Estate and inheritance taxes could affect how much you leave as a legacy, but proper planning may allow you to mitigate their impact.

Your financial advisor can work with you and your legal and tax professionals to help ensure your strategy reflects your current wishes as well as current tax laws.

Below are some highlights of current federal tax laws that are important to know if you are concerned about transfer taxes, including federal and state estate taxes, state inheritance taxes and generation-skipping transfer tax.

Note: If either you or your spouse is not a U.S. citizen, speak with your estate-planning attorney to determine what estate tax planning options might be available to you.

What to know about estate, inheritance, gift and generation-skipping transfer taxes

Federal estate taxes

In 2026, an individual can pass up to $15 million at their death ($30 million for a married couple) before paying any federal estate tax. The exclusion amount is adjusted annually for inflation.

Gift taxes

The gift tax exclusion is coupled with the estate tax exclusion, so it’s also $15 million for 2026. Therefore, you may be able to gift up to $15 million during your lifetime free from federal gift tax. It’s important to remember, though, that any gifts made during your lifetime will reduce your estate tax exclusion amount dollar for dollar.

State estate and inheritance taxes

Along with federal taxes, some states have their own estate or inheritance taxes. So, while your estate may not be subject to federal estate tax, your estate or beneficiaries may be subject to state taxes upon your passing. Twelve states and the District of Columbia have estate taxes that have varied exemption levels and tax rates. Estate taxes are assessed against the estate of the deceased individual. In contrast, inheritance taxes are assessed against the individual receiving the inheritance. A few states have an inheritance tax with rates that tend to vary based upon the relationship of the recipient to the deceased.

Discuss with your estate-planning attorney whether your state of residence or the location of any assets might subject you to state estate or inheritance taxes.

Generation-skipping transfer (GST) taxes

GST tax may apply when assets are transferred to "skip" people (generally a relative more than a generation from you (such as a grandchild) or an unrelated individual at least 37.5 years younger than you). The GST tax exclusion in 2026 is $15 million for all individuals (adjusted for inflation annually). For any taxable transfer, the GST tax rate is 40%, which may be in addition to any other estate/gift tax liability due. You should discuss with your estate-planning attorney if you plan to leave assets to a skip person.

Whether your estate will be taxed depends on your assets and circumstances. If applicable, there are ways to help reduce the impact of these taxes.

Strategies for estate tax planning

Depending on your assets and situation, your estate may or may not be subject to tax. If needed, however, there are strategies you can put into place that may help minimize the effects of these taxes.

If married, consider portability or credit shelter trust planning

There are two strategies available exclusively to married couples that can help mitigate estate taxes: portability and credit shelter trust planning. 

Portability means that when a person dies, their surviving spouse may retain the deceased spouse's unused exclusion amount if the proper election is made on the deceased spouse's final estate tax return. Credit shelter trust (CST) planning is included in a trust or will and directs the CST to be funded with the deceased spouse's assets up to the applicable exemption amount, potentially allowing the full use of their exemption. There are some key differences between these approaches that should be discussed with your estate-planning attorney. 

Portability

• Surviving spouse has full access and control over assets
• All assets (and their growth) transferred to spouse are part of survivor's taxable estate
• Assets can be subject to creditor claims
• All assets receive applicable step-up in cost basis at second spouse's death
• GST tax exemption not portable

Credit shelter trust (CST)

• Spouse who creates CST designates trust beneficiaries and successor beneficiaries
• Assets (and their growth) in CST not subject to estate tax at second spouse's death
• Assets typically protected from beneficiaries' creditors
• Assets don't receive step-up in cost basis at second spouse's death
• With proper planning, assets may not be subject to federal GST tax

Lifetime gifting

For people who can afford to part with their assets, lifetime gifting can be an effective strategy to move assets, and the future appreciation and income stream, to beneficiaries. With the ability to shift $15 million, you can transfer significant assets during your lifetime. Gifting during your lifetime reduces, dollar for dollar, the estate tax exclusion.

Note: If you gift during your lifetime, the cost basis in the assets transfers to the beneficiary, which could cause income tax consequences for them down the line.

Annual gifting

In 2026, annual exclusion gifts allow you to gift up to $19,000 to any individual per year without using any of your lifetime gift and estate tax exemption. In 2026, married couples may gift up to $38,000, if they agree to gift splitting. Annual gifting of any amount decreases your taxable estate, thereby reducing your potential estate taxes. The annual exclusion is adjusted for inflation over time.

Charitable giving

Giving to charities during your lifetime can help potentially reduce your taxable estate and potentially provide an income tax deduction. If you choose to leave assets to a qualified charity when you die, you may receive a dollar-for-dollar deduction on your estate tax return for the value of those charitable gifts.

Irrevocable trusts

An irrevocable trust is a legal arrangement in which you permanently transfer ownership and control of your assets to a trust. The trust's assets are separate from your own, and the terms of the trust generally can't be changed or terminated. Many irrevocable trusts remove the trust's assets (and their future growth) from your taxable estate. However, assets held in an irrevocable trust outside your estate won't receive a step-up in cost basis at your death.  These trusts are considered advanced planning strategies and include: irrevocable life insurance trust (ILIT), intentionally defective grantor trust (IDGT), spousal lifetime access trust (SLAT), qualified personal residence trust (QPRT), grantor retained annuity trust (GRAT), and a family limited partnership (FLP). Discuss your goals and specific situation with your estate-planning attorney to determine what might be appropriate for you.

More estate tax questions? Contact your financial advisor.

Taking time to review and update your estate plan can help ensure you're on the right track with your goals. Talk with your Edward Jones financial advisor about working together with your trusted professionals to define and help fulfill your legacy wishes.