The estate tax is a federal levy on the total value of a person's assets at death, before distribution to heirs. As of recent law, estates exceeding the federal exemption amount (which has historically fluctuated) are taxed at rates up to 40%.
Many states impose their own estate or inheritance taxes with lower exemption thresholds.
Estate tax planning involves strategies to reduce the taxable estate — gifting during lifetime, funding irrevocable trusts, leveraging marital deductions, charitable giving, and valuation discounts through entity structures.
The exemption amount is not permanent. Legislative changes can dramatically alter the landscape, which is why plans built around current exemptions need built-in flexibility.
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