The One Big Beautiful Bill Act (OB3) contains many new provisions, some of which are effective in 2025. Some planning steps can be taken before the end of 2025 to take advantage of these new provisions, primarily tax deductions.

This new interest in state wealth taxes could reflect a ‘be careful what you ask for (at the federal level with OB3) because you might actually get it.’ If the federal government is cutting back on programs that it used to financially share with the states, the states are not going to idly stand by and watch many of their public service programs disappear.

Wills and trusts often contain gifts and bequests of specifically identified assets. Wills and trusts often become stale, meaning that often governing instrument is not periodically updated. That is when the stale Will or trust instrument refers to an asset that no longer exists owned by the testator/settlor or his/her trust at death.

Any individual who claims a charitable deduction must comply with all of the reporting and disclosure requirements. Proper documentation is more than just a recommendation; it is a requirement. While the Tax Court’s decision acknowledged that it believed that the Besaws had made the charitable donations, it nonetheless disallowed their entire deduction due to the incomplete charity receipts. The Regulations must be followed as much as the statutes that authorize charitable deductions. Even undisputed charitable giving provides not tax benefit without meticulous documentation, and despite the best efforts of the donor to be transparent with the IRS.

Naming an estate as the beneficiary of an IRA is probably a mistake, because there are potentially two different distribution periods that might apply, which in turn can cause confusion that then leads to a 25% excise tax for the failure to take a required minimum distribution (RMD.)

Estate planning will now be about maximizing what beneficiaries actually receive after all taxes, whether those taxes are estate, GST,  inheritance, income, or capital gains.

With the One Big Beautiful Bill Act (OB3) far more attention will be given to positioning assets to obtain an income tax basis adjustment on a decedent’s death, more so than shifting asset appreciation out of an owner’s estate with lifetime gifts to avoid federal estate taxes.

Adding a charity as a discretionary beneficiary of trust income is a simple advance planning strategy that can be used to minimize the trust’s exposure to high, confiscatory, federal income tax brackets.

A debate currently rages among commentators whether estates and non-grantor trusts are subject to the new 2/37th limitation on itemized deductions starting in 2026.

This Delaware decision is an important reminder to settlors who are potentially considering the adoption of a self-settled asset protection trust, but reluctant to do so due to the loss of control over the transferred assets. A fair amount of control can still be retained over the trust while still enjoying the trust’s protection from creditor claims.