The Federal Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have Good news rich people For 2026, the Federal Estate and Gift tax lifetime exemption is increased to $15 million per individual (and $30 million per married couple with proper planning). The annual gift tax exclusion will remain at $19,000 per persont. Note, that does not apply to Medicaid, which permits no gifts. These changes were enacted by the "One Big Beautiful Bill Act" (OBBBA), signed into law in July 2025, which made the increased exemption amounts permanent under current law and prevented a scheduled decrease. This is actually good news, since in the prior decade the Estate tax started at $675,000 and many NJ estate were subject to high estate taxes. Few NJ estate now exceed $15,000,000. There is no Estate tax if assets are under $15,000,000 The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify. After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit. Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. A filing is required for estates with combined gross assets and prior taxable gifts exceeding the Estate Tax amount [$15,000,000] Since January 1, 2011, estates of decedents survived by a spouse may elect to pass any of the decedent’s unused exemption to the surviving spouse. This election is made on a timely filed estate tax return for the decedent with a surviving spouse. Note that simplified valuation provisions apply for those estates without a filing requirement absent the portability election. More info at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax
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