts without triggering the gift tax.

Where Texas Estate Planning Attention Should Go Now

For the majority of Texas families — those with estates well under $15 million per spouse — the OBBBA's message is not "you're done planning." It is "the planning priority has shifted." Here is where the legitimate attention belongs.

Income Tax and Basis Planning Have Moved to Center Stage

When estate tax is off the table, the most valuable planning for most Texas families is controlling what happens to the income tax basis of appreciated assets.

Under IRC § 1014, assets transferred at death receive a new cost basis equal to their fair market value at the date of death — the "step-up in basis." A home purchased in McKinney for $180,000 in 2002 and worth $750,000 today would, if inherited, carry a new basis of $750,000. The $570,000 in gain accumulated over 22 years is never taxed.

In Texas, that benefit extends further through community property law. Under IRC § 1014(b)(6), when a Texas spouse dies, the entire community property estate — both halves — receives the step-up in basis, not just the decedent's half. No common-law state offers this. For a Texas couple holding $800,000 in appreciated stock with a $60,000 original basis, the difference between a full community property step-up and a partial step-up is $370,000 in eliminable capital gains taxes for their heirs.

The practical implication: as estate tax concerns diminish, preserving the step-up in basis becomes more important — not less. Irrevocable trusts funded during life specifically to avoid estate tax can actually destroy the step-up for assets placed inside them, because those assets no longer pass through the estate at death. Texas families should audit any existing irrevocable trust structures to confirm they are still producing the intended outcome given the new law.

Probate Avoidance Remains Equally Important

Texas probate is not as cumbersome as probate in some other states, but it is still a court process, and court processes have costs, delays, and public records. An estate plan designed around a revocable living trust — the primary tool for probate avoidance — produces exactly the same benefits whether the estate tax exemption is $7 million or $15 million. The assets transfer privately, quickly, and at a fraction of the cost of supervised administration.

For most Texas families, the right response to the OBBBA is not to abandon sophisticated estate planning, but to refocus it. A well-drafted revocable living trust funded with the family's real estate, business interests, and investment accounts; clear and current beneficiary designations on IRAs and retirement accounts; durable powers of attorney that meet the current requirements of Tex. Est. Code ch. 751; and a healthcare directive aligned with current medical preferences — these are the documents that most Texas families will actually rely on, and they have nothing to do with the federal estate tax threshold.

Asset Protection Planning Is More Relevant Than Ever

With fewer Texas families needing to move assets out of their estates for tax reasons, asset protection planning has become the independent reason to consider irrevocable structures. A business owner who transfers appreciated assets to an irrevocable trust for a family member doesn't eliminate a tax problem — but they may significantly complicate a creditor's ability to reach those assets in a future lawsuit.

Texas already offers some of the strongest creditor protection rules in the country: the homestead exemption protects the primary residence from most creditors without a dollar cap; the state exempts certain insurance products and retirement accounts. But for business owners with meaningful exposure — medical professionals, real estate developers, contractors — supplementing Texas's baseline protections with thoughtful trust structures has merit that stands independent of the estate tax calculus.

Reviewing Existing Structures — The Overlooked Priority

Perhaps the most immediate priority for families who did sunset planning in 2024 or 2025 is simply a review. Not because the planning was necessarily wrong — but because the reason for the planning may have changed, and the structures should be evaluated in that light.

A SLAT established to remove assets from a taxable estate below $15 million is now serving a different purpose than the one that drove the decision. If the trust's terms are appropriate for asset protection and family flexibility, that is a valuable outcome. If the irrevocable structure turns out to be unnecessarily constraining for the actual risk the family now faces, a review can identify whether the trust's terms can be modified, whether assets can be managed differently within it, or whether other planning adjustments make sense going forward.

Texas trust law under Tex. Prop. Code §§ 112.051–112.059 provides mechanisms for trust modification and decanting that may be available depending on how the trust was drafted. These are not remedies for mistakes — they are planning tools that allow thoughtful adjustment when circumstances change. The OBBBA is exactly the kind of changed circumstance that warrants a second look.

What This Means for a McKinney or Frisco Family in 2026

Here is the practical summary for a North Texas family with a combined estate in the $3 million to $12 million range — the profile that describes most of WG Law's estate planning clients in Collin County:

You do not have a federal estate tax problem. At $15 million per person — and with no Texas state estate tax — your estate is not in range of the federal estate tax under current law. Planning driven primarily by estate tax avoidance is not a priority for you right now.

You almost certainly have an income tax opportunity. If you own appreciated real estate, a closely held business, or a long-held investment portfolio, how those assets are titled and transferred at death has enormous income tax implications for your heirs. The step-up in basis rules — particularly Texas's community property double step-up — can eliminate decades of accumulated gain at no cost, if the plan is structured correctly.

You have a probate and asset-transfer plan that needs to be current. An estate plan last reviewed before 2020 was drafted under a different legal landscape — the SECURE Act alone changed the rules for inherited IRAs in ways that affect almost every family that holds retirement accounts. A current plan coordinates retirement account beneficiaries, trust structures, powers of attorney, and healthcare directives in a way that reflects the law as it actually exists today.

If you have a business, you have succession planning work to do regardless of the tax environment. The question of how a family business transitions at death, disability, or retirement is a legal and operational question that no amount of legislative tax reform simplifies. Buy-sell agreements, business succession trusts, and operating agreement provisions for incapacity are equally important whether the estate tax exemption is $7 million or $15 million.

Questions About Your Estate Plan in the New Legal Environment?

The One Big Beautiful Bill Act is genuinely good news for most Texas families. It is not a reason to stop planning — it is a reason to plan for the things that actually matter to a North Texas family in 2026: income tax efficiency, seamless asset transfer, business continuity, and protection for what you have built.

Carla Alston, whose NYU Tax LL.M. and 39 years of practice give her a rare vantage point at the intersection of federal tax law and Texas estate planning, helps families recalibrate their plans when the legal landscape shifts. Taylor Willingham, who has served more than 10,000 Texas families, brings the broad estate planning context that makes individual decisions cohere into a complete plan.

WG Law's offices are in McKinney (7701 Eldorado Pkwy, Suite 200) and Southlake (1560 E Southlake Blvd, Suite 100, Office 116). We serve clients across Collin County, Denton County, and the DFW metroplex.

To speak with our team, call 214-250-4407 or request a consultation online. For further reading, see our guides on what estate planning costs in Texas, WG Law's Estate Planning practice, tax-smart estate planning for Texas families, and what Texas retirees need to update in their estate plans.

This article is general information, not legal advice. Federal estate and gift tax law, the One Big Beautiful Bill Act, and Texas estate and trust law are subject to change and apply differently depending on individual facts and circumstances. Consult a licensed Texas estate planning attorney and a qualified tax advisor before making decisions about your estate plan.