Is There Death Tax on Large Inheritances?

I Just Received a Large Inheritance, Do I Need to Worry About the Death Tax?

In my many years of estate planning practice a common inquiry I receive is about the death tax taking a big bite out of the estate before its passes to your beneficiaries. In another Blog I previously wrote about the historical evolution of the death tax, also known as the inheritance tax. There is no question that in past decades the death tax was common and took a large chunk of money out of many estates.

So where do things stand today regarding the death tax? My last article left off in time with the federal government’s passage of the Tax Cuts & Jobs Act of 2017 which generously exempted most estates from taxation. In common layman’s language this is known as the federal exemption, which you can look at as a safe harbor against taxation of an estate. Specifically the Tax Cuts & Jobs Act of 2017 raised the amount of an estate that would be sheltered from taxation up to $13,990,000 per individual, and double that amount for married couples. And even better news was that California matched those amounts.

The one downside to the Tax Cuts & Jobs Act of 2017 is that it contained what is known as a “sunset clause”, which is a future date set on which legislation will expire. Under the Tax Cuts & Jobs Act of 2017 the date on which the federal exemption would reset to lower amounts was December 31, 2025. But then great news came along and the federal government recently passed the well-publicized Big Beautiful Bill which became a signature feature of Donald Trump’s presidency. This Act, which was signed into law by President Trump on the 4th of July of 2025, removed the sunset provision contained in the Tax Cuts & Jobs Act. The Big Beautiful Bill then went further and raised the estate tax exemption up to $15,000,000 per individual, and $30,000,000 for married couples.

With all that good news presented, it is noteworthy that other types of tax apart from the inheritance tax can be triggered by an individual’s death, such as the capital gains tax for example, and taxes on certain types of retirement accounts and annuities. Those topics will be addressed in a separate blog so keep an eye on our blog section for important new releases and updates.

Protect Your Estate Beyond Just Tax Considerations

While the current federal estate tax exemption levels provide significant protection for most families, it’s important to remember that estate planning involves much more than just tax considerations. Even with favorable tax laws, your estate could face other costly challenges that a proper living trust can help you avoid.

For instance, without proper estate planning, your beneficiaries might still face expensive probate proceedings that can consume tens of thousands of dollars in court fees and attorney costs – money that should go to your loved ones instead. A well-structured comprehensive living trust package can help you avoid probate entirely while also providing additional protections for your beneficiaries.

Additionally, if you become incapacitated, having proper Power of Attorney documents in place ensures your affairs can be managed according to your wishes without costly court intervention.

Ready to Secure Your Estate?

Don’t wait for tax laws to change again. Protect your family’s financial future with professional estate planning services that address all aspects of wealth preservation, not just taxes. Learn more about everything you need to know about living trusts or contact Ironclad Living Trusts today to begin securing your legacy.

Would You Like a Free Consult With an Estate Planning Attorney in California?

If you wish to speak with an experienced estate planning lawyer, please contact online or call us directly at (951) 587-3737. Ironclad Living Trusts is honored to serve clients throughout all of Southern California.