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

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).

The Inheritance Tax

The inheritance tax is a tax that a beneficiary pays when he or she receives money from an estate. Again, Texas does not use this inheritance tax, but several other states do. Therefore, if you are set to receive money from a loved one that lived in a different state, there is a chance you could be subject to this tax in the other state. When in doubt, check with an estate planning attorney that can advise you on the different regulations in different areas of the country.

The Gift Tax

The gift tax is a tax on transfer of property from one person to another, as long as that transfer is defined as a gift (i.e. the receiver gives nothing in return). Texas has no gift tax, but again, there is a federal gift tax that should be taken into consideration. In 2024, the gift tax exemption is $18,000 per recipient.

Are You On the Lookout for a Houston Estate Planning Attorney?

If you or a loved one need a Houston estate planning attorney, contact our office at McCulloch & Miller for a consultation today. Our team of attorneys is proud to carry decades of experience in the field, and we leverage our expertise to help our clients achieve their financial goals, no matter how big or small. If you are looking for the right firm to help you navigate the worlds of probate, estate planning, and related financial matters, we might be the right fit for you.

For your consultation with a trusted Houston estate planning attorney, give us a call today at 713-597-7176. You can also fill out our online form to have an attorney reach back out to you as soon as possible regarding your estate planning questions.

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