Newsletter

ESTATE TAXES AND OBBBA – NEW RULES, NEW OPPORTUNITIES

Estate Tax Updates for 2026 and Beyond

The One Big Beautiful Bill Act (OBBBA) permanently increases the federal estate, gift, and generation-skipping transfer (GST) tax exemption to $15 million per person (or $30 million for married couples) starting January 1, 2026, with annual inflation adjustments thereafter. This replaces the previously scheduled rollback to approximately $7 million and provides long-term clarity for estate planning.

Key implications:

• Fewer estates will be subject to the 40% federal estate tax.

• Lifetime gifting strategies can be expanded with renewed exclusion amounts.

• Dynasty trusts and multi-generational planning gain traction with the higher GST exemption.

OBBBA’s Impact on Life Insurance, Annuities & Disability Benefits

OBBBA also introduces new transparency and reporting standards for key benefit categories, helping individuals and employers better understand how these benefits interact with estate planning.

Life Insurance Policies



• Employer-paid group life insurance over $50,000 must be clearly disclosed on employee tax documents.
• Permanent policies with cash value may require additional documentation to determine estate inclusion.
• Irrevocable Life Insurance Trusts (ILITs) remain effective for excluding high-value policies from taxable estates.

Annuities

• Deferred annuities benefit from simplified rollover rules for heirs, potentially deferring taxable gains.
• Lifetime income annuities may be included in estate valuations depending on ownership and beneficiary structure.

Short- And Long-Term Disability Benefits

• Benefits funded with after-tax payroll deductions are favored for preserving tax-free payouts.
• Employers must provide standardized annual statements detailing benefit values and funding sources.
• These changes help clarify whether benefits are taxable during life or after death.

What to Do Now



1. Review beneficiary designations and trust structures.
2. Reevaluate life insurance holdings in light of the increased exemption.
3. Confirm disability coverage funding to ensure optimal tax treatment.
4. Consult with estate planning professionals to align strategies with the new law.

Bottom Line

With OBBBA now law, individuals and families have a powerful opportunity to protect and pass on wealth with greater certainty. The expanded exemptions and benefit reporting reforms make this a pivotal moment for strategic planning. If you’re reviewing your own legacy, now is the time to act.

UNDERSTANDING LONG-TERM CARE POLICIES – A SIMPLE GUIDE

What Is Long-Term Care (LTC)?

Long-term care refers to ongoing support for people who need help with everyday activities due to aging, illness, or disability. These activities include bathing, dressing, eating, and moving around. Care might be provided at home, in an assisted living facility, or a nursing home.

Why It Matters

Most traditional health insurance plans—including Medicare—do not cover long-term care benefits. (Medicare covers skilled nursing care when ordered by a provider but do NOT cover custodial care.) That’s where long-term care insurance comes in. It helps protect your finances and gives you flexibility in choosing how and where to receive care.

What Do Long-Term Care Policies Cover?

Coverage may include:

• In-home care (nurses, aides, therapists)
• Adult day care centers
• Assisted living facility costs
• Nursing home expenses
• Home modifications (e.g. wheelchair ramps)

Each policy has its own rules, so it’s important to review the benefit limits, waiting periods, and qualifying conditions.

How Does It Work?

1. You choose a daily or monthly benefit amount—for example, $150/day.
2. Policies typically have a benefit period (e.g. 2 to 5 years).
3. There may be an elimination period—a waiting time before benefits start (often 30 to 90 days).
4. You qualify for benefits once you're unable to perform a set number of daily activities (usually two out of six).

Why Buy LTC Insurance?

• It helps protect your savings from high care costs.
• Gives you more control over your care choices.
• Can ease the burden on family members.
• May offer tax advantages, depending on your situation.

Things To Consider

• Buy early: Premiums are lower when you're younger and healthier.
• Understand inflation protection: This feature keeps your benefits in line with rising care costs.
• Look into hybrid policies: Some combine life insurance with LTC coverage, offering benefits no matter what.

The Bottom Line

Long-term care insurance isn’t just about preparing for worst-case scenarios—it’s about preserving dignity, independence, and financial stability. If you’re planning for retirement or helping a loved one explore options, learning about LTC policies is a smart move.

WHAT TO LOOK FOR IN A LONG-TERM CARE POLICY

About Paul Cholak

Paul has over forty years of benefits experience and has been Director of Employee Benefits for large companies, as well as a benefits consultant with major consulting firms. He understands the life and health insurance needs of individuals and families of all ages. He also has considerable experience in selling life and health insurance to employer groups.

He guides you through the steps of getting insurance and is available to help you both BEFORE and AFTER you've made your purchase decision.