Estate Tax
Until recently, much tax uncertainty surrounded estate planning. The Tax Cuts and Jobs Act doubled the federal gift and estate tax exemption to an inflation-adjusted $10 million, but only for 2018 through 2025.
Fortunately for those with larger estates, in 2025, legislation was signed into law that increases the exemption to $15 million for 2026, with annual inflation adjustments going forward — and no expiration date.
While individual taxpayers currently cannot claim miscellaneous itemized deductions through 2025, certain deductions for estates and non-grantor trusts remain available under IRS guidance. This distinction is critical for fiduciaries, estate administrators, and beneficiaries navigating tax filings.
Payable-on-death (POD) accounts can be a quick, simple, and inexpensive way to transfer assets outside of probate. They can be used for bank or credit union accounts, certificates of deposit, and even brokerage accounts. Setting up such an account is as easy as providing the financial institution with a signed POD beneficiary designation form. Upon your death, your beneficiaries need to present identification to the bank, with a certified copy of a death certificate, and the money or securities will be theirs.
At one time, life insurance played a much more significant part in an estate plan than it does now. Why? Families would often use life insurance payouts to pay estate taxes. But with the federal gift and estate tax exemption at $13.61 million for 2024, far fewer families currently are affected by the estate tax.
What Is the Net Investment Income Tax?
While the Net Investment Income Tax (NIIT) most often affects wealthier individuals, in certain circumstances, it can also affect moderate-income taxpayers whose income increases significantly in a given tax year.
Starting October 28, a new $67 user fee will apply to any estate that requests an estate tax closing letter for its federal estate tax return. This closing letter is formally referred to as IRS Letter 627.
