Estate Tax and Inheritance Tax 2026: What Happens to Your Assets When You Die

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Estate Tax and Inheritance Tax 2026: What Happens to Your Assets When You Die

Estate Tax and Inheritance Tax 2026: What Happens to Your Assets When You Die

Complete guide to federal estate tax, state inheritance tax, exemptions, and planning strategies to protect your family's wealth.

Estate Tax and Inheritance Tax 2026

Estate planning protects wealth transfer and minimizes tax burden on heirs.

Federal Estate Tax

Exemption: $13.99 million per person ($27.98M married). Tax rate: 18%–40%. Applies only to estates exceeding exemption. Portability: surviving spouse can use unused exemption.

State Estate Tax

12 states + DC impose estate tax. Lower exemptions: Oregon ($1M), Massachusetts ($2M), New York ($7.16M), Washington ($2.2M). Massachusetts: highest effective rate.

Inheritance Tax

Only 6 states: Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania. Spouse and children usually exempt. Unrelated heirs pay highest rates.

Planning Strategies

Irrevocable life insurance trust (ILIT). Gifting program ($19,000/year per recipient). Family limited partnership. Charitable remainder trust. Grantor retained annuity trust (GRAT).

Portability

Must file estate return to claim. Unused exemption transfers to surviving spouse. Election must be made timely.