Insurance & Wealth Transfer — 2026 U.S. Estate Planning and Tax-Efficient Legacy Strategies

Hanmi CPA · Compliance Guide

Insurance & Wealth Transfer in the United States
2026 Estate Planning & Tax-Efficient Legacy Guide

A practical reference covering the 2026 $15M estate tax exemption under OBBBA, life insurance structures, ILIT planning, trust strategies, step-up in basis, beneficiary designations, and gifting rules for U.S. taxpayers.

$15M Exemption ILIT Life Insurance Step-Up in Basis Gifting

Section 01

Overview

Insurance and wealth transfer planning are essential components of long-term financial strategy for U.S. taxpayers. This guide explains how life insurance, trusts, beneficiary designations, and estate tax rules work under 2026 regulations — including major changes enacted by the One Big Beautiful Bill Act (OBBBA).

Readers will learn how to protect assets, minimize estate taxes, and transfer wealth efficiently to heirs under the significantly revised 2026 exemption structure. The focus is on practical, compliance-driven strategies — not product sales or aggressive schemes.

Section 02

Why This Matters

Without proper planning, wealth can be eroded by estate taxes, probate costs, and administrative delays. Beneficiary mistakes can unintentionally disinherit family members or trigger unnecessary taxes. Life insurance can provide liquidity, replace income, or fund estate taxes — but only when structured correctly.

OBBBA — $15M Exemption Made Permanent: The most significant estate planning development in decades. The TCJA-era increased exemption was scheduled to sunset back to approximately $7 million per person on January 1, 2026. The OBBBA eliminated that cliff: the federal estate and gift tax exemption is now $15 million per person ($30 million for married couples), made permanent and indexed for inflation starting in 2027. This eliminates federal estate tax exposure for the vast majority of U.S. families.

⚠ "Permanent" Has Limits: The OBBBA removed the sunset provision — but future Congresses can always change the law. Families whose planning was built around the anticipated sunset (urgent gifting strategies, trust formations) should review those plans now that the higher exemption is confirmed. Families near or above $15M should continue advanced planning — the exemption is high, but not unlimited, and state estate taxes apply at much lower thresholds in many states.

Section 03

2026 Estate & Gift Tax — OBBBA Rules

The federal estate tax, gift tax, and generation-skipping transfer (GST) tax share a unified exemption. All three are affected by the OBBBA changes effective January 1, 2026.

Estate Tax Exemption (Per Person)

$15,000,000

Up from $13.99M in 2025. Permanent under OBBBA; inflation-indexed from 2027. No sunset provision.

Married Couple (with Portability)

$30,000,000

Surviving spouse can use deceased spouse's unused exemption (DSUE) via portability election on a timely estate tax return.

Federal Estate Tax Rate

40%

On amounts above the exemption. Unchanged by OBBBA. Applies only to taxable estates exceeding $15M per person.

Annual Gift Tax Exclusion

$19,000

Per recipient per year. Up from $18,000 in 2025 (inflation adjustment). Gifts below this amount do not reduce lifetime exemption.

Lifetime Gift / GST Exemption

$15,000,000

Unified with estate tax exemption. Gifts above the annual exclusion reduce the lifetime exemption dollar-for-dollar.

Gift to Non-Citizen Spouse

$194,000

Annual exclusion for gifts to a spouse who is not a U.S. citizen. The unlimited marital deduction does not apply to non-citizen spouses.

State Estate Taxes — A Critical Gap

⚠ State Estate Taxes Are Separate: Twelve states and the District of Columbia impose their own estate or inheritance taxes — often at much lower exemption thresholds. Oregon and Massachusetts apply estate tax at $1 million. Washington State at $2.193 million. Illinois at $4 million. Maryland at $5 million. These state-level taxes remain fully applicable regardless of the federal exemption increase. Residents of these states need estate planning even if their estate falls well below the $15M federal threshold.

Who Still Needs Federal Estate Tax Planning

Individuals with net worth above $15 million — including the death benefit of life insurance policies owned personally — have taxable estate exposure at 40% on the excess.
Married couples with combined estates above $30 million, or whose planning has not formally elected portability of the deceased spouse's unused exemption.
Business owners where the business valuation plus personal assets could approach or exceed the exemption — particularly if business value grows significantly before death.
Families in states with lower exemptions where state estate tax is a real and current concern independent of federal rules.

Section 04

Life Insurance Types & Tax Rules

Life insurance serves multiple roles in estate and financial planning: income replacement, estate liquidity, wealth transfer, and — when structured properly — tax-free death benefit delivery. The tax treatment depends on the policy type and how it is owned.

Term Life Insurance

Pure death benefit for a fixed period (10, 20, or 30 years). No cash value accumulation. Lowest cost per dollar of coverage. Best for income replacement during working years and mortgage protection.

Income Replacement

Whole Life Insurance

Permanent coverage with guaranteed death benefit and fixed cash value accumulation. Premiums are level. Cash value grows at a guaranteed rate and is accessible via loans. Used for permanent estate planning needs.

Permanent / Estate

Universal Life (UL)

Flexible permanent coverage. Premiums and death benefit can be adjusted within limits. Cash value grows based on a credited interest rate. Offers more flexibility than whole life but requires monitoring to prevent lapse.

Flexible Permanent

Indexed Universal Life (IUL)

Cash value growth linked to a market index (S&P 500, etc.) with a floor (typically 0%) and cap. Not a registered security; growth is not guaranteed. Often marketed as a retirement supplement — not a retirement account.

Index-Linked

Survivorship (2nd-to-Die)

Covers two lives; pays on the second death. Lower premiums than individual policies. Commonly used to fund estate taxes for married couples — death benefit arrives precisely when estate tax is due.

Estate Liquidity

Life Insurance Tax Rules

Death benefit: Generally income-tax-free to the beneficiary under IRC §101(a). This is one of the most significant tax advantages in financial planning — a $3M death benefit is received entirely free of income tax.
Cash value growth: Tax-deferred accumulation inside the policy. No annual income tax on credited interest or index gains while the policy remains in force.
Policy loans: Loans against cash value are not taxable if the policy remains in force. The loan is repaid at death from the death benefit.
Policy lapse with outstanding loans: A taxable event. If a policy lapses or is surrendered while loans are outstanding, the outstanding loan balance minus the original cost basis is recognized as ordinary income. This is one of the most surprising tax events in insurance planning.
Transfer-for-value rule: If a life insurance policy is sold or transferred for valuable consideration (except to certain permitted transferees), the income tax exclusion for the death benefit may be partially or fully lost. Transfers to the insured, a partner of the insured, or a corporation owned by the insured are safe harbors.
Estate tax: Life insurance owned personally by the insured is included in the taxable estate under IRC §2042 — even though the proceeds are income-tax-free. A $5M policy owned personally adds $5M to the gross estate.

Section 05

ILIT — Irrevocable Life Insurance Trust

An Irrevocable Life Insurance Trust (ILIT) is a trust designed specifically to own a life insurance policy. Because the insured does not own the policy, the death benefit is excluded from the taxable estate — providing estate-tax-free liquidity to beneficiaries.

How an ILIT Works

The grantor creates an irrevocable trust and names a trustee — typically a trusted family member or corporate trustee. The trust applies for and owns the life insurance policy on the grantor's life.
Each year, the grantor makes cash gifts to the trust to cover premium payments. These gifts use the annual gift tax exclusion ($19,000 per beneficiary in 2026). Crummey notices must be sent to trust beneficiaries giving them a brief window to withdraw the contributed amount — this formality is required to qualify the gifts for the annual exclusion.
When the insured dies, the insurance company pays the death benefit to the ILIT. Because the ILIT — not the insured — owns the policy, the proceeds are excluded from the taxable estate.
The trustee distributes proceeds to beneficiaries per the trust terms — immediately, in stages, or held in trust for long-term benefit — providing both estate liquidity and asset protection for heirs.

The 3-Year Rule — IRC §2035

⚠ IRC §2035 — Three-Year Lookback: If a life insurance policy is transferred to an ILIT from personal ownership, the death benefit is still included in the taxable estate if the insured dies within 3 years of the transfer. To avoid this trap, the ILIT should apply for and own the policy from inception — never accept a transfer of an existing personally-owned policy unless a 3-year waiting period can be absorbed.

Is ILIT Still Relevant at the $15M Exemption?

For estates above $15M: yes — an ILIT removes life insurance proceeds from the taxable estate and is one of the most efficient structures available at this level.
For estates near $15M: an ILIT remains valuable because business appreciates over time, and a large life insurance policy could push a currently-exempt estate over the threshold at death.
For estates well below $15M federally but in high-tax states: ILIT may be warranted where state estate tax applies at lower thresholds (e.g., Oregon at $1M, Massachusetts at $1M).
Beyond estate taxes, ILITs serve two additional functions that remain valuable regardless of tax exposure: creditor protection(trust assets are generally shielded from beneficiary creditors) and distribution control(the trust terms govern how and when proceeds are distributed to heirs).

Section 06

Trust Structures for Wealth Transfer

Trust Type	Primary Purpose	Estate Tax Benefit	Key Consideration
Revocable Living Trust (RLT)	Probate avoidance; seamless asset transfer at death	None — assets remain in taxable estate	Grantor retains full control; no asset protection from creditors; assets do receive step-up in basis at death
ILIT	Remove life insurance from taxable estate; provide liquidity	Death benefit excluded from estate; uses annual exclusion gifts to fund premiums	Irrevocable; 3-year lookback if existing policy transferred; Crummey notices required annually
Bypass / Credit Shelter Trust	Preserve estate tax exemption for married couples at first death	Locks first spouse's exemption into trust; assets grow outside surviving spouse's estate	Less critical with portability — but still useful when future exemption reduction is a concern or for state estate tax planning
IDGT (Intentionally Defective Grantor Trust)	Transfer appreciating assets out of estate while grantor pays income tax on trust earnings	Assets sold to IDGT at FMV; future appreciation outside estate; grantor's income tax payments are additional tax-free gifts	Complex; requires careful drafting; typically paired with a promissory note installment sale
GRAT (Grantor Retained Annuity Trust)	Transfer appreciation above IRS hurdle rate (§7520 rate) to heirs gift-tax-free	Reduces taxable estate by amount of appreciation transferred. Zero gift if structured as "zeroed-out" GRAT.	Grantor must survive the GRAT term or asset returns to estate. Best used with high-appreciation assets in a low §7520 rate environment.
SLATs (Spousal Lifetime Access Trust)	Remove assets from estate while maintaining indirect access through spouse	Assets outside grantor's estate; spouse can access trust distributions if needed	Divorce or death of beneficiary spouse eliminates access. Reciprocal trust doctrine risk if both spouses create SLATs simultaneously.

Section 07

Step-Up in Basis

One of the most valuable tax provisions for heirs is the stepped-up basis under IRC §1014. When a taxpayer dies holding appreciated assets, the heir's cost basis is reset to the fair market value on the date of death — eliminating all unrealized capital gains accumulated during the decedent's lifetime.

How Step-Up Works

A taxpayer who purchased stock in 1990 for $50,000 that is worth $800,000 at death has $750,000 of unrealized gain. If the heir sells immediately after receiving the stepped-up basis, there is no capital gains tax on that $750,000 appreciation.
Step-up applies to assets included in the taxable estate: stocks, real estate, business interests, and other appreciated property held personally or in a revocable trust.
The stepped-up basis is the FMV on the date of death — or the alternate valuation date (six months after death) if elected by the estate and it reduces both estate value and estate tax.

What Does NOT Receive a Step-Up

Retirement accounts (IRA, 401(k), 403(b)): Inherited retirement accounts do not receive a step-up. All withdrawals by the beneficiary are taxed as ordinary income — the same as withdrawals by the original owner.
Annuities: The untaxed portion of an inherited annuity is income to the beneficiary. No step-up.
Assets transferred out of the estate during life(gifts, irrevocable trust transfers): assets given away before death do not receive a step-up — they carry the donor's original basis. This is the central trade-off in lifetime gifting: using lifetime exemption removes assets from the estate (no estate tax) but also forfeits the step-up.

Step-Up vs. Gifting Trade-Off: With the $15M exemption, most families no longer need to make large gifts to avoid estate tax. This changes the calculus on gifting — assets held until death receive the step-up and pass to heirs capital-gains-free. Assets gifted during life carry the donor's original basis. For families below the exemption threshold, holding appreciated assets until death is often more tax-efficient than gifting them during life.

Section 08

Beneficiary Designations

Beneficiary designations on retirement accounts and life insurance policies control where assets go at death — regardless of what the will says. A beneficiary designation always supersedes the will. This makes beneficiary forms one of the most critical documents in estate planning.

Accounts Governed by Beneficiary Designation

Traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA
401(k), 403(b), 457(b), and other employer-sponsored plans
Life insurance policies (both term and permanent)
Transfer-on-Death (TOD) brokerage accounts
Pay-on-Death (POD) bank accounts
Annuities

Best Practices for Beneficiary Designations

Always name a contingent beneficiary — if the primary beneficiary predeceases the account owner and no contingent is named, the account may pass through the estate and into probate.
Do not name minor children directly. Minors cannot legally receive large sums directly. A court-appointed guardian of the property will manage the funds until the child reaches the age of majority (18 or 21 depending on state) — often not the age intended. Use a trust as beneficiary instead.
Review and update beneficiaries after every major life event: marriage, divorce, birth or adoption of a child, or death of a named beneficiary.
For retirement accounts: naming a spouse as primary beneficiary allows the surviving spouse to roll the inherited IRA into their own IRA — preserving tax deferral and RMD flexibility. Non-spouse beneficiaries are subject to the 10-year rule.
Consider naming a trust as beneficiary when: the beneficiary is a minor, a person with special needs (whose benefits might be jeopardized by a direct inheritance), or someone who needs protection from creditors or their own spending habits.

Section 09

Gifting Strategies

With the $15M lifetime exemption confirmed for 2026, the urgency of large lifetime gifts has diminished for most families. However, annual exclusion gifting and certain direct payment strategies remain efficient tools for transferring wealth incrementally without touching the lifetime exemption.

Annual Exclusion Gifts

The annual gift tax exclusion is $19,000 per recipient in 2026. A married couple can give $38,000 per recipient per year through gift-splitting — with no gift tax return required if the gifts are cash or listed securities.
Annual exclusion gifts do not reduce the lifetime $15M exemption. Over 10 years, a couple with three children can transfer $38,000 × 3 × 10 = $1,140,000 entirely free of gift and estate tax — without using any lifetime exemption.
Gifts above the annual exclusion require filing Form 709(United States Gift Tax Return) and reduce the lifetime exemption by the excess. No gift tax is owed until lifetime gifts exceed $15M.

Direct Payment Exclusions — No Limit

Tuition paid directly to an educational institution on behalf of another person is excluded from gift tax with no dollar limit — in addition to the annual exclusion. The payment must go directly to the school, not to the student.
Medical expenses paid directly to a medical provider on behalf of another person are similarly excluded with no dollar limit.
These exclusions can be stacked with the annual exclusion — a grandparent can pay $200,000 in tuition directly to a university AND give $19,000 cash, all without gift tax or lifetime exemption reduction.

529 Plans for Education

Contributions to a 529 education savings plan are treated as gifts to the beneficiary. Annual contributions up to $19,000 qualify for the annual exclusion.
Superfunding: Up to 5 years of annual exclusions may be front-loaded in a single year — $95,000 per beneficiary ($190,000 per couple) — if an election is made on Form 709. No additional annual exclusion gifts to that beneficiary are permitted during the 5-year period.
529 plan earnings grow tax-free, and qualified withdrawals for education expenses are tax-free at the federal level. Unused funds can be rolled to a Roth IRA (up to $35,000 lifetime, subject to annual Roth IRA contribution limits) under SECURE 2.0.

Section 10

Step-by-Step Guidance

Assess Estate Tax Exposure Under 2026 Rules

Calculate current net worth: add all assets including retirement accounts, real estate, business interests, and the death benefit of any life insurance owned personally.
Compare to the $15M federal exemption. If below $15M individually ($30M as a couple with portability), federal estate tax is not an immediate concern — but state estate tax may be.
For business owners: obtain a current business valuation. Rapidly appreciating businesses can cross the exemption threshold in a shorter time than expected.

Review and Update All Beneficiary Designations

Pull statements from every IRA, 401(k), life insurance policy, and TOD/POD account and verify current primary and contingent beneficiaries.
Update any outdated designations — particularly after marriage, divorce, birth of a child, or death of a named beneficiary.
Replace direct designations to minor children with trust arrangements or custodial accounts.

Structure Life Insurance Correctly

For estates near or above $15M: evaluate whether an ILIT should own new life insurance purchased going forward. Do not transfer existing personally-owned policies into an ILIT without accounting for the 3-year lookback under IRC §2035.
For estates below the exemption: confirm whether existing permanent life insurance serves a defined purpose (income replacement, business continuation, estate liquidity) — or is being held unnecessarily at high premium cost.
For married couples with estate liquidity needs: consider survivorship (2nd-to-die) life insurance inside an ILIT — lower premiums and death benefit arrives precisely when needed.

Optimize Step-Up in Basis Planning

For assets held below the $15M exemption: consider holding appreciated assets until death rather than gifting them, in order to preserve the step-up. Heirs will receive the asset at FMV with no embedded capital gains tax.
Identify highly appreciated assets (stock, real estate) that would benefit most from a step-up. Consider retaining these in the estate rather than gifting them, unless there is a specific reason to remove them.
Assets inside retirement accounts do not receive a step-up — these will be ordinary income to heirs. Roth conversions during the owner's lifetime reduce this burden by converting pre-tax balances to tax-free Roth accounts before death.

Implement Annual Gifting and Education Funding

Execute annual exclusion gifts of up to $19,000 per recipient ($38,000 for married couples using gift-splitting) systematically each year.
Direct-pay tuition and medical expenses without limit for family members — payments must go directly to the institution or provider.
Consider 529 superfunding for grandchildren — $95,000 per beneficiary ($190,000 per couple) in one year using the 5-year election.

Conduct Annual Estate Plan Review

Review wills, trusts, and powers of attorney — particularly after major life events or significant changes in net worth.
Re-evaluate estate tax exposure annually as asset values change. A business that grew from $8M to $14M in 3 years can change the planning picture significantly.
Confirm portability election has been filed for a surviving spouse if the deceased spouse's exemption should be preserved. The portability election requires filing an estate tax return even for estates below the exemption — the deadline is generally 9 months after death (with extension to 15 months).

Section 11

Practical Examples

Case 01 ILIT — Removing Life Insurance from a $18M Estate

A business owner has a net worth of $15.5M excluding life insurance — just above the $15M federal exemption. He also owns a $3M life insurance policy personally. Without planning, his taxable estate is $18.5M — $3.5M above the exemption, generating a $1.4M estate tax bill at 40%.

ILIT Solution

Gross estate without ILIT ($15.5M + $3M policy)	$18,500,000
Federal exemption	$15,000,000
Taxable estate	$3,500,000
Estate tax at 40%	$1,400,000
After ILIT: $3M policy owned by ILIT (not in estate)	Gross estate = $15,500,000
Taxable estate after ILIT	$500,000
Estate tax saved by ILIT	$1,200,000

ILIT must be established and own the policy from inception — not via transfer of an existing policy (3-year lookback)
Annual premiums paid by owner via gifts to trust using $19,000 annual exclusion per beneficiary × number of beneficiaries
Crummey notices sent to trust beneficiaries annually to qualify gifts for the exclusion

❌ Incorrect

Holding the $3M life insurance policy personally. Death benefit is included in taxable estate under IRC §2042 regardless of who the beneficiary is — the owner's estate, not the beneficiary's identity, determines estate inclusion.

✓ Correct

Establish an ILIT before purchasing the policy. The ILIT applies for coverage; annual gifts fund premiums. Policy proceeds flow to heirs outside the taxable estate entirely.

Case 02 Step-Up in Basis — Hold vs. Gift Decision

A taxpayer owns a rental property purchased for $300,000 in 1995. Current fair market value is $1,200,000 — a $900,000 unrealized gain. The taxpayer's estate is $6M, well below the $15M exemption. They are deciding whether to gift the property to their child now or hold it until death.

Gift Now vs. Hold Until Death

Option A: Gift now — child receives property with $300,000 carryover basis
Child sells for $1,200,000 → capital gain	$900,000
Federal capital gains tax (15% LTCG)	$135,000
Option B: Hold until death — child inherits with stepped-up basis of $1,200,000
Child sells for $1,200,000 → capital gain	$0
Federal capital gains tax	$0
Tax saved by holding until death (step-up)	$135,000 federal + state tax

❌ Incorrect

Gifting the property now to "get it out of the estate" when the estate is well below the $15M exemption. There is no estate tax to avoid — and the gift forfeits the step-up, costing the child $135,000+ in capital gains tax.

✓ Correct

Hold the appreciated property until death. The child receives a stepped-up basis equal to FMV — eliminating $900,000 of built-in capital gain. With a $6M estate, no federal estate tax applies regardless.

Case 03 Beneficiary Designation Error — Will Cannot Override

A taxpayer divorces in 2019 and updates their will to leave everything to their adult children. However, they forget to update the beneficiary designation on a $400,000 IRA — which still names the ex-spouse as primary beneficiary. The taxpayer dies in 2026.

The IRA beneficiary designation controls — not the will
The ex-spouse receives the $400,000 IRA regardless of the will's instructions
In most states, divorce automatically revokes a beneficiary designation on a will — but does not automatically revoke IRA or 401(k) beneficiary designations
The adult children have no legal recourse to reclaim the IRA from the ex-spouse

❌ Incorrect

Relying on the will or assuming that divorce automatically updates all financial accounts. Retirement accounts, life insurance policies, and TOD accounts are governed exclusively by their beneficiary designation forms.

✓ Correct

After any major life event — marriage, divorce, birth — immediately update beneficiary designations on all accounts. Create a checklist of every account with a beneficiary form and review it annually.

Section 12

Common Mistakes

1 Not updating beneficiary designations after major life events. Outdated beneficiaries on retirement accounts and life insurance policies can direct assets to ex-spouses, deceased individuals, or unintended recipients — overriding the most carefully drafted will.
2 Holding large life insurance policies personally when the estate approaches $15M. Life insurance owned personally is included in the taxable estate under IRC §2042. A $5M policy owned personally at death adds $5M to the gross estate — potentially triggering significant estate tax. An ILIT removes these proceeds entirely.
3 Assuming the will controls retirement accounts and life insurance. It does not. Beneficiary designation forms are legally superior to wills for these assets. Many families discover this only after a death — when it is too late to correct.
4 Naming minor children directly as beneficiaries. Minors cannot legally receive large sums. A court-appointed guardian will control the funds until the child reaches legal majority — often creating exactly the outcome the parent hoped to avoid. Use a trust as beneficiary for minor children.
5 Gifting highly appreciated assets when below the estate tax exemption. With the $15M exemption, most families should hold appreciated assets until death to capture the step-up in basis. Gifting forfeits the step-up and passes the built-in capital gain to the recipient — often a costly mistake when there is no estate tax to avoid.
6 Transferring an existing life insurance policy to an ILIT without accounting for the 3-year lookback. IRC §2035 requires a 3-year waiting period after transfer before the death benefit is excluded from the estate. Dying within 3 years of the transfer pulls the entire death benefit back into the taxable estate.
7 Failing to file a portability election for a surviving spouse. The portability election — which preserves the deceased spouse's unused estate tax exemption — requires filing a federal estate tax return even if no estate tax is owed. Missing the deadline (9 months after death, extendable to 15 months) permanently forfeits the unused exemption.
8 Not reviewing the estate plan after the OBBBA exemption change. Plans built around the anticipated $7M sunset — including aggressive lifetime gifts, SLAT formations, and IDGT sales — may no longer be optimal now that the $15M exemption is confirmed. The step-up benefit of holding assets until death may outweigh the estate tax benefit of gifting them during life for many families.

Section 13

Hanmi CPA Insight

Practitioner's Note

The OBBBA's $15M exemption is the most significant estate planning development in decades. For the years leading up to 2026, estate planners spent considerable effort urging clients to "use it or lose it" — executing large lifetime gifts before the anticipated sunset. That cliff did not materialize. Many of those gifts were tax-efficient in hindsight, but some families now hold assets outside the estate that would have benefited from the step-up in basis had they been retained until death.

The most important shift in 2026 estate planning is the step-up in basis calculus. With most families now comfortably below the federal exemption, holding appreciated assets until death — rather than gifting them — is often the better strategy. The step-up eliminates embedded capital gains that would otherwise cost heirs 15%–23.8% on sale. This does not mean gifting is never appropriate; annual exclusion gifts, direct-pay tuition, and 529 funding remain excellent tools. The question is whether an asset that would receive a step-up should be gifted — and in most cases below $15M, the answer is no.

State estate taxes remain the underappreciated risk in this environment. A family with $4M in Massachusetts, $3M in Oregon, or $6M in Washington State faces real estate tax exposure despite being well below the federal threshold. Coordination of federal and state planning — including beneficiary designations, trust structures, and insurance ownership — should be reviewed by any family with significant assets in a state that imposes its own estate tax.