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Estate Planning
"What you leave, and what gets taken"
Most US estates owe nothing — federal exemption is $13.99M ($27.98M MFJ) in 2025. State exposure is the more common bite, and the post-2026 TCJA sunset will roughly halve the federal exemption unless extended. Tools cover federal + state exposure, annual-exclusion gifting, the step-up at death that argues for HOLDING appreciated assets, the SECURE Act 10-year inherited IRA rule, and the QCD strategy for IRA-holding charitable donors. Sources cited throughout; not legal advice.
Estate planning is mostly about the move you skip, not the trust you draft
Most estate-tax savings come from a handful of plain mechanics: gift up to the annual exclusion every year, hold appreciated taxable assets to death (the step-up beats selling and reinvesting), route charitable giving through your IRA after 70½ (QCD), don't tip into the state estate tax via avoidable structuring. Trusts and gilded planning structures get the attention but mostly help estates in the high-eight-figure range. For the typical $5-15M estate, the basic moves shown here cover 80% of the optimization.
Do most people need estate planning?
Not for federal estate tax — fewer than 5,000 federal estate-tax returns owe tax in a typical year (IRS data) against ~3 million annual deaths. The federal exemption is $13.99M individual / $27.98M MFJ in 2025. State exposure is much more common: 12 states + DC have an estate tax with exemptions as low as $1M (Oregon) or $2M (Massachusetts), so a substantial home + retirement account already crosses the threshold. Beyond the tax piece, anyone with minor children needs guardianship designations, and anyone with assets needs beneficiary designations on retirement accounts and life insurance.
How does the gift exclusion work?
The 2025 annual gift-tax exclusion is $19,000 per donor per recipient. Married couples can elect 'gift splitting' on Form 709 to effectively double it to $38,000 per recipient. No gift-tax return required at or below this amount, no lifetime exemption consumed. The strategy compounds quickly: a married couple gifting to 3 children + 5 grandchildren = $304,000/yr sheltered, or $6.08M over 20 years. At the 40% federal estate-tax top rate that's $2.43M saved. Sources: IRC §2503(b), Rev. Proc. 2024-40.
What is the step-up basis at death?
Under IRC §1014, inherited assets reset to fair-market-value cost basis at the original owner's date of death — eliminating ALL prior unrealized appreciation from a tax perspective. Heirs who sell immediately owe essentially zero capital-gains tax. For a $1M stock position bought 20 years ago for $100K held to death at 6% growth, the step-up saves heirs about $577K in LTCG tax (vs the donor selling now and investing the net). The strategic upshot: if you're elderly with appreciated assets and don't need the cash, holding usually beats selling.
What's the SECURE Act 10-year rule on inherited IRAs?
Non-spouse beneficiaries who inherit after 2019-12-31 must empty the inherited IRA within 10 years. No more 'stretch IRA' for non-spouse heirs. Eligible Designated Beneficiaries (spouses, minor children of the deceased until 21, disabled / chronically ill heirs, and heirs within 10 years of the deceased's age) still have lifetime stretch options. Per SECURE 2.0 and IRS Notice 2024-35, annual RMDs during years 1-9 are required for some heirs; the IRS waived penalties on missed 2021-2024 RMDs. Strategy: a tax-aware bracket-filling schedule across the 10 years usually retains the most net.
What's a QCD and who should use one?
A Qualified Charitable Distribution sends money directly from an IRA to a qualified 501(c)(3) public charity. Available from age 70½ (RMD requirement starts at 73 under SECURE 2.0). 2025 limit: $108,000 per individual, indexed since SECURE 2.0. Two advantages: (1) the QCD counts toward your RMD requirement and (2) it doesn't increase AGI — preserving Medicare IRMAA brackets, Social Security taxability, and AGI-tested credits. Standard-deduction retirees gain the most. Standard-deduction filers are ~90% of taxpayers post-TCJA, so the QCD is the more efficient charitable-giving vehicle for most IRA-holding seniors. Source: IRC §408(d)(8), IRS Notice 2023-75.
Are these tools legal advice?
No. They're planning estimates built on published 2025 IRS figures (Rev. Proc. 2024-40, Pubs 559/950/590-B), SECURE Act 2019 + 2.0 (2022), and IRC sections §1014, §2010, §2503, §408(d)(8). They cover federal estate tax + a parametric state estate tax — they don't cover inheritance tax, gift tax filing, generation-skipping transfer tax, or any state-specific quirks. For consequential decisions — trust drafting, large gifts, estate-tax filings — talk to an estate-planning attorney and a CPA. The math here is honest; the structures to implement it are theirs to draft.