Planning Considerations for State Death Taxes

With the federal estate tax exemption now at $15 million per person, most households will not face federal transfer taxes. Even so, state estate and inheritance taxes can still create meaningful costs for families with far lower wealth levels.

This matters most in states with low exemptions, no spousal portability, or “cliff” rules that can sharply raise taxes once a threshold is crossed. For many investors, the right response is not just basic titling or beneficiary updates, but a coordinated plan that may use trusts, lifetime gifting, liquidity planning, and in some cases domicile changes.

The key opportunity is to preserve more wealth for heirs by aligning assets with each state’s rules before death occurs. The main risk is assuming federal relief means state exposure has disappeared.