In the weeks after a death, most families are juggling two very different kinds of work at the same time. One is emotional: figuring out how to say goodbye in a way that feels like the person you love. The other is logistical: settling accounts, collecting paperwork, and deciding what happens next with property, titles, and taxes. Those two tracks collide more often than people expect, especially when someone’s estate includes real estate, a closely held business, significant investments, or complicated family dynamics.
If you have heard that the federal estate tax exemption 2026 is around $15 million per person, you are not imagining it. But the number on its own can create a false sense of certainty. Families can be well below the federal threshold and still need to make smart, time-sensitive choices. And families can be above it without realizing how quickly valuations, liquidity, and deadlines turn a “we’ll handle it later” plan into a costly scramble.
This guide explains the practical basics: the estate tax limit 2026, how the 40% federal estate tax rate works in broad terms, why DSUE portability matters for married couples estate tax planning, what portability election Form 706 actually does, and the avoidable mistakes that show up again and again when families are grieving and busy.
The 2026 exemption number, and what “$15 million” actually covers
For decedents who die in 2026, the IRS states that the basic exclusion amount is $15,000,000, up from $13,990,000 for 2025. You can see this directly in the Internal Revenue Service inflation-adjustments release for tax year 2026. :contentReference[oaicite:0]{index=0}
Families often call this the 15 million estate tax exemption, and that shorthand is fine as long as you remember what it includes. The federal system is unified: lifetime taxable gifts and the estate tax share the same overall exemption structure, so large gifts made during life can reduce what is available at death. The IRS also confirms that the basic exclusion amount was increased to $15,000,000 for gifts for calendar year 2026 under the 2025 law change, which matters if you are looking at gifting strategies alongside end-of-life planning. The IRS explanation is available in its Internal Revenue Service estate-tax FAQ. :contentReference[oaicite:1]{index=1}
It also helps to keep the annual gift exclusion separate in your mind. For 2026, the IRS states that the annual exclusion for gifts remains $19,000. That means many everyday gifts never touch the lifetime exemption at all, but gifts above the annual amount generally require a gift tax return and may use up lifetime exemption over time. The IRS lists the 2026 annual exclusion on its Internal Revenue Service 2026 adjustments page. :contentReference[oaicite:2]{index=2}
Who actually pays federal estate tax, and why the “no tax due” assumption can still be risky
Most families never owe federal estate tax. Even among families with meaningful assets, the combination of the basic exclusion amount, the marital deduction, charitable planning, and the reality that many estates are below the threshold means the federal tax is not part of the outcome. Still, it is a mistake to treat “probably not taxable” as “nothing to do.”
One reason is that the filing decision can matter even when no tax is due. Another is that federal tax is not the only tax. Some states impose their own estate or inheritance taxes with dramatically lower thresholds than the federal level, and those state rules can influence timelines, appraisals, and liquidity decisions even when federal tax is a non-issue.
The other reason is simply this: the family’s first major deadline often arrives before the family feels ready. The estate tax return clock, for example, starts running immediately. The IRS instructions emphasize that Form 706 is generally due nine months after death, and that a six-month extension to file is available if requested. That timeline is laid out in the Internal Revenue Service instructions for Form 706. :contentReference[oaicite:3]{index=3}
Portability in plain English: how a married couple can preserve two exemptions
When people talk about married couples estate tax planning, one concept comes up constantly: portability. Portability is the ability of a surviving spouse to use a deceased spouse’s unused federal exemption amount. That unused amount is often called the DSUE portability amount (deceased spousal unused exclusion). The practical effect is that, with the right filing, a couple may be able to use a combined exemption rather than losing the first spouse’s unused exemption at the first death.
Here is the part that surprises families: portability is not automatic. The IRS states that to elect portability of the DSUE amount, the estate’s representative must file an estate tax return (Form 706), even if the estate is otherwise under the filing threshold. That guidance appears in the IRS’s Internal Revenue Service estate-tax FAQ. :contentReference[oaicite:4]{index=4}
This is why the question do I need to file Form 706 has two different answers depending on what you are trying to accomplish. Some estates file because they are required to report a taxable estate. Others file primarily to preserve portability for the surviving spouse, because the family’s wealth may grow, because assets may appreciate, or because a later inheritance could push the survivor’s estate into taxable territory.
What Form 706 actually does, beyond “paying estate tax”
It helps to think of Form 706 as a federal inventory and calculation tool with legal consequences. When properly prepared and timely filed, it can do several things at once: report the gross estate and deductions, calculate any estate tax due, document valuations and appraisals, and (for married decedents) make the portability election Form 706 that allows the surviving spouse to use DSUE.
The IRS makes the timeliness requirement explicit in its instructions: an executor can only elect to transfer DSUE if Form 706 is filed timely, meaning within nine months of death or within the extension period if an extension was obtained. That language appears in the Internal Revenue Service instructions. :contentReference[oaicite:5]{index=5}
Deadlines that matter: the nine-month rule, the extension, and the “late portability” safety net
Most families hear “nine months” and assume it is flexible. It is not a deadline you want to casually test. The IRS instructions state the general nine-month filing rule and direct executors to use Form 4768 for an automatic six-month extension of time to file. You can see the extension framework described on the Internal Revenue Service Form 4768 page and in the Form 706 instructions. :contentReference[oaicite:6]{index=6}
There is also a simplified relief procedure for certain estates that missed the timely portability election when the estate was not otherwise required to file Form 706. The IRS references late-election procedures, and the governing document is Internal Revenue Service Revenue Procedure 2022-32, which provides simplified procedures for certain late portability elections. :contentReference[oaicite:7]{index=7}
That relief is valuable, but it is not a reason to relax. Eligibility depends on facts, and families can lose portability permanently if they assume relief will always be available. In practice, the safest approach is to treat the first spouse’s death as the moment to decide, with professionals, whether portability should be preserved.
The mistakes that cost families: portability election errors you can prevent
The portability decision is easy to postpone because it rarely feels urgent at the first death. Often everything goes to the surviving spouse, and there is no estate tax due at that moment. But the IRS and the courts have been clear that procedural errors can matter later.
One widely discussed example is the Tax Court’s 2025 Rowland decision, which is often cited as a warning that an incomplete or improper return can jeopardize a portability election. The professional takeaway is not “panic,” but “be thorough when the return is filed.” A helpful practitioner discussion is available from the American College of Trust and Estate Counsel, which summarizes how incomplete reporting can create long-term consequences. :contentReference[oaicite:8]{index=8}
In real life, the most common portability mistakes are not exotic. They tend to be human. Families are exhausted. Executors are trying to be efficient. Someone assumes the estate is “small enough.” Then the return is filed late, or it is filed without the level of detail needed for the facts of that estate, or it is never filed at all because no one realizes that DSUE portability requires an affirmative step.
- Missing the filing window because everyone assumed “no tax due” meant “no deadline.” The Form 706 due date is tied to the date of death, not to when the family feels ready. :contentReference[oaicite:9]{index=9}
- Filing for portability but treating the return like a formality, which can backfire if the estate includes assets that must be itemized and valued to meet the filing requirements for that specific estate profile. :contentReference[oaicite:10]{index=10}
- Failing to coordinate with the survivor’s long-term plan, especially when the surviving spouse may later remarry. Portability is tied to the “last deceased spouse” concept in the tax regulations, which can affect how DSUE is applied. A plain-language example of the rule appears in the federal tax regulation text hosted by Cornell Law School. :contentReference[oaicite:11]{index=11}
If you are a family member reading this and thinking, “We are already behind,” that does not automatically mean the opportunity is gone. It does mean you should move quickly and get qualified help so you understand whether relief procedures apply and what the realistic options are.
How the 40% rate fits in, and why valuations and liquidity matter more than the headline
Families sometimes hear “40% estate tax” and assume that if the estate crosses the line, nearly half of everything is lost. That is not how it works. Federal estate tax applies to the taxable portion above the exemption, and the rate schedule is progressive up to a top rate. A Congressional Research Service overview explains that the estate tax rate on the taxable portion, if any, is 40%. You can see that statement in the CRS product hosted on Congress.gov. :contentReference[oaicite:12]{index=12}
Still, even when the tax applies only to amounts above the threshold, planning can hinge on liquidity. Estates that are “wealthy on paper” can be cash-poor, especially when value is concentrated in real estate, a family business, private investments, or illiquid collectibles. That is when valuations, appraisals, and smart timing matter, and it is one reason families with significant assets often work with an estate tax attorney and experienced CPA long before deadlines appear.
Where funeral planning intersects with estate planning (and why it helps to talk about it early)
At Funeral.com, we see a quieter reality: even families who never owe federal estate tax still need a plan for what happens in the first days and weeks after loss. And when a family does have a high-net-worth estate, the emotional experience can be complicated by the extra work of valuations, filings, and careful decision-making.
One of the most practical ways to reduce stress is to separate decisions that must be made now from decisions that can wait. With cremation, that often means understanding that a temporary container is common and there is time to decide on a permanent memorial. The industry trend lines support why families want that flexibility: the National Funeral Directors Association projects the U.S. cremation rate to be 63.4% in 2025, and the Cremation Association of North America reports a U.S. cremation rate of 61.8% in 2024. :contentReference[oaicite:13]{index=13}
That shift is one reason families are asking more detailed questions about what to do with ashes, how to create a home memorial, and how to involve siblings or adult children in a way that feels respectful. If you are in that place, a helpful starting point is to browse cremation urns for ashes with the mindset that the urn is not just a product but a decision tool: where will the urn live, who will have access, and what does the family want the next year to look like?
For families who want to share ashes across households, small cremation urns and keepsake urns can make a plan workable without turning grief into a negotiation. You can explore small cremation urns for ashes and keepsake urns, then read a practical guide like Keepsake Urns 101 if you are unsure how sharing works in real life.
If a loved one’s death involves a beloved animal companion, the planning overlaps in a different way. People often underestimate how much a pet’s memorial matters until they are standing in a quiet house with a collar in their hand. If that is you, pet urns for ashes range from classic vessels to photo-frame designs, and families who want a more sculptural tribute often gravitate toward pet cremation urns in figurine styles. For households sharing a portion among family members, pet keepsake cremation urns can provide a gentle solution.
Many families also ask about wearable memorialization. cremation jewelry can be deeply comforting when the grief is raw, but it helps to choose it with the same practical mindset you would use for any long-term item: durability, sealing, comfort for daily wear, and how much you want to carry. The cremation necklaces collection is a simple way to compare styles, and cremation jewelry 101 explains what families wish they had known before ordering.
Some families have a plan that involves the ocean or a lake and use the phrase water burial casually without realizing it can mean different things. If your family is considering scattering at sea or using a biodegradable urn that dissolves, water burial guidance can help you translate a meaningful idea into a ceremony that is legal, practical, and calm in the moment.
Cost also belongs in the conversation, especially when an executor is trying to manage cash flow while larger estate issues are being sorted. If you are asking how much does cremation cost, it helps to start with realistic ranges and then compare what is included. Funeral.com’s guide on how much cremation costs is designed for that exact moment, and it also links out to industry benchmarks like NFDA’s cost statistics for context.
Finally, for many families, the question that sits quietly under everything is keeping ashes at home. If the estate process is going to take time, or if family members need breathing room before deciding on burial, scattering, or a niche, keeping ashes at home can be a respectful interim plan. The guide on keeping ashes at home walks through the practical considerations so a home memorial feels steady rather than stressful.
A calm way to think about next steps
If you are reading this because you are helping settle an estate, it is completely reasonable to want a single answer to the big question: “Are we going to owe estate tax?” The honest answer is that many families will not. But the families who benefit most from early clarity are not only the ultra-wealthy. They are the families who want to avoid preventable mistakes, protect a surviving spouse’s options, and make funeral planning decisions that are thoughtful rather than rushed.
When an estate may be large enough to matter federally, when a surviving spouse might one day need the deceased spouse’s unused exemption, or when valuations are complex, it is appropriate to involve an experienced professional. A good advisor will not just calculate a number. They will help you decide whether filing Form 706 is required, whether filing it for portability is prudent, and how to do it in a way that stands up to scrutiny later. And alongside the legal and tax work, a well-paced memorial plan can give the family a place to stand while the paperwork catches up.
If you want help with the memorial side while you handle the estate side, Funeral.com’s resources on choosing an urn, sharing ashes, jewelry, and home memorials are meant to be supportive and practical—especially during a season when “practical” can feel hard to reach.
