Articles Posted in Tax Planning

An executor in a Texas probate case usually spends the first months on letters testamentary, the inventory, and notice to creditors. Federal income tax tends to come later, and it often comes as a surprise, because the year of death produces two income tax returns rather than one. Texas has no state income tax, so both are federal, and both are the executor’s responsibility.

The first executor tax return in Texas is the decedent’s final Form 1040, covering income up to the date of death. The second is Form 1041, the estate’s own income tax return, for income the estate receives after death, such as interest, dividends, or rent. Federal law makes the executor responsible for both.

In an estate that cannot pay all of its debts, an executor who distributes assets before the federal tax is paid can end up personally liable for it. McCulloch & Miller, PLLC guides Houston executors through this part of probate alongside the court filings.

Last updated September 17, 2026 · Reviewed by Thomas W. McCulloch

When a married Texan dies, the federal tax basis of the property the couple owned is recalculated, and Texas’s community property system changes how much of that property gets the new figure. For a surviving spouse deciding whether to sell a Houston home or a long-held brokerage account, the result can be that decades of appreciation never enter the gain calculation. The rule is federal, but it depends on Texas marital property law to work.

Under 26 U.S.C. § 1014, property acquired from a person who has died takes a basis equal to its fair market value on the date of death. Section 1014(b)(6) extends that treatment to the surviving spouse’s own half of community property, so both halves of a community asset take the date-of-death value rather than only the half that belonged to the spouse who died. McCulloch & Miller, whose founding partner is both an attorney and a CPA, builds this rule into the estate planning it does for Houston couples and into the advice it gives surviving spouses.

As we move past tax season, it is an apt time to think about the crossover between estate planning and tax filing. For many individuals, filing taxes can bring up important questions about updating an estate plan. On today’s blog, we review some of the advantages of using tax season as a springboard for revising your estate planning documents. As always, with fact-specific questions, we recommend you contact a Houston estate planning attorney to talk through your personalized goals and priorities.

There are a few reasons that tax season is one of the best times to review your estate plan. First of all, filing taxes gives you a full picture of your assets, debts, and income. The momentum you gain by gathering the necessary documents and imputing financial information allows you to consider whether your estate plan might be outdated.

Secondly, a change in your financial status means that your estate planning documents should also change. If you’ve acquired a new home, for example, you’ll want to add a provision to your will about who you’ve chosen as the beneficiary. If you’ve come into an inheritance, you’ll have to write out a plan for how that money will be distributed to your loved ones. Adding this information into your tax submissions can trigger a reminder to add the information to your estate plan.

One of the most frustrating aspects of estate planning can be having to pay out a percentage of assets to the government or to others who have a claim on your estate. In Texas, tax implications depend on the estate strategy that you choose. Today, we review some of the tax implications of estate planning with an eye toward minimizing tax liability.

What is an Estate Tax?

Texas is one of 38 states that does not require residents to pay an estate tax. In states without this benefit, an individual’s estate will have to pay a certain percentage of their assets to the state government upon that person’s death. This is good news: by living in Texas, you already avoid a tax that residents of some other states will have to pay.

Texans do, however, still pay a federal estate tax. This kind of tax can be generally broken up into three different taxes: the estate tax, the gift tax, and the generation-skipping transfer tax.

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Thanks to newly announced policies from the IRS, 2023 is shaping up to be a big year for estate planning. With several new opportunities for ultra-wealthy individuals to protect their assets, it is more important than ever to plan ahead and think about goals for the upcoming year. By planning, you can protect yourself from being double taxed and from facing penalties for failing to pay the required amounts.

In its recent press release, the IRS announced that it will implement several new policies that will allow ultra-wealthy individuals to protect more of their assets from taxes. The reason for the shift, according to tax law experts, is to account for annual adjustments in inflation. The reality, however, is that individuals that have been sitting with lower-value portfolios in 2022 can use the policies to their advantage and can begin developing more aggressive strategies heading into 2023.

One of the new policies will increase how much individuals can transfer to their heirs each year without being subject to federal taxes: in 2022, Americans could transfer $12.06 million, but next year the number will jump to $12.92 million. The IRS will also increase the limit on tax-free gifts next year, giving each individual a threshold of $17,000 per recipient instead of the current limit of $16,000.

Many of the same tools used in ordinary estate planning apply to high-net-worth individuals. Estate planners of all income and asset levels should consider utilizing a last will and testament, guardianship designations, trusts, life insurance policies, planning for incapacity, and various powers of attorney documents. In addition, the complexity and sheer volume of high-net-worth individuals’ assets necessitate further consideration. High-net-worth clients may consider gifting to reduce tax implications on their estates. Charitable donations can also generate a tax benefit for the estate. Tax planning in general should be carefully considered by high-net-worth individuals, as substantial rates can diminish the amount left to your beneficiaries.

A skilled team of estate planning attorneys can help navigate these strategies and formulate a plan tailored to you and your family’s needs and special circumstances. A good attorney will help you minimize your tax exposure with their up-to-date knowledge of ever-changing tax laws.

Who is Considered High Net Worth?

Net worth, or a simple calculation of your household’s debt minus your household’s liquid assets such as cash, cryptocurrency, and other investments, can help determine your estate planning strategy. Forbes has classified high-net-worth individuals or households as holding liquid assets between $1 million and $5 million. Between $5 million and $30 million is considered very high net worth. Finally, assets in excess of $30 million fall in to the ultra-high-net-worth category.

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