Estate Tax Update: Relief for Many, But Planning Still Crucial
The recent passage of the “One Big Beautiful Bill” sets the federal estate tax exemption at a robust $15 million per individual ($30 million per couple). This significant increase offers peace of mind for many families who previously worried about federal estate tax liability.
However, understanding how the IRS calculates your gross estate remains critically important. Your gross estate isn’t just your home or savings—it encompasses a broad array of assets, including:
- Real Estate: Primary residences, vacation homes, and investment properties.
- Life Insurance Proceeds: If you own the policy, the payout is included in your estate, potentially inflating its value significantly.
- Retirement Accounts: IRAs, 401(k)s, pensions, and other retirement assets are fully counted toward your gross estate.
- Family-Owned Businesses: The full market value of closely-held or family businesses is included in estate valuations.
- Personal Property: Vehicles, jewelry, art collections, and other valuables can add substantial value to your estate.
These assets, individually modest, can collectively push an estate closer to—or beyond—thresholds over time. Even families currently well below the $15 million exemption can find themselves approaching taxable levels due to appreciation, inheritance, or unexpected life events.
Why Estate Planning Remains Important:
- Asset Protection: Safeguard your assets against unexpected growth or future law changes.
- Probate Avoidance: Proper planning can help your family avoid lengthy and costly probate processes.
- Peace of Mind: Clarifying your wishes ensures a smoother transition of your assets to your loved ones.
While there’s no immediate urgency for families below the new exemption threshold, staying proactive by regularly reviewing your estate plans with a qualified financial advisor or estate planning attorney is always wise. Keeping a comprehensive view of your gross estate will ensure lasting financial security for you and future generations.
Disclaimer:
The information provided in this post is for educational and general informational purposes only and does not constitute legal, tax, financial, or other professional advice. Laws, regulations, and interpretations are subject to change frequently and may vary by jurisdiction. You should not rely solely on this information when making decisions affecting your personal circumstances. Please consult with a qualified attorney, tax advisor, or financial professional for advice specific to your situation. The transmission or receipt of this information does not create an attorney-client relationship or any other professional relationship. This post may be considered advertising under applicable state laws.
