What the OBBBA changed for estate planning

The One Big Beautiful Bill Act, signed July 4, 2025, made the historically high federal estate tax exemption permanent. Starting January 1, 2026:

• The federal estate tax exemption is $15 million per individual
• Married couples can shield up to $30 million combined through portability
• The exemption is indexed for inflation going forward
• The “sunset” provision that had threatened to cut the exemption roughly in half at the end of 2025 has been eliminated

For South Jersey families who had been making rushed gifting decisions or accelerating trust structures in anticipation of the sunset, this is a meaningful change. The urgency to act before an arbitrary deadline is gone. The case for thoughtful, long-term estate planning remains as strong as ever.

What New Jersey does — and does not — tax

New Jersey eliminated its state estate tax effective January 1, 2018. There is no NJ state estate tax on assets passing at death, regardless of estate size.

However, New Jersey does impose an inheritance tax — and this is where many NJ families are caught off guard. The NJ inheritance tax is based not on the size of the estate but on who receives the assets:

• Class A beneficiaries (spouse, children, grandchildren, parents, grandparents): fully exempt from NJ inheritance tax
• Class C beneficiaries (siblings, sons- and daughters-in-law): taxed at rates from 11% to 16%
• Class D beneficiaries (all other individuals, including nieces, nephews, friends, domestic partners not in a civil union): taxed at 15% up to $700,000, then 16%
• Qualified charities: exempt

For a South Jersey family with a sibling, a niece or nephew, a close friend, or a long-term partner named as a beneficiary of a significant asset, the NJ inheritance tax can produce a material and unexpected tax bill — even though there is no NJ estate tax.

What this means for your estate plan right now

The permanent federal exemption changes some calculations but does not eliminate the need for a current, coordinated estate plan. For most South Jersey HNW families, the priorities now are:

• Ensuring beneficiary designations on all retirement accounts, life insurance, and annuities reflect current wishes and are coordinated with the estate plan
• Reviewing whether any non-Class A beneficiaries are named in wills, trusts, or transfer-on-death accounts, and what the NJ inheritance tax exposure would be
• For larger estates (above $15M individually or $30M combined), reviewing whether existing irrevocable trusts, GRATs, or other structures put in place before the OBBBA still reflect the best approach
• Ensuring the estate plan coordinates with the retirement income plan — Roth conversion strategy, RMD timing, and asset location decisions all affect what your heirs actually receive

The WealthCare perspective

Marty Higgins holds the Accredited Estate Planner (AEP®) designation — one of the few advisors in South Jersey with this credential — and coordinates estate planning with clients’ estate attorneys as a standard part of the WealthCare Process. Our partnership with Wealth.com brings additional digital estate planning tools directly to clients, including document analysis, estate flow mapping, and beneficiary designation audits.

The permanent exemption is good news. But it does not replace the need for a current, coordinated plan — particularly for NJ families with non-Class A beneficiaries, blended families, or significant retirement assets.

What to do next

If you have not reviewed your estate plan since the OBBBA passed, or if you are unsure how the NJ inheritance tax applies to your specific beneficiaries, contact our team at (856) 988-7722 or familywealthadvisory.com.