Navigating the One Big Beautiful Bill Act: Estate Planning Insights

Understanding Estate and Gift Tax Exemption Increases

Significant changes are on the horizon with the One Big Beautiful Bill Act (OBBBA), introducing an opportunity in estate planning starting January 1, 2026. Individuals will be able to pass on up to $15 million, or $30 million for couples, without incurring federal estate tax, with adjustments for inflation each year. This much-anticipated increase eliminates prior uncertainties concerning phased reductions, rendering a clear pathway for estate planning.

Medicaid Reform and Long-Term Care Planning Alert

OBBBA introduces $1 trillion in federal Medicaid cuts, new work or volunteer requirements, and stricter eligibility verifications. These adjustments will likely complicate the qualification process for long-term care support. Proactively consider private insurance and robust asset protection strategies to navigate this evolving landscape effectively.

Social Security Tax Changes Could Benefit Seniors

New in the Act is a temporary deduction—up to $6,000 for individuals and $12,000 for couples over 65, applicable under certain income thresholds until 2028. This change may increase the number of seniors with untaxed Social Security benefits, presenting a short-term window for strategic retirement planning adjustments.

Fewer Estates Subject to Federal Tax, but Mind the State Level

Post-OBBBA, only about 0.25% of estates will owe federal tax, underscoring substantial tax relief for many families. However, estate planners should remain vigilant about state-level taxes, which could still apply and require attention in individual estate strategies.

Impact on Medicare Budget and Future Planning

Key Medicare cost-sharing assistance rules will face a delay until 2034, coupled with a potential $490 billion in cuts. If PAYGO rules are triggered, expect potential increases in out-of-pocket expenses and reductions in provider availability. Staying informed on these shifts can help in planning healthcare expenditures thoughtfully.

No Fundamental Shifts in Estate Tax Structure

Beyond the exemption increase, the structure of estate, gift, and GST taxes remains stable, retaining provisions from the 2017 Tax Cuts and Jobs Act. This consistency allows individuals to form long-term planning strategies without looming changes to foundational tax laws. Proactively adjusting your estate planning strategies in light of these changes can present new opportunities and mitigate emerging challenges. Reviewing estate documents, long-term care plans, and tax strategies with a trusted advisor can help tailor your approach to these legislative alterations. The OBBBA might add complexity, but it also opens a window for strategic estate planning that suits unique personal and financial circumstances.