Estate Tax Guide

Assuming estate tax does not apply to you

While the federal exemption is high ($13.61M), state exemptions can be as low as $1M (Oregon). Life insurance proceeds, retirement accounts, and real estate appreciation can push modest estates into state estate tax territory.

Not electing portability on the first spouse's death

Even if the first spouse's estate owes zero tax, file Form 706 to preserve their unused exemption for the surviving spouse. Failing to elect portability cannot be retroactively fixed after the deadline.

Owning life insurance in your own name

Life insurance death benefits are included in your taxable estate. An Irrevocable Life Insurance Trust (ILIT) can remove the proceeds from your estate entirely. Transfer existing policies or have the trust purchase new ones.

Not updating estate plans when the law changes

The TCJA doubled the exemption in 2018, and it may change again. Estate plans drafted under old exemptions may have outdated trust structures. Review your plan every 3-5 years or whenever major tax law changes occur.

Ignoring state estate taxes

12 states plus DC have their own estate taxes with exemptions as low as $1M. If you live in these states, state estate tax planning is critical even if you are well below the federal exemption.