For the past several years, families and business owners have been planning in a fog. Estate tax exemptions were uncertain. Interest rates were volatile. Tax legislation seemed to change with every news cycle. In that environment, postponing major planning decisions often made sense as you couldn’t plan confidently for a future you couldn’t predict.
That’s changed.
The One Big Beautiful Bill Act brought clarity to estate and gift tax planning that we haven’t had in years. The federal estate and gift tax exemption is now set at $15 million per person ($30 million for married couples with proper portability planning) and is locked in for at least the next four years. Combined with a stabilized interest rate environment and recent improvements to tax-advantaged structures like Private Placement Life Insurance, we’re entering 2026 with something we haven’t had in a while: a clear planning window.
But clarity in the law doesn’t guarantee clarity in your plan. And that’s where the real work begins.
The $15 Million Exemption: What It Means (And What It Doesn’t)
Most people buy insurance to satisfy an obvious need: income replacement, debt protection, business For many families, a $15 million per person exemption feels like relief. “We’re under the threshold. We’re fine.”
Sometimes that’s true. Often, it’s incomplete.
Consider a family that owns a business valued at $18 million, real estate worth $8 million, and investment accounts and retirement plans totaling another $10 million. Their total estate is $36 million…$6 million over the exemption for a married couple. That creates a federal estate tax exposure of roughly $2.4 million.
But the exemption number isn’t what keeps these families up at night. It’s the liquidity problem.
The business and real estate are illiquid. The surviving spouse or heirs can’t simply write a check for the estate tax. So now they’re facing forced asset sales, business loans, or delayed distributions while the estate scrambles to raise cash. Even with a high exemption, lack of liquidity can turn an otherwise solid estate plan into a crisis. (Learn more about how life insurance can provide estate equalization for families with illiquid assets.)
State estate taxes add another layer. Oregon’s exemption is $1 million. Massachusetts is $2 million. Washington is approximately $2.2 million. You can be comfortably under the federal threshold and still face a significant state estate tax bill that catches families by surprise.
The lesson: exemption amounts matter, but they’re only one piece of the puzzle. Liquidity, timing, and coordination across your advisory team matter just as much, and often more.
Why PPLI Is Getting More Attention
Over the past 18 months, we’ve had more conversations about Private Placement Life Insurance (PPLI) than we had in the previous five years combined. There are specific reasons for that.
In 2021, changes to Section 7702 of the Internal Revenue Code made the tax math inside PPLI structures significantly more favorable. More recently, the adoption of Separately Managed Accounts (SMAs) within these policies means wealthy families can now work with their existing money managers rather than being forced into unfamiliar investment platforms.
For families with $10 million or more in investable assets who are frustrated by the annual tax drag on their portfolios, including capital gains, dividends, and interest taxed every single year, PPLI offers a structure where investments can grow tax-deferred, and distributions, when structured properly, can be tax-advantaged or entirely tax-free.
This isn’t a new concept. But it’s become more accessible, more efficient, and more widely understood. Successful families talk to each other, and word has spread.
PPLI isn’t a product you buy off the shelf. It’s a structure you engineer, requiring tight coordination between your attorney, your CPA, your investment advisor, and insurance professionals who understand how the insurance chassis works. It’s also not appropriate for everyone. The complexity and cost need to be justified by meaningful tax savings over a long time horizon.
But for the right families, the math is compelling. And the combination of recent regulatory changes and improved investment flexibility has made 2026 a particularly good year to explore whether PPLI fits into your overall wealth strategy..
What This Looks Like in Practice
Even with a clear tax landscape and sophisticated strategies, we see families run into trouble with what should be straightforward administrative details.
Beneficiary designations are a common example. We recently worked with the estate of a business owner who had a well-drafted trust, competent advisors, and a multi-million-dollar life insurance policy intended to provide liquidity. When he died, we discovered the beneficiary designation still named his ex-wife from a decade-old divorce. The estate litigated for 18 months. Legal fees mounted. The family fought instead of grieving. All because a form wasn’t updated. (Read more about how beneficiary designations can make or break your plan.)
Beneficiary designations override your will. They override your trust. They override everything. And yet, most people review them once when the policy is issued and never again.
Term insurance conversion windows present a similar issue. Many people purchase term coverage in their 40s with the assumption they’ll “figure something out” when the term period ends. By the time they’re in their late 50s or early 60s, health has often changed—diabetes, heart issues, cancer in their medical history. If the policy has a conversion provision and they’re still within the window, they can convert to permanent coverage without new underwriting. If they’re past the deadline, they’re out of options.
These aren’t exotic planning problems. They’re administrative gaps that surface only when it’s too late to fix them easily. A proactive review in early 2026 can prevent costly problems later..
Business Succession: Still a Liquidity Problem
For business owners, succession planning tends to focus on leadership and control. But when the transition actually happens, whether due to death, disability, or an unplanned exit, it becomes a liquidity problem first.
Can the surviving owners buy out the estate? Can the company continue operating without draining working capital? Can the family receive fair value without forcing a sale?
A common scenario: two partners, 50-50 ownership, business valued at $10 million. The buy-sell agreement says the surviving partner buys out the estate for $5 million. Great. Where does that $5 million come from? Borrowing? Draining the business? Bringing in an outside investor?
A plan that’s not funded is just a document. Life insurance turns it into something executable. (Discover why every closely-held business needs a properly funded buy-sell agreement.) And 2026, with its clearer tax environment and stable interest rates, is a good year to make sure your business succession plan is properly capitalized, not just properly documented. For more on the full range of business planning applications, explore the ABCs of life insurance for business owners.
The Year to Act
We’re not suggesting that 2026 is the last chance to get planning done. But it is a window, a period where the variables are clearer than they’ve been in years and where families can make strategic decisions with more confidence and less speculation.
If your estate plan was designed when the exemption was $5 million, or if your buy-sell agreement hasn’t been reviewed since your business doubled in value, or if you’ve been hearing about PPLI and wondering whether it’s real or just noise, this is the year to pull those conversations off the back burner.
Planning done proactively is almost always cleaner, more efficient, and less stressful than planning done reactively. The families who take advantage of clarity while it exists don’t tend to regret it.
If you’d like to talk through where your plan stands and whether any adjustments make sense for 2026, we’re here for that conversation. Reach out anytime.
