Death and Taxes, Right?

The Estate Taxes Hub

Estate taxes can feel overwhelming, but understanding them is key to protecting your legacy. This hub provides clear guidance, practical tools, and expert insights to help you plan effectively, minimize tax burdens, and ensure your estate is handled with care.

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Frequently Asked Questions About Estate Taxes

The estate tax is a tax imposed on the transfer of property upon a person’s death. It applies to the total value of the deceased's assets, including cash, real estate, investments, and other property, before distribution to heirs.

The federal estate tax exemption amounts are adjusted annually for inflation. For 2024, the exemption is $13.61 million per individual. In 2025, it is set to increase to $13.99 million per individual.

This means that estates valued below these thresholds are not subject to federal estate taxes.

However, significant changes are anticipated after 2025. The current higher exemption levels, established by the Tax Cuts and Jobs Act of 2017, are scheduled to expire on December 31, 2025. Without legislative action, the exemption is expected to revert to pre-2017 levels, adjusted for inflation, which could be approximately $7 million per individual.

It's important to note that some states impose their own estate or inheritance taxes with lower exemption thresholds. For example, Massachusetts has a state estate tax exemption of $2 million.

  • Estate Tax: Paid by the estate before assets are distributed to heirs.
  • Inheritance Tax: Paid by the individual receiving the inheritance. Only a few states impose inheritance taxes.

States such as Oregon, Washington, Massachusetts, and New York impose state-level estate taxes. Each state has its own exemption limits and tax rates.

Some strategies to reduce estate taxes include:

  • Using trusts (e.g., irrevocable life insurance trusts)
  • Gifting assets during your lifetime (up to the annual gift tax exclusion)
  • Leveraging the marital deduction for transfers to a spouse
  • Charitable donations
Jointly owned property may be included in the estate depending on how ownership is structured (e.g., joint tenancy vs. tenancy in common). The rules vary by state and relationship to the deceased.
Portability allows a surviving spouse to inherit the unused portion of their deceased spouse’s federal estate tax exemption. This means the surviving spouse can potentially shield more assets from taxation.
Life insurance proceeds are generally not subject to income tax but may be included in the estate’s taxable value if the deceased owned the policy. Using an irrevocable life insurance trust can help exclude it from the estate.
Estate taxes are calculated based on the total value of the estate that exceeds the exemption limit. Federal rates range from 18% to 40%, while state rates vary.
Estate taxes are generally due nine months after the date of death. An automatic six-month extension may be requested, though payment of taxes due must still be made by the original deadline.
While not required, consulting with an estate planning attorney or tax professional is highly recommended to navigate complex estate tax laws and maximize tax-saving opportunities.
You can estimate your estate’s taxable value by calculating the total worth of your assets and subtracting applicable exemptions. Consulting a financial advisor or tax professional can provide a more accurate assessment.

Resources

You shouldn’t have to navigate the complexities of estate taxes on your own. Fortunately, we have resources to guide you every step of the way.

Find An Estate Tax Professional Near You

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Disclaimer: The information provided on this page is for general informational purposes only and should not be considered legal advice. Please consult with a qualified attorney for advice specific to your situation.