Section 1:

The $15 Million Estate Exemption Is Now Permanent

What Happened:

As of January 1, 2026, the federal estate and gift tax exemption has officially risen to $15 million per individual ($30 million for married couples). This is up from $13.99 million in 2025.

The big news? It's permanent. Unlike the 2017 Tax Cuts and Jobs Act (which had a sunset clause), the One Big Beautiful Bill Act made this exemption increase permanent with no expiration date. Starting in 2027, it will be indexed for inflation annually.

[Source: IRS.gov]

Why This Matters for Your Wallet:

Here's the math: If your estate is worth less than $15 million (or $30 million combined for a married couple), your heirs will pay $0 in federal estate tax. Above that threshold? A brutal 40% tax rate kicks in.

For most families, this is great news. But here's what the headlines don't tell you:

• State estate taxes still apply. 12 states + DC have their own estate taxes with MUCH lower thresholds. New York's exemption is only $7.35 million and if you're over 105% of that, you lose the exemption entirely.

• Medicaid doesn't care about estate tax exemptions. Even if your estate passes tax-free to your kids, Medicaid Estate Recovery (MERP) can still seize your home to recoup nursing home costs. That $15M exemption protects you from the IRS, not from a $287,000 MERP lien.

• Lawsuits don't respect exemptions either. A $15M estate tax exemption doesn't stop a creditor judgment from attaching to every dollar you own.

Lambergg Interpretation:
"Estate tax planning and asset protection planning are NOT the same thing. One protects you from the IRS at death. The other protects you from everyone else while you're still alive."

The families who truly protect their wealth understand this distinction. They use both estate tax strategies (like portability elections and lifetime gifting) and asset protection structures (like irrevocable trusts under 11 U.S.C. § 541(b)(1)) to create a complete shield.
The $15M exemption is a gift. Don't let it lull you into a false sense of security.

Section 2: 

When "Power of Attorney" Becomes Power to Steal

We came across a heartbreaking discussion this week that illustrates one of the most common and devastating, forms of elder financial abuse.

The Story:

A 78-year-old widower in Ohio had a minor health scare and was hospitalized for observation. His nephew, who had been "helping out" with errands, arrived at the hospital with flowers and an offer: "Uncle, let me help manage your bills while you recover. I just need you to sign this power of attorney."

The uncle signed. Within six months, the nephew had drained $340,000 from his uncle's accounts, transferred the family vacation home into his own name, and liquidated a brokerage account worth $180,000.

By the time the uncle's daughter discovered what happened, the nephew had spent most of the money. When she confronted him, he claimed:
"Uncle gifted it to me as an early inheritance."

Total loss: $520,000+ nearly everything the uncle had saved over a lifetime.

The Lesson:

A Power of Attorney (POA) is one of the most powerful legal documents you can sign. It gives another person the authority to:

• Access all your bank accounts

• Sell your real estate

• Liquidate investments

• Transfer property into their own name

• Open lawsuits, sign contracts, and change beneficiaries

In the wrong hands, it's not a power of attorney, it's a license to steal.

The Fix:

If you have a POA in place (or are creating one), here are three safeguards:

1. Require co-agents for major transactions. Structure your POA so that any transaction over $10,000 requires TWO agents to sign off, not just one.

2. Add a "watchdog" provision. Name a trusted third party (like an accountant or attorney) who must receive copies of all financial statements and transactions monthly.

3. Keep your POA on file with your attorney, not with the agent. Only release it when it's actually needed. A POA sitting in a nephew's drawer is a POA waiting to be abused.

"Trust is earned, but documents should verify."

Section 3:

THE PROTECTION TOOLKIT

The "5-Year Lookback" Trap (And How to Sidestep It)

With nursing home costs now averaging $119,340 per year nationally ($327/day for a shared room), understanding Medicaid's "look-back period" isn't optional, it's survival.

Here's how it works and what most people get wrong.

THE RULE

When you apply for Medicaid to cover nursing home care, the state reviews every financial transaction you've made in the past 60 months (5 years). If you gave away assets money to grandchildren, a house to your daughter, a car to your son, Medicaid assumes you did it to qualify for benefits.

The penalty? A "penalty period" during which Medicaid won't pay for your care, even though you've already given away the money. The formula varies by state, but a $100,000 gift could mean 10+ months of ineligibility.

And here's the cruel part: that penalty period doesn't start until you're already in the nursing home and otherwise eligible. You're stuck paying out-of-pocket until it expires.

WHAT MOST PEOPLE GET WRONG

• "I'll just wait 5 years after transferring assets." True but can you guarantee you won't need a nursing home in the next 5 years? At age 75, you have a 50%+ chance of needing long-term care.

• "I'll put my house in my kids' names." This triggers look-back violations, exposes your home to your children's creditors and divorces, and can create capital gains tax disasters when they sell.

• "My living trust protects me from Medicaid." No. A revocable living trust is invisible to Medicaid. They see right through it.

THE SMARTER APPROACH

There are legally sound strategies to protect assets from Medicaid while preserving access and control but they require proper structure and proper timing. Here are three options worth knowing about:

1. Medicaid Asset Protection Trusts (MAPTs): Irrevocable trusts that remove assets from your estate while allowing you to live in your home and benefit from trust income. Must be funded 5+ years before you need care.

2. Lady Bird Deeds (in applicable states): A special type of deed that lets you keep full control of your home while alive, but transfers it automatically to your heirs upon death, avoiding both probate AND Medicaid estate recovery.

3. Bulletproof Trust Structure (11 U.S.C. § 541(b)(1)): A federal carve-out that excludes trust assets from bankruptcy estates and by extension, from most creditor attacks including some Medicaid recovery efforts in probate-only states.

The key insight: The best time to implement these strategies is before you need them. Once a health crisis hits, your options narrow dramatically.

Questions about which strategy fits your situation?
Everyone's circumstances are different, family structure, state laws, asset types, and health status all play a role in determining the right approach.

If you'd like to talk through your specific situation with an asset protection specialist, we offer a free 45-minute clarity call where you can ask questions, discuss your goals, and get pointed in the right direction.

→ Schedule Your Free Clarity Call ←

Section 4:

ON THE RADAR

IRS Filing Season Opens Today

Quick reminder: The 2026 tax filing season officially opens Monday, January 26, 2026. Deadline: April 15, 2026.

Three things to watch:

• New Schedule 1-A: Required for claiming the new deductions (no tax on tips, overtime, car loan interest, and the $6,000 senior bonus deduction).

• IRS workforce concerns: The IRS workforce has been reduced by 26% since 2025. The National Taxpayer Advocate has warned of potential delays. File early to avoid the crush.

• Paper refund checks phasing out: Make sure your direct deposit info is current. The IRS is moving toward electronic-only refunds.

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DISCLAIMER: This newsletter is for educational purposes only. Lambergg provides asset protection education, not legal advice. The information presented reflects general principles and may not apply to your specific situation. Tax laws, estate planning rules, and asset protection strategies vary by state and change frequently. Always consult with a qualified attorney and tax professional for advice tailored to your individual circumstances. Nothing in this briefing should be construed as creating an attorney-client relationship.

Until next week, protect what matters.

The Lambergg Team