What is the federal estate tax exemption?

For 2026, the federal estate tax exemption is $15 million per individual ($30M for married couples). This exemption was made permanent with inflation adjustments under the OBBBA law.

How can I reduce estate taxes?

Strategies include: charitable giving, gifting during lifetime ($19K/year per person in 2026), irrevocable life insurance trusts (ILIT), family limited partnerships, and qualified personal residence trusts (QPRT).

Does my spouse pay estate tax?

No, transfers to a U.S. citizen spouse are generally tax-free due to the unlimited marital deduction. Estate tax is deferred until the surviving spouse's death.

What assets are included in my estate?

Your estate includes: real estate, bank accounts, investments, retirement accounts, business interests, life insurance proceeds (if you own the policy), and personal property.

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Estate Planning Calculator

Estimate inheritance and estate taxes based on asset value and exemptions with wealth transfer analysis. Features federal estate tax calculations and gift tax limits including state estate taxes, lifetime exemption tracking, generation-skipping transfer tax, and minimization strategies.

How to Use the Estate Planning Calculator

Use the Estate Planning Calculator to inheritance and estate taxes based on asset value and exemptions with wealth transfer analysis. Features federal estate tax calculations and gift tax limits including state estate taxes, lifetime exemption tracking, generation-skipping transfer tax, and minimization strategies.. Enter your values to get accurate, instant results tailored to your situation.

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Estate Planning Guide

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Expert Tips

Estate Tax Exemption $13.6M (2025): Federal estate tax only applies to estates >$13.6M individual, $27.2M married (2025). Below this: No federal estate tax. Only 0.2% of estates pay federal tax. Focus on state estate tax (12 states have it) and avoiding probate, not federal tax unless ultra-wealthy.
Revocable Trust Avoids Probate: Probate costs 3-7% of estate value, takes 6-24 months, is public record. Revocable living trust bypasses probate: Immediate asset transfer, private, costs $1.5K-3K to set up. $500K estate: Probate costs $15K-35K. Trust costs $2K. Save $13K-33K plus time and privacy.
Beneficiary Designations Override Will: Retirement accounts (401k, IRA), life insurance, payable-on-death accounts transfer directly to named beneficiaries—will has no control. Update beneficiaries after marriage, divorce, birth. Ex-spouse named on $500K 401k? They get it even if will says otherwise.
State Estate Taxes as Low as $1M: 12 states have estate/inheritance taxes: Oregon $1M threshold, Massachusetts $2M, NY $6.9M. $2M Oregon estate pays $130K state tax. Same estate in Texas: $0. Consider domicile planning if near thresholds. Moving to no-estate-tax state saves $50K-200K for $2-5M estates.
Guardianship Must Be in Will: Name guardian for minor children in will. Without it: Court decides (can take months, may not align with wishes). Name primary and backup guardians. Discuss with them first to ensure willingness. Update if circumstances change (divorce, relocation, etc.).
Annual Gift Exemption $18K (2025): Give up to $18K/person/year tax-free without eating into lifetime $13.6M exemption. Married couple can give $36K/person. 2 kids: Gift $36K each ($72K total). Over 10 years: Transfer $720K estate tax-free, reduce estate subject to tax.

Essential Fundamentals — Core documents

Essential Documents

Last Will & Testament: Specifies asset distribution, names executor (handles estate), names guardians for minor children. Cost: $300-1,500 DIY/simple attorney draft. Without will: State intestacy laws decide (spouse gets 50-100%, rest to kids/parents). May not match wishes. Update every 3-5 years or after major life events.
Revocable Living Trust: Holds assets during life, transfers immediately on death without probate. You control as trustee while alive. Names successor trustee to distribute on death. Costs $1.5K-3K to create. Saves $15K-35K probate costs (3-7% of estate) plus 6-24 month delay. Must "fund" trust by retitling assets into trust name.
Durable Power of Attorney: Names someone to handle financial decisions if incapacitated. Pay bills, manage investments, file taxes, sell property. Without it: Court-appointed conservator (expensive, slow, public). Must be "durable" (survives incapacity). Cost: $200-500. Essential for everyone 18+.
Healthcare Directive & Proxy: Living will: Specifies end-of-life care wishes (life support, resuscitation). Healthcare proxy: Names someone to make medical decisions if unable. Without it: Family may disagree, court intervention. Cost: $100-300 or free state forms. Discuss wishes with proxy beforehand.

Probate vs Trust

Probate Costs & Timeline: Probate: Court-supervised asset distribution. Costs: 3-7% of estate ($15K-35K on $500K). Timeline: 6-24 months. Public record: Anyone can see assets, beneficiaries. Applies to: Real estate, bank/brokerage accounts without transfer-on-death, personal property titled in your name.
Trust Benefits: Revocable trust bypasses probate. Immediate transfer on death (days, not months). Private (not public record). Avoids probate fees (save $15K-35K on $500K estate). Maintains control while alive (you're trustee, manage assets normally). Can change/revoke anytime. Protects in incapacity (successor trustee takes over, no court conservator).

Advanced Strategies — Tax optimization

Estate Tax Minimization

Annual Gifting Strategy: Give up to $18K/person/year tax-free ($36K if married). Example: 2 kids, 4 grandkids. You + spouse give $36K each = $216K/year transferred tax-free. Over 10 years: $2.16M removed from taxable estate. Plus appreciation on gifted assets goes to beneficiaries, not your estate (further reducing estate tax).
Irrevocable Life Insurance Trust (ILIT): Life insurance proceeds normally included in taxable estate. ILIT owns policy, proceeds go to trust, not estate—estate tax-free. Example: $3M policy in $12M estate (over $13.6M with policy). Standard: $3M taxed at 40% = $1.2M tax. ILIT: $0 tax on insurance. Saves $1.2M. Cost: $2K-5K to set up, must fund with annual gifts.
Portability & Bypass Trusts: Portability: Surviving spouse can use deceased spouse's unused $13.6M exemption (doubles to $27.2M for married). Must file estate tax return within 9 months. Bypass trust: First spouse's $13.6M goes to trust for heirs, second spouse's $13.6M to spouse. Shelters $27.2M even if spouse remarries. Best for estates $15M-30M.

Frequently Asked Questions

What is the federal estate tax exemption?: For 2026, the federal estate tax exemption is $15 million per individual ($30M for married couples). This exemption was made permanent with inflation adjustments under the OBBBA law.
How can I reduce estate taxes?: Strategies include: charitable giving, gifting during lifetime ($19K/year per person in 2026), irrevocable life insurance trusts (ILIT), family limited partnerships, and qualified personal residence trusts (QPRT).
Does my spouse pay estate tax?: No, transfers to a U.S. citizen spouse are generally tax-free due to the unlimited marital deduction. Estate tax is deferred until the surviving spouse's death.
What assets are included in my estate?: Your estate includes: real estate, bank accounts, investments, retirement accounts, business interests, life insurance proceeds (if you own the policy), and personal property.