The One Big Beautiful Bill (OBBBA), signed into law on July 4, 2025, introduced sweeping federal tax changes that impact estate and gift planning. While many of these updates appear favorable at first glance, Minnesota residents face unique state-level challenges that require thoughtful coordination.

“On the surface, these changes look like good news,” says Echo Huang, CFA, CFP®, CPA, founder and president of Echo Wealth Management. “But Minnesota’s estate tax rules remain restrictive, and we’ve been guiding our clients through strategic adjustments all year.”

A key change in the OBBBA is the permanent increase of the federal estate and gift exemption to $15 million per person ($30 million per couple) beginning January 1, 2026. In contrast, Minnesota’s exemption remains at $3 million per person ($6 million per couple).

“That’s a significant gap,” Echo explains. “Clients need proactive estate strategies to avoid substantial Minnesota estate taxes.”

For married couples with taxable estates above the Minnesota threshold, Echo recommends a Spousal Lifetime Access Trust (SLAT).

“A SLAT enables you to transfer assets in a tax-advantaged way while giving your spouse access to those funds if needed,” she says. “This keeps assets growing outside your estate while maintaining flexibility.”

SLATs also allow investment income to be taxed on the grantor’s return, helping assets accumulate more efficiently. Echo recommends this strategy for clients with at least $1 million in surplus capital, determined through in-depth cash flow analysis using the Echo Dashboard.

“It’s a strategy that justifies the cost of legal work and filing a gift tax return—especially given the potential estate tax savings in Minnesota.”

Unlike federal law, Minnesota does not allow exemption portability. If a spouse dies without using their $3 million exemption, it’s lost.

“To prevent that,” Echo says, “we use credit shelter trusts or marital trusts to ensure each spouse’s exemption is fully utilized.”

For instance, consider a couple—Paul and Amy. Paul is a corporate executive with a $7 million estate, while Amy, a stay-at-home mother, has a $1 million estate. If Amy passes away first, she would only use $1 million of her $3 million Minnesota exemption, wasting the remaining $2 million. When Paul later passes, only his $3 million exemption would apply. Minnesota estate tax rate starts at 13% and can go up to 16%. To avoid wasting any estate exemption, Echo Wealth Management works with clients to rebalance ownership so both spouses fully use their exemptions.

Echo Wealth Management develops estate plan implementation checklists and works with clients to rebalance ownership and align strategies with their goals.

“For most clients, this is the easiest way to reduce their estate while seeing the joy of giving,” Echo says. The federal annual gift tax exclusion in 2025 is $19,000 per recipient. A couple with two children and three grandchildren can gift up to $190,000 per year collectively without triggering gift tax filings.

“This is a great way to reduce your taxable estate—and it’s completely filing-free,” she notes. “We typically recommend this before more complex tools like SLATs.”

At Echo Wealth Management, we don’t just respond to tax law changes—we integrate them into a larger, client-specific financial picture. We collaborate with estate attorneys, tax professionals, and use tools like the Echo Dashboard to help our clients maximize tax efficiency while protecting their wealth across generations.

Our next blog will cover more OBBBA-related strategies and their implications for high-net-worth Minnesotans.

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