At First National Bank and Trust Company, we remain committed to helping clients navigate financial transitions with confidence. As part of our “Preparing for 2026 & Beyond: Tax Code Updates” educational series, we aim to offer trusted insights on how evolving tax laws can be viewed not just as regulatory updates, but as strategic opportunities to strengthen long‑term financial planning.
Part Three — “From Estate to Legacy: Wealth Transfer & Family‑Centered Planning”
In this segment, we highlight how the One Big Beautiful Bill Act (OBBBA) clarifies key estate‑related rules, including exemptions, gifting options, and multi‑generational planning tools. This information is especially helpful for individuals managing family wealth, navigating complex estate structures, or preparing to preserve their legacy for future generations.
Estate planning has traditionally focused on two core goals: protecting what you have built and ensuring your assets are passed on according to your intentions. The updates contained in OBBBA go beyond simple tax adjustments—they introduce expanded opportunities for lifetime gifting, multi‑level wealth transfers, and more efficient legacy planning.
Higher Estate Tax Exemption Levels
The enhanced estate tax thresholds originally introduced through SECURE 2.0 and set to expire at the end of 2025 are now permanently extended under OBBBA. The 2025 exemption rises to $15 million, with annual inflation adjustments moving forward. Portability is still available to surviving spouses, allowing them to apply the unused exemption of their deceased partner.
Similarly, the generation‑skipping transfer (GST) tax exemption also increases to $15 million per person, indexed for inflation—creating meaningful opportunities for families who wish to transfer wealth directly to grandchildren or future generations.
Greater Flexibility in 529 Education Savings Plans
Before July 5, 2025, 529 plan distributions were more limited. With recent updates, these plans now offer expanded tax‑free uses, providing families more ways to support educational needs.
As of July 5, 2025, 529 funds may now be applied to:
- K–12 tuition (up to $20,000 per year starting in 2026)
- Textbooks, curriculum, and instructional materials
- Online learning tools and educational content
- Tutoring services
- Standardized test fees (ACT, SAT, AP exams)
- Dual‑enrollment college course fees
- Educational therapies such as speech, behavioral, or occupational therapy
These additions make 529 plans even more valuable for long‑term education planning.
Introducing Trump Accounts: A Savings Tool for Children
A new account type—known as the Trump Account—is now available to all children under age 18. For those born between 2025 and 2028, the federal government contributes a $1,000 seed deposit. These accounts function similarly to traditional IRAs, offering low‑fee, tax‑deferred investment growth.
Key details include:
- Maximum annual contribution: $5,000 per child per family
- No additional tax deductions for contributions
- Withdrawals taxed as ordinary income, with a 10% early‑withdrawal penalty unless an exception applies
Combined with a 529 plan, this account can be a powerful long‑term wealth‑building option, particularly for grandparents who want to contribute without triggering gift‑tax reporting.
More Cash Flow = More Legacy Options
Because OBBBA increases cash flow for many retirees and business owners, individuals may find greater flexibility to enhance their estate strategies, including the ability to:
- Revisit beneficiary designations in light of lower income taxes
- Update lifetime gifting plans for future generations
- Use trusts to structure more tax‑efficient transfers
If you’re still building toward retirement or planning for medical expenses, stay tuned for our next installment, which addresses tax changes that support late‑stage savers and healthcare planning.
Supporting Your Legacy with Confidence
At First National Bank and Trust Company, we help clients adapt with confidence using our integrated approach to financial planning, which includes investment planning, retirement planning, estate planning, and tax planning.
Estate planning is about more than minimizing taxes—it’s about ensuring your intentions are honored, your family is supported, and your legacy reflects the values you care about. Now is an ideal time to review your estate documents and ensure your strategy remains aligned with your goals.
If you’re ready for an estate plan review or want to explore how these tax updates may affect your long‑term strategy, our team is here to help you move forward with clarity and peace of mind.
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