How Business Owners and High-Net-Worth Families Can Use Life Insurance Under the 2025 Tax Reform

As the dust settles on the landmark One Big Beautiful Bill (OBBB) of 2025, the financial planning landscape for 2026 and beyond has fundamentally changed. For business owners and high-net-worth families, the message is clear: the era of uncertainty is over. Many provisions once considered temporary are now permanent, creating clarity, and with clarity comes opportunity. The real question is no longer what might change, but how to lock in protection, liquidity, and legacy under the new rules.

At TRC Financial, we view tax reform through a specific lens:
How does this impact long-term wealth protection, estate liquidity, and multi-generational planning? Here’s what the 2025 Tax Reform means, and why strategic life insurance planning is more important than ever.

The End of "Sunset" Anxiety Enables Long-Term Legacy Planning

For years, families delayed major planning decisions due to uncertainty around the expiration of the 2017 Tax Cuts and Jobs Act. The 2025 reform resolves much of that anxiety by making key provisions permanent.

This stability allows families to implement long-term life insurance and trust strategies without fear that a sudden tax change will undermine years of planning. When rules are predictable, life insurance structures can be designed with confidence - properly funded, efficiently owned, and aligned with generational goals.

Certainty is the foundation of effective legacy planning.

Business Growth Creates New Life Insurance and Liquidity Needs

The restoration of 100% bonus depreciation and expanded Section 179 expensing (up to $2.5 million) incentivizes businesses to reinvest aggressively. But growth also introduces risk:

• Increased enterprise value

• Greater dependence on key individuals

• More complex succession and liquidity planning

Life insurance plays a critical role here, whether to protect the business, fund buy-sell agreements, provide executive benefits, or ensure liquidity for heirs when business value outpaces available cash.

Tax efficiency fuels growth. Life insurance ensures continuity.

R&D Expensing Accelerates Value - Life Insurance Protects It

By reinstating immediate deductions for domestic Research & Experimental (R&E) expenditures, the 2025 reform improves cash flow and accelerates enterprise value creation. As companies become more valuable, the stakes rise:

• Estate exposure increases

• Liquidity gaps widen

• Planning mistakes become more costly

Strategically structured life insurance helps convert illiquid business value into tax-advantaged liquidity, ensuring that innovation benefits not only the business, but the family behind it.

The $15 Million Estate Tax Exemption: A Rare Planning Window

The federal estate and gift tax exemption remains at $15,000,000 per person, placing today’s environment among the most favorable in history for wealth transfer planning. For families focused on preserving legacy, this is a powerful moment to:

• Leverage gifting strategies

• Fund trusts efficiently

• Secure life insurance outside the taxable estate

Life insurance remains one of the most effective tools for creating estate liquidity, equalizing inheritances, and ensuring that taxes don’t force the sale of family assets. High exemptions reduce friction. Life insurance eliminates uncertainty.

Pass-Through Clarity Reinforces the Need for Integrated Planning

The extension of the 20% Qualified Business Income (QBI) deduction benefits pass-through business owners, but it also reinforces the importance of aligning entity planning with personal wealth and estate strategies.

At TRC Financial, we help clients ensure their life insurance planning evolves alongside business structure, income, and estate exposure - rather than becoming outdated or misaligned over time.

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Why "Good Enough" Planning Falls Short - Use Life Insurance Under the 2025 Tax Reform

Tax reform has created opportunity, but also complexity. Permanent depreciation, R&D expensing, high estate exemptions, and business growth all intersect in ways that demand intentional planning. Life insurance is no longer just a hedge against risk; it is a strategic financial asset - used to:

• Protect wealth

• Create tax-efficient liquidity

• Preserve legacies across generations

At TRC Financial, protecting wealth and preserving legacy is not a slogan, it is the lens through which we evaluate every planning decision.

The new tax environment rewards those who plan early and plan deliberately. Is your current life insurance and estate strategy optimized under the 2025 Tax Reform? Schedule a strategy session to review how you can use life insurance to protect your wealth and your legacy.

This material and the opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. The tax and legal references attached herein are designed to provide accurate and authoritative information with regard to the subject matter covered and are provided with the understanding that neither TRC Financial, nor M Financial are engaged in rendering tax, legal, or actuarial services. If tax, legal, or actuarial advice is required, you should consult your accountant, attorney, or actuary. Neither TRC Financial, nor M Financial should replace those advisors.