Estate Planning for Business Owners: Why Now, Not 2026

As a business owner, you’re no stranger to planning: revenue forecasts, capital expenditures, hiring decisions, exit strategies. But one planning horizon many tend to postpone is estate planning. It’s common to think, “I’ll get around to that in a few years,” maybe in 2026 or beyond. The problem: tax laws, business valuations, and incentives are evolving now—and delaying can cost dearly.

Here’s why 2025 is the moment to act on estate planning, and why waiting until 2026 may mean lost opportunity.

1. The Tax Landscape Is Shifting—and in Your Favor (for a Window)

A compelling recent development is that under the One Big Beautiful Bill Act (OBBBA), beginning after January 19, 2025, businesses may again take 100 % first-year bonus depreciation on eligible assets. Prior to this change, depreciation rates were being phased down (80%, 60%, 40%) over successive years.

What does this mean for estate planning?

• If you acquire assets now (or designate them strategically), you might maximize depreciation deductions, reducing current taxable income. This in turn boosts your cash flow, freeing up liquidity for estate-planning moves (e.g., gifting, trusts, seed capital transfers to heirs).
  
• These deductions also affect your business’s adjusted value. When transferring business interests to heirs or trusts, the “step-up” or basis in assets may be more favorable if your balance sheets are optimized now.
  

In short: the present tax regime gives business owners tools that may not persist forever. Taking advantage of it while active amplifies flexibility in how you structure transfers to family or trusts.

2. Business Value Volatility — Capture Today’s Peaks

Business valuations tend to fluctuate. Market conditions, competition, interest rates, regulatory changes, and internal performance all shift over time. If your business is currently in a strong growth phase — stable earnings, favorable market positioning, rising multiples — delaying estate planning runs the risk of transferring at lower value (or missing opportunities to allocate now when the multiple is high).

By beginning the estate-planning process now, you can:

• Lock in valuations (via buy-sell agreements, valuation formulas)
  
• Structure gifts or partial transfers when business value is favorable
  
• Layer in growth prospects and future milestones into planning instead of waiting for uncertain future metrics.
  

3. The Clock on Lifetime Transfer Exemptions and Gift Tax Windows

The federal gift and estate tax rules are subject to change. The current lifetime gift and estate tax exemption (the amount you can transfer without gift or estate tax) could be under pressure or altered in future legislative sessions. Delaying your transfers may expose you to a diminished exemption later or new restrictions.

By planning ahead now:

• You can begin utilizing portions of your lifetime gift exemptions in a thoughtful, phased manner—making annual gifts, structured transfers, or contributions to trusts (e.g., grantor retained annuity trusts, or GRATs).
  
• You might shield future appreciation from your estate by moving value now. The earlier the move, the greater the compounding of tax savings on appreciation.
  

Because legislative wheels turn slowly, acting now insulates you from potential tightening of rules or lower thresholds in the future.

4. Estate Planning Complexity Requires Time

Estate planning for business owners is seldom “fill in the form and done.” There are many moving parts:

• Choosing the right entity structure (LLC, S corporation, C corporation, partnerships)
  
• Drafting buy-sell agreements or shareholder agreements
  
• Valuations, possibly including discounts (like minority interest or lack-of-marketability discounts)
  
• Retaining flexibility for future capital raises or exit strategies
  
• Dealing with family dynamics, founder succession, and liquidity concerns
  
• Ensuring the plan is coordinated with your personal estate plan (wills, trusts, powers of attorney)
  
• Considering state and local tax implications, including any generation-skipping tax traps
  

Delaying means compressing this complicated work into a shorter timeframe, increasing the risk of oversight, errors, or less optimal structures.

5. Aligning Incentives and Cash Flow

Because of the reinstated 100 % bonus depreciation, a business can write off the full cost of eligible assets in the year placed in service (post-January 19, 2025). This immediate deduction can generate significant tax savings or even net operating losses (NOLs) that carry forward. That means:

• More cash flow is available in the short term to fund estate planning vehicles (trusts, life insurance, gifts)
  
• You can structure your business and personal finances more cleanly, making transitions smoother
  
• The “tax benefit tailwinds” are stronger now than they may be later, giving you tailwinds to push more value outward to heirs while costs are lower
  

If you wait until 2026, you may lose part of that depreciation window, or future tax laws may remove it (or reduce it), making those transfers more expensive.

6. Mitigating Risk from Future Changes

Legislators often tinker with tax incentives, depreciation rules, and estate/gift thresholds. What is favorable today may not be favorable tomorrow. By beginning an estate plan now, you:

• Lock in more favorable rules, deductions, or valuations before changes
  
• Gain optionality (you can pause, adjust, or expand plans) rather than being forced into make-it-fast decisions later
  
• Build in “change buffers” or contingencies for shifting tax regimes
  

Rather than guess what Congress will do or hope for favorable rules later, relying on the current environment gives you more control.

Suggested Roadmap: Estate Planning Actions to Take in 2025

1. Engage Experts Early
   Work with attorneys, CPAs, and financial planners familiar with business-owner estate planning and current depreciation law.
   
2. Review Business Structure & Capital Plan
   Determine whether your entity (LLC, S corp, C corp) is optimized for both operational tax efficiency and future transfer flexibility.
   
3. Map Out Succession & Ownership Transfer Paths
   Consider gradual transfers, gifts, trusts (e.g. irrevocable grantor trusts, intentionally defective trusts), or family limited partnerships / LLCs.
   
4. Value Your Business—Now and Forward
   Commission or update formal valuations. Incorporate discount strategies where appropriate. Use this as a baseline for transfer planning.
   
5. Use Depreciation Incentives Strategically
   Acquire eligible assets now (or plan timing) so that bonus depreciation yields benefits you can channel into your estate-planning goals.
   
6. Layer in Flexibility & Change Mechanisms
   Structure plans to allow adjustments in the face of future tax law changes (e.g. “power to adjust” clauses, decanting, or amendment mechanisms in trusts).
   
7. Coordinate Personal & Business Estate Plans
   Ensure your wills, trusts, life insurance, and liquidity needs are aligned with how you’ll pass on business ownership.
   
8. Review & Monitor Annually
   Laws, business conditions, and family situations evolve. Revisit your plan annually or when major changes occur (e.g. acquisitions, exit events, tax law shifts).
   

Conclusion

For business owners, estate planning is not a “nice to do someday”—it is a strategic imperative. With the recent reinstatement of 100% first-year bonus depreciation under OBBBA, favorable depreciation deductions are back on the table. Capitalizing on those opportunities today gives you higher flexibility, stronger tax advantages, and more control over how and when ownership transfers. Delaying until 2026 ignores present incentives, risks legislative shifts, and compresses the time needed to build a robust, adaptive plan.

If your business is thriving, now is the moment to begin implementing your estate plan—not years down the road. The structure you build today may define how smoothly, tax-efficiently, and harmoniously your legacy transfers tomorrow.

_{^{Brown, P. (2025, August 14). OBBBA restores 100% first-year bonus depreciation for businesses. OBBBA Restores 100% First-Year Bonus Depreciation for Businesses.}}