Federal lifetime exemption, state estate taxes, gift strategies, and transfer tax planning. Interactive calculators and state-by-state guides covering California, New York, Florida, Texas, Delaware, Oregon, Massachusetts, Rhode Island, and Arizona.
Interactive tools to estimate federal and state estate taxes, track gift tax exclusions, and model TCJA sunset scenarios.
Federal & State Estate Tax Exposure Calculator
Estimate combined federal and state estate tax liability. Includes graduated federal brackets and state-specific calculations for New York, Oregon, Massachusetts, and Rhode Island.
Gross Estate
Total Deductions
Taxable Estate
Federal Exemption Applied
Federal Estate Tax
State Estate Tax
Gift Tax Annual Exclusion Tracker
Track annual exclusion gifts and calculate lifetime exemption impact. The 2024 annual exclusion is $19,000 per recipient ($38,000 if gift-splitting with spouse).
Total Gifts
Within Annual Exclusion
Excess (Requires Form 709)
Lifetime Exemption Used
Remaining Exemption
TCJA Sunset Scenario Planner
Compare estate tax under current exemption vs. post-sunset (~$7M). Model growth and determine whether accelerating gifts before sunset makes sense.
5%
Projected Estate at Death
Tax (Current $13.61M Exemption)
Tax (Post-Sunset ~$7M)
State-by-State Estate Tax Comparison
Interactive comparison of estate tax rules across all 9 covered jurisdictions. Click column headers to sort.
Beneficiary deeds; 500-year dynasty trust; Affidavit of Value
Federal Estate & Gift Tax Rules
Key federal provisions that govern estate and gift tax planning across all states.
Unified Credit & Lifetime Exemption
The federal estate and gift tax system operates on a unified credit that shields a certain amount of lifetime transfers from tax. For 2024, the basic exclusion amount (BEA) is $13,610,000 per person.
This exemption applies to the combined total of lifetime gifts exceeding the annual exclusion and assets passing at death. The tax rate on amounts exceeding the exemption is a flat 40%.
TCJA Sunset — The Critical Deadline
The Tax Cuts and Jobs Act of 2017 Pub. L. 115-97 roughly doubled the exemption from ~$5.49M to ~$11.18M (now inflation-adjusted to $13.61M). This provision sunsets on December 31, 2025 unless Congress acts.
If sunset occurs, the exemption reverts to approximately $7 million (inflation-adjusted from the pre-TCJA $5.49M baseline). The IRS has issued an anti-clawback regulationTreas. Reg. § 20.2010-1(c) confirming that gifts made using the higher exemption will not be recaptured if the exemption later decreases.
2024 exemption: $13,610,000 per person ($27,220,000 per married couple)
Post-sunset (est.): ~$7,000,000 per person (~$14,000,000 per married couple)
Tax rate: 40% on amounts exceeding exemption
Anti-clawback: IRS confirmed gifts using higher exemption are safe
Annual Gift Exclusion
Under IRC § 2503(b), each person may gift up to $19,000 per recipient per year (2024) without any gift tax consequences or reduction of the lifetime exemption. This is the annual gift tax exclusion.
For a married couple using gift splitting under IRC § 2513, the exclusion doubles to $38,000 per recipient. Gift splitting requires both spouses to consent (Form 709 must be filed even though no tax is due).
Present Interest Requirement
The annual exclusion only applies to gifts of a present interest — the donee must have an immediate, unrestricted right to use or enjoy the property. Gifts to trusts generally do not qualify unless the trust includes a Crummey withdrawal power giving beneficiaries a limited window to withdraw the gifted amount.
2024 annual exclusion: $19,000 per donor per donee
Gift splitting: $38,000 per couple per donee (requires Form 709)
Tuition/medical: Unlimited exclusion under IRC § 2503(e) if paid directly to institution
Crummey notices: Required for trust gifts to qualify for annual exclusion
Form 709 Filing Requirements
A gift tax return (Form 709) must be filed whenever gifts to any single recipient exceed the annual exclusion amount, or when gift splitting is elected. The return is due by April 15 of the year following the gift (extensions available).
Adequate Disclosure — Starting the Statute Clock
One of the most critical (and overlooked) aspects of gift tax planning is the adequate disclosure requirement under IRC § 6501(c)(9). If a gift is "adequately disclosed" on a timely filed Form 709, the IRS has 3 years to challenge the valuation. Without adequate disclosure, the statute of limitations never begins to run.
Adequate disclosure requires:
A description of the transferred property and consideration received
The identity of the transferor and each transferee, and their relationship
If the property is held in trust, the trust's EIN and a brief description of terms
Either a qualified appraisal or a detailed description of the valuation method
For discounted gifts (such as interests in family LPs or LLCs), I strongly recommend a qualified appraisal to support the valuation and start the 3-year clock running.
Marital Deduction & Portability
Under IRC § 2056, an unlimited marital deduction allows any amount to pass to a surviving U.S. citizen spouse free of estate tax. This applies to outright transfers and qualifying trust arrangements (QTIP trusts, power of appointment trusts).
Portability of the DSUE Amount
Portability allows the surviving spouse to use any unused exemption of the deceased spouse (the "DSUE amount" — Deceased Spousal Unused Exclusion). This effectively doubles the exemption for married couples without complex trust planning.
To claim portability, the executor must file a timely Form 706 (estate tax return) for the deceased spouse, even if no tax is owed. The IRS issued Rev. Proc. 2022-32 providing a simplified late portability election for estates not otherwise required to file Form 706, available within 5 years of death.
Unlimited marital deduction: Defers all tax until surviving spouse's death
Portability: Surviving spouse inherits unused exemption (requires Form 706)
Late election: Rev. Proc. 2022-32 allows late filing within 5 years
QTIP trust: Provides marital deduction + control over ultimate distribution
Non-citizen spouse: Must use QDOT (Qualified Domestic Trust) for marital deduction
Important: State estate tax portability is not available in New York, Oregon, Massachusetts, or Rhode Island. Only the federal exemption is portable.
Generation-Skipping Transfer (GST) Tax
The GST tax under IRC §§ 2601-2664 imposes a flat 40% tax on transfers that skip a generation (e.g., grandparent to grandchild). The GST exemption mirrors the estate tax exemption ($13.61M in 2024) but is not portable between spouses.
Each person has their own GST exemption that must be affirmatively allocated. Allocation can be automatic (for direct skips and trusts meeting requirements under IRC § 2632) or manual on Form 709.
GST exemption: $13.61M (2024), NOT portable between spouses
GST rate: Flat 40% on generation-skipping transfers
ETIP rule: No GST allocation during Estate Tax Inclusion Period (e.g., grantor retained annuity trusts)
Automatic allocation: Applies to direct skips and GST trusts (can elect out)
Dynasty trusts: Allocate GST exemption to perpetual trust — all future growth is GST-free
Because the GST exemption is not portable, married couples must plan separately to use both exemptions. This is one area where trust planning (e.g., credit shelter trusts or exempt dynasty trusts) remains essential even for couples with moderate estates.
Valuation & Discounts
Estate and gift tax liability depends on the fair market value (FMV) of transferred assets under IRC § 2031 (estate) and IRC § 2512 (gifts). FMV is defined as the price at which property would change hands between a willing buyer and willing seller, both having reasonable knowledge of relevant facts.
Valuation Discounts
Minority interests in closely held businesses and investment entities may qualify for valuation discounts:
DLOM (Discount for Lack of Marketability): Recognizes that interests in private entities cannot be readily sold on a public market. Typical range: 15-35%.
DLOC (Discount for Lack of Control): Minority interest holders cannot force distributions, liquidation, or management decisions. Typical range: 15-30%.
Combined discounts: A minority interest in a family LP might receive combined discounts of 25-40%, significantly reducing the taxable value.
IRS Scrutiny Under Section 2704(b)
The IRS has historically challenged aggressive valuation discounts, particularly for family-controlled entities holding passive assets (marketable securities, real estate). Proposed regulations under IRC § 2704(b) attempted to limit discounts but were withdrawn in 2017. The IRS continues to scrutinize discounts through audit and litigation.
I recommend working with a qualified appraiser (ASA or similar credential) and ensuring adequate disclosure on Form 709 to start the 3-year statute of limitations.
Estate Planning Strategies
Advanced techniques to reduce estate and gift tax exposure while achieving wealth transfer objectives.
Irrevocable Life Insurance Trust
ILIT
Removes life insurance proceeds from the taxable estate. The trust owns the policy and receives death benefits outside the estate, providing liquidity for estate taxes or family support without tax exposure.
Best for: Estates needing liquidity for tax payment
Grantor Retained Annuity Trust
GRAT
Transfer appreciating assets at minimal gift tax cost. The grantor retains an annuity for a fixed term; appreciation above the IRS hurdle rate (Section 7520 rate) passes to beneficiaries gift-tax-free. "Zeroed-out" GRATs are a proven technique.
Best for: Rapidly appreciating assets (pre-IPO stock, growth equity)
Qualified Personal Residence Trust
QPRT
Transfer a personal residence at a discounted gift tax value. The grantor retains the right to live in the home for a fixed term, then the home passes to beneficiaries. The gift value is reduced by the retained interest.
Best for: High-value primary or vacation homes
Family LP / LLC
FLP / FLLC
Consolidate family investments and transfer minority interests at discounted values (DLOM + DLOC). Parents retain control as general partners while gradually gifting limited partnership interests to children.
Best for: Families with significant investment portfolios or real estate
Charitable Remainder Trust
CRT / CRUT
Provides an income stream to the donor (or family) for a term of years or life, with the remainder passing to charity. Provides an immediate income tax deduction and removes assets from the taxable estate.
Best for: Charitably inclined donors seeking income + estate reduction
Dynasty Trust
GST-Exempt Dynasty Trust
Multi-generational trust with GST exemption allocation, allowing wealth to compound free of estate and GST tax for the maximum period allowed by state law. Delaware and Florida offer perpetual or near-perpetual durations.
Best for: Multi-generational wealth preservation (DE=perpetual, FL=1000yr, AZ=500yr)
State-Specific Guides
In-depth guides with state-specific calculators, trap alerts, and planning strategies for each jurisdiction.
Common questions about federal and state estate and gift tax planning.
The federal estate tax exemption for 2024 is $13,610,000 per individual. For married couples using portability, the combined exemption is $27,220,000. This means estates below these thresholds owe no federal estate tax. The exemption is adjusted annually for inflation.
The Tax Cuts and Jobs Act provisions that doubled the estate tax exemption are scheduled to sunset on December 31, 2025. If Congress does not act, the exemption will revert to approximately $7 million per person (inflation-adjusted from the pre-TCJA $5.49M baseline). The IRS has confirmed through the anti-clawback regulation (Treas. Reg. § 20.2010-1(c)) that gifts made using the higher exemption will not be recaptured after sunset.
For 2024, the annual gift tax exclusion is $19,000 per donor per recipient. Married couples can double this to $38,000 per recipient through gift splitting (which requires filing Form 709). Gifts within the exclusion amount do not reduce the lifetime exemption or require a gift tax return (unless gift splitting is elected). Additionally, direct payments for tuition or medical expenses under IRC § 2503(e) are excluded without limit.
Among the 9 states covered in this hub, four have a state-level estate tax: New York ($6.94M exemption, up to 16%), Oregon ($1M exemption, up to 16%), Massachusetts ($2M exemption, up to 16%), and Rhode Island (~$1.84M CPI-indexed exemption, up to 16%). California, Florida, Texas, Delaware, and Arizona do not impose a state estate tax. Nationally, 12 states plus Washington D.C. impose an estate tax, and 6 states impose an inheritance tax.
An estate tax is levied on the total value of the deceased person's estate before distribution. An inheritance tax is levied on the individual beneficiaries based on what they receive. The 9 states in this hub impose estate taxes (NY, OR, MA, RI) or no death tax at all — none of these 9 states impose an inheritance tax. States with inheritance taxes include Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.
Portability allows the surviving spouse to use any unused federal estate tax exemption of the deceased spouse (the DSUE amount). If the first spouse dies with a $5M estate and a $13.61M exemption, the surviving spouse can claim the unused $8.61M, effectively having a $22.22M exemption. To claim portability, the executor must file Form 706 (estate tax return) for the deceased spouse, even if no tax is owed. The IRS issued Rev. Proc. 2022-32 allowing late portability elections within 5 years of death. Important: portability applies only to the federal exemption — no state with an estate tax offers portability.
The Generation-Skipping Transfer (GST) tax is a separate 40% tax on transfers that skip a generation (e.g., grandparent to grandchild). It exists to prevent wealthy families from avoiding one layer of estate tax by skipping a generation. Each person has a $13.61M GST exemption (2024), but critically, the GST exemption is NOT portable between spouses. This means both spouses must independently allocate their GST exemptions through proper trust planning.
New York has a unique and devastating "cliff" provision. If a New York taxable estate exceeds 105% of the exemption ($7,287,000 in 2024, i.e., 105% of $6.94M), the entire exemption is lost and the estate is taxed from the very first dollar. For example, an estate of $6.94M owes $0 in NY estate tax. An estate of $7.3M (just slightly over the cliff) could owe over $500,000. This cliff makes New York estate tax planning particularly critical.
Oregon has the lowest estate tax exemption in the nation at just $1,000,000. This exemption has not been adjusted for inflation since 2012 and applies to the total estate (including real property, retirement accounts, life insurance proceeds, etc.). With Portland-area home values routinely exceeding $500K-$800K, many middle-class Oregon families are exposed to state estate tax. Oregon does not have a gift tax, so lifetime gifting is an effective strategy to reduce the taxable estate below the $1M threshold.
In community property states (California, Texas, Arizona, and 6 others), both halves of community property receive a step-up in basis to fair market value when one spouse dies, under IRC § 1014(b)(6). In contrast, in common law states, only the decedent's half receives a step-up. For example, if a couple in California bought stock for $200,000 that's now worth $2,000,000, the entire $2M gets a new basis at first death — eliminating $1.8M in potential capital gains. In a common law state, only $900K of gains would be eliminated.
A Grantor Retained Annuity Trust (GRAT) is an irrevocable trust where the grantor transfers assets and retains an annuity payment for a fixed term. If the assets appreciate faster than the IRS assumed rate (the Section 7520 rate), the excess growth passes to beneficiaries free of gift and estate tax. A "zeroed-out" GRAT sets the annuity payments equal to the value transferred plus the assumed interest rate, so the taxable gift is approximately zero. If the assets outperform the hurdle rate, the excess passes tax-free. The main risk is that the grantor must survive the trust term.
A dynasty trust is a long-term irrevocable trust designed to benefit multiple generations without incurring estate or GST tax at each generational transfer. The trust is funded with the grantor's GST exemption, so all future growth and distributions are exempt from the 40% GST tax. State law determines how long the trust can last: Delaware allows perpetual trusts, Florida up to 1,000 years, Arizona up to 500 years, Texas up to 300 years, while California limits trusts to approximately 90 years.
Generally, no. If your gifts to any single recipient are within the annual exclusion ($19,000 in 2024), no Form 709 is required. However, you must file Form 709 if: (1) you elect gift splitting with your spouse (even if total gifts per couple are within $38,000 per recipient), (2) any single gift exceeds $19,000, (3) you make gifts of future interests (not qualifying for the exclusion), or (4) you want to adequately disclose a gift to start the 3-year statute of limitations.
Valuation discounts (DLOM for lack of marketability, DLOC for lack of control) are still permitted, though the IRS scrutinizes them closely. These discounts recognize that a minority interest in a private entity is worth less than a pro-rata share of the entity's underlying assets. Combined discounts of 25-40% are common. The IRS withdrew proposed regulations under Section 2704(b) that would have restricted discounts, but continues to challenge aggressive discounts through audit and litigation. A qualified appraisal from an accredited appraiser is essential to support any discount position.
The anti-clawback regulation (Treasury Regulation § 20.2010-1(c)) provides that if a taxpayer makes gifts using the current higher exemption ($13.61M), and the exemption later decreases (e.g., after TCJA sunset), the IRS will not retroactively tax those gifts. This means it is safe to make large gifts before sunset — even if the exemption drops to ~$7M, gifts properly made under the higher exemption will not be recaptured. This is one of the strongest arguments for accelerating gifting strategies before the potential sunset.
The unlimited marital deduction applies at both the federal and state level — assets passing to a surviving U.S. citizen spouse are fully deductible. However, the deduction only defers the tax until the surviving spouse's death. Without portability at the state level (no state covered here offers it), the first spouse's state exemption is "use it or lose it." This creates planning opportunities: a credit shelter trust funded at the first death with an amount equal to the state exemption can preserve both spouses' state exemptions while the marital deduction defers the remainder.
A DING (Delaware Incomplete Non-Grantor) trust is a strategy where a resident of a high-tax state creates an irrevocable trust in Delaware. The trust is structured so the gift is "incomplete" (no gift tax) but the trust is treated as a separate taxpayer for state income tax (Delaware does not tax non-resident trust income). This can save residents of states like New York (10.9%), New Jersey (10.75%), or Oregon (9.9%) significant annual income taxes. However, California closed this strategy with SB 131 effective January 1, 2023 — California residents cannot use DING trusts to avoid CA income tax.
Yes, but careful planning is needed. The NY cliff threshold is 105% of the exemption ($7,287,000 in 2024). Strategies include: lifetime gifting (but note NY's 3-year clawback for gifts made within 3 years of death to NY residents), charitable bequests, marital deduction planning, and purchasing life insurance in an ILIT to replace the wealth transferred out. Because of the 3-year clawback, gifts must be made well in advance of death to be effective for NY purposes. Federal anti-clawback rules do not help with the state-level clawback.
For individuals with estates between approximately $7M and $13.61M, accelerating gifts before a potential sunset makes strong financial sense. The anti-clawback regulation ensures gifts made under the current higher exemption will not be taxed retroactively. Strategies include: direct gifts, funding irrevocable trusts (SLATs, dynasty trusts), GRATs, and contributing to family LPs/LLCs followed by gifting interests. I recommend consulting with a tax professional to model the specific savings and ensure proper documentation.
Adequate disclosure on Form 709 is the mechanism that starts the 3-year statute of limitations for IRS challenges to gift valuations. Under IRC § 6501(c)(9), if a gift is not adequately disclosed, the IRS can challenge the valuation at any time — even decades later. This is particularly important for discounted gifts (family LP/LLC interests, closely held business interests) where the IRS frequently disputes valuations. Adequate disclosure requires detailed information about the transfer, the valuation method, and ideally a qualified appraisal.
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I'm Sergei Tokmakov, Esq. I help clients navigate estate and gift tax planning across multiple jurisdictions. My rate is $240/hr.
