Estate Planning After OBBBA: What Texas Families Need to Know About the New $15 Million Exemption

The estate-planning brief most Texas households were working from in 2024 has changed. The One Big Beautiful Bill Act did not let the federal estate and gift tax exemption fall in 2026, it lifted the exemption, made it permanent, and reset the planning conversation for households between $2 million and $25 million.

If you have been working off a 2023 or 2024estate-planning brief, the federal regime has changed and the planning conversation that follows from it has changed too. The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, did not let the higher Tax Cuts and Jobs Act exemption sunset on 1 January 2026, it raised the exemption, made it permanent, and removed the scheduled reversion that had been driving so much' use-it-or-lose-it' gifting urgency through 2024 and 2025.

This article is aimed at US-resident Texas households, typically high-earning Houston professionals, business owners, and retired executives, with investable assets and real estate in the $2 million to$25 million range. It explains what OBBBA actually changed, why the Texas planning context still matters (no state estate tax, no state income tax, community-property rules, the homestead exemption), the categories of trust structures available at an educational level, and the questions to take into a conversation with qualified estate counsel. It does not recommend a specific trust structure, a specific gifting strategy, or a specific drafting choice; those decisions are properly the domain of a qualified estate-planning attorney working with the household's full tax and financial picture.

What OBBBA Actually Did to the Federal Estate and Gift Tax Exemption

OBBBA permanently raised the federal estate and gift tax exemption to $15 million per person, effective 1 January 2026, and indexed the amount for inflation from 2027 using 2025 as the base year. Married couples can shelter up to $30 million between them. The unified credit was lifted to the same level; the GST exemption was raised to match. Crucially, and unlike the Tax Cuts and Jobs Act exemption it replaced, there is no sunset clause. The exemption is now a permanent feature of the Internal Revenue Code unless and until Congress changes it. The pre-OBBBA scheduled reversion to approximately $7 million per person on 1 January 2026 will not happen.

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Why the Texas Planning Context Still Matters

Texas remains one of the most favourable state regimes for estate planning. The state has no estate tax, no inheritance tax, and no state income tax, which means federal planning is the planning, and the income-tax friction that complicates planning in high-tax states is absent. Three Texas-specific features still drive household-level decisions.

No State Estate or Inheritance Tax

Texas does not levy a state-level estate or inheritance tax. The household's only transfer-tax exposure is federal, and the post-OBBBA $15 million per-person exemption means that households below that level (per spouse) have no federal estate-tax exposure on a death today. The planning focus shifts from 'how do we shelter the exemption from a sunset' to 'how do we coordinate basis step-up, gifting, and trust structures around the household's actual objectives'.

Community Property and Basis Step-up

Texas is a community-property state. Assets acquired during marriage are generally community property unless titled or characterised otherwise. At the first spouse's death, community-property assets receive a full basis step-up under Internal Revenue Code Section 1014, both the deceased and surviving spouse's halves, eliminating the capital-gains tax on appreciation prior to death. Separate property (typically assets owned before marriage, inheritances, or gifts) receives a step-up only on the deceased spouse's share. The community-property versus separate-property distinction drives real outcomes and is worth confirming in writing.

The Texas Homestead Exemption

The Texas homestead exemption, codified in the Texas Property Code and the Texas Constitution, provides robust protection of a primary residence from most creditors (judgment creditors, with significant exceptions). For households with material exposure to professional or business liability, the homestead is a relevant component of the estate-planning conversation, distinct from, but coordinating with, the federal estate-tax architecture.

Trust Structures at an Educational Level

Trusts are not a single tool; they are a family of structures with different uses. The five categories below are described at an educational level only. The design of a specific trust, choice of trustee, drafting language, jurisdiction, allocation of exemption, is the work of qualified estate counsel, not an article.

Revocable Living Trust

A revocable trust holds assets during the grantor's lifetime, can be amended or revoked, and is generally tax-neutral for federal purposes. Its primary purposes are probate avoidance and continuity in the event of incapacity. It does not remove assets from the grantor's estate for federal estate-tax purposes.

Irrevocable Trust (general)

An irrevocable trust transfers assets out of the grantor's control and, when properly structured, out of the grantor's estate for federal estate-tax purposes. The grantor uses lifetime gifting exemption to fund the trust. The trade-off is the loss of control. The category covers a wide range of structures with different drafting choices.

Spousal Lifetime Access Trust (SLAT)

A SLAT is an irrevocable trust funded by one spouse for the benefit of the other spouse (and often children). The grantor uses lifetime exemption to make the gift; the non-grantor spouse retains indirect access via distributions. The structure preserves access while moving assets and future appreciation outside the grantor's taxable estate. Spouses generally cannot create reciprocal SLATs with mirror provisions, which would trigger the reciprocal-trust doctrine.

Grantor Retained Annuity Trust (GRAT)

A GRAT is an irrevocable trust into which the grant or transfers assets and retains an annuity payment for a defined term. The remainder passes to beneficiaries free of gift tax if the trust's investment performance exceeds the Internal Revenue Code Section 7520 interest rate used to value the annuity. GRATs are most powerful in low-interest-rate environments and for high-growth assets; the structure can be 'zeroed out' to minimise the initial gift.

Irrevocable Life Insurance Trust (ILIT)

An ILIT owns a life-insurance policy on the grantor's life, keeping the death benefit outside the grantor's taxable estate. The grantor typically makes annual gifts to the trust to fund premium payments. ILITs are most useful where life insurance is part of the household's estate-liquidity or legacy plan and where keeping the death benefit outside the estate is materially advantageous.

Portability and the Generation-Skipping Transfer Exemption

Two further federal features remain central. Portability between spouses, the Deceased Spousal Unused Exclusion(DSUE), allows a surviving spouse to use the unused exemption of a deceased spouse, but only if a timely Form 706 is filed at the first death electing portability. The GST exemption was raised to the same $15 million per person from 2026 and is allocated separately from the estate-tax exemption; misallocation is a common error that estate counsel will model explicitly.

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An Illustrative Example, a Houston Household After OBBBA

The following example is illustrative only; individual facts differ. It is not a projection of outcomes or a recommendation.

Consider a hypothetical Texas household, a retired executive couple, 67 and 65, married filing jointly, with a $14 million net worth (a $3 million primary residence in Houston, $9 million in taxable investment accounts, $1.5 million in retirement accounts, $0.5 million in concentrated stock from the prior employer). Pre-OBBBA, the household had been working toward using significant lifetime exemption before the scheduled 2026sunset. Post-OBBBA, the federal exemption is well above the household's net worth even with no further gifting, and the planning question has shifted. The couple, their estate counsel, and their tax adviser reframe around different questions: maintaining basis step-up on community-property assets at the first death; ensuring portability is preserved by timely Form 706 filing at the first death; deciding whether the concentrated stock should be left to receive basis step-up at death or used to fund a donor-advised fund during life; and reviewing whether the existing revocable trust drafting still reflects current intent. The conversation is no longer about 'use it before it sunsets'; it is about the household's actual objectives.

Questions To Raise With A Qualified Adviser

These are not recommendations. They are questions to take into a conversation with a qualified adviser who understands the household's full financial picture.

• Where does our net worth sit relative to the post-OBBBA $15 million per-person federal exemption today, and how does the projection look across the next decade?
• Are our community-property and separate-property characterisations correctly documented for basis-step-up purposes under Internal Revenue Code Section 1014?
• If our estate plan was drafted before OBBBA, does the drafting still match our current intent, particularly any 'sunset trigger' language that was designed around the pre-OBBBA reversion?
• At the first spouse's death, will Form 706 be filed in time to elect portability and preserve the Deceased Spousal Unused Exclusion?
• How is GST exemption being allocated separately from the estate-tax exemption, and has the allocation been modelled for the next generation?
• Are any irrevocable trust structures (SLAT, GRAT, ILIT) appropriate for our objectives, and what trade-offs in control and flexibility do they introduce?
• How does our charitable plan, our concentrated-stock position, and our retirement-account beneficiary architecture coordinate with the estate plan?