Tax Planning

How Community Property Resets the Tax Basis for a Texas Surviving Spouse

Published on: September 17, 2026 | By Thomas W. McCulloch

How Community Property Resets the Tax Basis for a Texas Surviving Spouse

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.

Portability Made Practical for Houston Couples—How to Capture the DSUE Amount After the First Spouse’s Death

Published on: January 14, 2026 | By David W. Miller

If you are married, federal estate tax “portability” lets the survivor use any unused estate tax exemption from the first spouse to die. That carryover—called the deceased spouse’s unused exclusion (DSUE)—can be worth millions of dollars in tax savings for your family. The catch is simple but strict: you must file a timely estate tax return for the first spouse, even when no tax is due. With a little planning, you can secure the DSUE and keep options open for wealth transfers, business exits, and home sales down the road.

Understand What Portability Really Gives You

Each spouse has a federal estate and gift tax exemption. When the first spouse dies, any unused exemption can be “ported” to the survivor. The survivor adds that DSUE to their own exemption, increasing the amount they can transfer during life or at death without federal estate tax. Portability pairs well with Houston families whose wealth sits in homes, retirement accounts, closely held companies, or life insurance trusts that may grow over time.

Taxes and Estate Planning in Texas: What You Need to Know

Published on: May 14, 2024 | By McCulloch & Miller, PLLC

Each state has slightly different taxes that it imposes when it comes to estate plans. In Texas, we are lucky that our state does not charge an estate tax, an inheritance tax, or a gift tax; even so, there are important things to know about each one. On today’s blog, we cover some of the basics on these three kinds of taxes, so that you can be well prepared if and when you encounter any of them in the future. As always, with additional questions, be sure to contact an experienced Houston estate planning attorney that you can trust.

The Estate Tax

The estate tax is a tax that states can impose on decedents’ estates, making them pay the state a percentage of the total assets before passing money down to their beneficiaries. Luckily, Texas is one of the 38 states that does not have an estate tax, meaning you can bypass this part of probate when thinking through your last will and testament.

The federal government, however, does impost an estate tax, but only for estates that are at least $13.61 million in value. The estate’s value that surpasses the $13.61 million is subject to the federal estate tax, meaning decedents should not have to pay taxes on the entire estate (only the amount above this threshold).

Estate Planning and Tax Season: What You Need to Know

Published on: April 23, 2024 | By David W. Miller

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.

The importance of Understanding All Tax Implications When Estate Planning

Published on: September 14, 2023 | By Thomas W. McCulloch

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.

IRS Announces Increased Estate-Tax Exclusion for 2023

Published on: October 24, 2022 | By David W. Miller

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.

Estate Planning for High-Net-Worth Individuals

Published on: October 12, 2022 | By David W. Miller

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.

2022 Texas Gift and Estate Tax Changes

Published on: April 26, 2022 | By Thomas W. McCulloch

Because there are proposed and implemented changes every year to the federal and state tax code, Texans should always be vigilant as to how these changes affect their gifting practices and their estate plans. In many cases, without the assistance of an estate planning attorney, these changes may seem minuscule and not even be noticed. However, newly passed laws may have a major impact on Texans and how they should implement their estate plan—plus changes they can make to take advantage of these changes. Below are some of the proposed changes that may occur in 2022 that Texans should be aware of and strategies to combat these changes.

Reduction to the Estate Tax Exemption

In the past year, there were proposals to reduce the estate tax exemption—meaning, lowering the amount after which individuals will need to pay a tax on their estate. The current amount is $12.06 million; however, this past year, there were proposals seeking to reduce the amount to $3.5 million per individual. If the amount were lowered this significantly in the upcoming year, many individuals who currently will not have to pay an estate tax will be forced to. However, even if this proposal is not adopted this year, the current estate tax law is set to reset in 2026 to $5 million—this is unlikely to be changed. Therefore, individuals should start planning and strategizing now if their estate value is around $5 million. Most of the strategies involve reducing the estate amount below the exemption limit—either by putting funds in irrevocable trusts or gifting it to loved ones or charity.

Should I Include an LLC as Part of My Texas Estate Plan?

Published on: December 14, 2021 | By McCulloch & Miller, PLLC

When people begin drafting their estate plan, they often debate who to give their personal assets to after they pass away. Often, these assets include real estate, monetary funds and sentimental items. For those individuals who worry about gift and estate taxes and want to pass their assets onto their children, they should consider creating a limited liability company—called an LLC. While LLCs are often used for small businesses, they have tax and other financial advantages. Below are so common questions and explanations about including an LLC in an estate plan.

What Is an LLC?

A Limited Liability Company, or an LLC, is a popular type of business structure that protects owners from most legal liability, like a corporation. This means LLC owners are typically not liable for debts incurred by the LLC business—meaning personal assets like personal bank accounts cannot be collected. However, LLC owners do report income and losses from the company on their personal tax returns.

How Can I Include an LLC in my Estate Plan?

For individuals with large estates who are worried about taxes but want to pass their assets onto their children, attorneys will often advise them to create an LLC. To include an LLC in an estate plan, parents and children create the LLC together and transfer assets into it. These assets often include monetary funds and real property. The parents are then made managing members of the LLC; this allows them to have control over the assets. Then, the parents will transfer assets in the LLC to their children—often named non-managing members of the entity.

Texas Estate Planning Around 2022 Tax Exemptions

Published on: November 23, 2021 | By McCulloch & Miller, PLLC

At last, the IRS has announced changes to the unified credit and annual gift tax exemption for 2022.

To understand what these changes mean for Houston residents, it is important to first understand how these tax exclusions operate. The lifetime estate and gift tax exemption—also known as the unified tax credit—allows people to make tax-free transfers up to a certain amount during their life and upon their death. The exclusion is said to be “unified” because certain gifts transferred during a person’s life will count against the total amount of transfers that can be made tax-free upon their death.

Outside the unified credit, however, is the annual gift tax exemption. This exemption gives people a free pass to make untaxed gifts up to a certain amount each year without counting it toward the unified credit limit.