It depends. If you do the right planning required to avert having an estate tax liability, then the answer is no. We have many tools and techniques to effectively plan for estate tax contingencies – you just need to do the planning. The Federal Estate Tax is calculated on the value of the assets in your estate at the time of your death (less encumbrances) and then applying the Estate tax exemption in effect in that year. A portion of the estate is “exempt” from tax. The amount over the exemption amount is subject to the Federal Estate Tax. The amount of the exemption has shifted and changed over the years. It was $600,000 during much of the early 1990s.
In 2001, Bush enacted a tax that gradually increased the estate tax exemption amount to $3.5MM in 2009. Although married people who are US citizens can easily take advantage of the unlimited marital deduction and leave everything to their spouse estate tax free, when that spouse later dies, there could be an estate tax on his or her estate. There are ways to plan to maximize the use of both spouses’ federal estate tax exemptions in their revocable trust and through other estate planning techniques and tools.
The 2017 Tax Cuts and Jobs Act (TCJA) created temporary laws for the estate tax with an index for infation until the end of 2025 when the Act expires (or sunsets) on December 31, 2025. Under this Act, the current estate tax exemption is $13,610,000 (2024). There will likely be one more inflationary increase come January 1, 2025 and then the provisions for the estate tax will sunset at the end of 2025, absent any legislation enacted before then.