Navigating the One Big Beautiful Bill Act: Estate Planning Insights

Sweeping legislative changes often bring confusion and concern, especially in sensitive areas like estate planning. The One Big Beautiful Bill Act (OBBBA), signed into law in July, introduces significant changes that can impact your future planning. While it might seem daunting, understanding these changes now can lead to stronger, long-term strategies.

Adapt and Benefit from New Provisions

The OBBBA offers opportunities to adapt your estate planning strategies. Let's explore some key provisions and their impacts.

Fewer Estates Owing Federal Tax

With the OBBBA, only about 0.25% of estates will owe federal estate tax, although state-level taxes may still apply. It's crucial to consider all potential taxes in your planning.

Estate and Gift Tax Exemption Increase

Starting January 1, 2026, individuals can pass on $15 million (or $30 million for couples) without federal estate tax. This increase, subject to annual inflation adjustments, ends uncertainty around phased reductions.

Medicaid Reform and Long-Term Care Planning

The act includes significant Medicaid reforms, with $1 trillion in cuts and stricter eligibility requirements. This makes qualifying for long-term care more difficult, highlighting the importance of private insurance and asset protection strategies.

Social Security Tax Changes

The temporary new deduction of up to $6,000 ($12,000 for seniors over 65) provides opportunities for more untaxed Social Security benefits. This provision expires in 2028 unless renewed, so plan accordingly.

Medicare Budget Impact

Delayed cost-sharing assistance rules and potential $490 billion in cuts to Medicare could mean higher out-of-pocket costs. It's important to prepare for possible reductions in provider access.

No Other Structural Estate Tax Changes

Aside from the higher exemption, the structure of estate, gift, and GST taxes remains unchanged. The provisions from the 2017 Tax Cuts and Jobs Act are locked in.

Though complex, the OBBBA creates a window for proactive, strategic estate planning. Now is the time to review your estate documents, long-term care plans, and tax strategies. Reach out to a trusted advisor for personalized guidance tailored to your unique family and financial situation.