Estate and Gift Tax Basics

Federal Transfer Tax Framework

Federal estate and gift tax planning uses a unified lifetime exemption framework under current law.

The practical tax impact depends on total estate composition, prior taxable gifts, and applicable rules at transfer dates.

Gift Tax Basics

• Annual exclusion gifting may reduce taxable estate over time
• Larger lifetime gifts can consume exemption amounts
• Certain direct tuition and medical payments may receive special treatment under current rules

Step-Up in Basis Concept

Under current federal law, many inherited assets receive basis adjustment to date-of-death value, which can materially affect future capital gains tax outcomes.

State-Level Differences

Some states impose estate tax or inheritance tax at thresholds much lower than federal levels.

Always evaluate state domicile and situs interactions in parallel with federal strategy.

Educational note: tax law changes and personal facts can materially alter outcomes; coordinate with qualified tax and legal professionals.