Estate Tax
A tax levied on the total value of a deceased person's estate before assets are transferred to heirs, imposed at both the federal level and in some states.
Understanding Estate Tax
The federal estate tax exemption in 2024 is $13.61 million per individual ($27.22 million for married couples). Estates above this amount are taxed at rates up to 40%. The exemption is scheduled to revert to approximately $7 million in 2026 when the Tax Cuts and Jobs Act provisions expire. Life insurance death benefits paid to named beneficiaries are generally not included in the taxable estate if the policy is not owned by the insured.
Why This Matters for Retirement: Understanding Estate Tax is essential for making informed decisions about tax-free retirement income strategies. Whether you are evaluating an IUL policy, planning Roth conversions, or comparing retirement vehicles, this concept directly affects your outcomes.