For someone who dies in 2026, you have to file a federal estate tax return (Form 706) only if the gross estate plus certain lifetime taxable gifts exceeds $15 million.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Most estates land well below that line and owe nothing. But if the decedent was married, the executor should think carefully before skipping the return anyway, because filing is the only way to preserve the surviving spouse’s portability rights, and letting that lapse can cost the family millions later.
The 2026 Filing Threshold
Form 706 is required when the combined value of everything the decedent owned at death (the “gross estate”) plus any taxable gifts made during their lifetime exceeds $15 million.1Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 The lifetime gifts piece is where people miscount. If the decedent gave $2 million above the annual gift exclusion during their life, that $2 million effectively lowers how much they can pass at death before a return becomes mandatory. The threshold is per person, so a married couple can collectively shelter up to $30 million if the surviving spouse takes the right step at the first death.
The filing trigger is the gross value, before deductions. That matters. An estate worth $20 million that will owe zero tax after the marital deduction still has to file the return. Deductions like the unlimited marital deduction and the charitable deduction reduce tax owed; they do not change whether Form 706 is required.2Office of the Law Revision Counsel. 26 USC 2056 – Bequests, Etc., to Surviving Spouse When the estate does exceed the threshold, the tax on the excess tops out at 40%.3Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax
What Actually Counts in the Gross Estate
The gross estate includes the value of all property the decedent had an interest in at death, whether or not it goes through probate.4Office of the Law Revision Counsel. 26 USC 2031 – Definition of Gross Estate Homes, land, bank accounts, investment portfolios, vehicles, jewelry, and business interests are the obvious pieces. Three categories catch families off guard.
Life insurance is the biggest one. If the decedent owned the policy or held any “incidents of ownership” (the power to change the beneficiary, borrow against the policy, or cancel it), the full death benefit counts.5Office of the Law Revision Counsel. 26 USC 2042 – Proceeds of Life Insurance A $3 million term policy can push an otherwise non-taxable estate over the line on its own.
Retirement accounts (IRAs, 401(k)s, pensions) are also part of the gross estate, even though they pass directly to a named beneficiary outside of probate. The same is true for payable-on-death bank accounts and jointly held property to the extent of the decedent’s interest.
Finally, certain transfers made within three years of death get pulled back in. The main target is life insurance: if the decedent transferred ownership of a policy within three years of dying, the proceeds are included as though the transfer never happened.6Office of the Law Revision Counsel. 26 USC 2035 – Adjustments for Certain Gifts Made Within 3 Years of Decedent’s Death The same clawback applies to other transfers that would have been included in the estate under the rules for retained interests or revocable transfers.
When You Should File Even Though You Do Not Have To
If the decedent was married and the estate is below $15 million, no tax is owed and no return is legally required. File anyway. The reason is portability. A surviving spouse can inherit whatever portion of the deceased spouse’s $15 million exemption went unused, but only if the estate files Form 706 and makes the election.7Internal Revenue Service. Frequently Asked Questions on Estate Taxes
An example makes the stakes clear. Say the first spouse dies with a $4 million estate. Without portability, $11 million of unused exemption vanishes. With a timely Form 706, the surviving spouse carries that $11 million forward and can eventually shelter up to $26 million at their own death. For families whose combined wealth might grow toward the threshold over decades, skipping this election is one of the most expensive mistakes in estate planning.
The return normally has to be filed within nine months of death to preserve the election, or within fifteen months with an extension. There is a safety net. Under Revenue Procedure 2022-32, an estate that was not otherwise required to file can submit a late portability election up to five years after the date of death.8Internal Revenue Service. Revenue Procedure 2022-32 The executor files a complete Form 706 and writes “FILED PURSUANT TO REV. PROC. 2022-32 TO ELECT PORTABILITY UNDER ยง 2010(c)(5)(A)” at the top. After the five-year mark, the only remaining option is a private letter ruling from the IRS, which is expensive and not guaranteed.
Who Has to File and When
The executor named in the decedent’s will is responsible for filing Form 706. If no executor was named or appointed by a probate court, the IRS treats anyone in actual or constructive possession of the decedent’s property as the executor for estate tax purposes.9Office of the Law Revision Counsel. 26 USC 2203 – Definition of Executor That definition casts a wide net. A surviving spouse living in the family home, an adult child holding a joint bank account, or anyone managing the decedent’s property can be treated as the responsible party. When multiple people qualify, they should join in filing a single return; if they cannot cooperate, each is required to file separately, disclosing everything they know about the estate’s assets.10Internal Revenue Service. Instructions for Form 706
Form 706 is due nine months after the date of death.11Internal Revenue Service. Filing Estate and Gift Tax Returns A death on March 15, 2026 produces a due date of December 15, 2026. When that date falls on a weekend or holiday, the deadline shifts to the next business day. Executors who need more time can file Form 4768 for an automatic six-month extension.12Internal Revenue Service. About Form 4768 The extension covers filing only, not payment. Any estimated tax owed must still be paid by the original nine-month due date, or interest and penalties begin accruing.
Form 706 cannot be filed electronically. The completed return and any payment go to the IRS service center in Kansas City, MO 64999.11Internal Revenue Service. Filing Estate and Gift Tax Returns The return runs over 25 pages with detailed schedules for every category of assets, so most executors hire an attorney or CPA experienced in estate tax preparation. Those professional fees are deductible as an administration expense.
If the Decedent Was Not a U.S. Citizen or Resident
The rules change dramatically for someone who was neither a U.S. citizen nor a U.S. resident at death. The filing threshold drops to just $60,000 in U.S.-situated assets, and the estate files Form 706-NA rather than Form 706.13Internal Revenue Service. Some Nonresidents With U.S. Assets Must File Estate Tax Returns U.S.-situated assets include real property in the United States, tangible personal property located here, and stock in U.S. corporations. A non-citizen, non-resident decedent with a modest U.S. brokerage account or a Florida vacation home can easily trigger this filing requirement.
State Estate and Inheritance Taxes Are a Separate Question
Not owing a federal return does not settle the tax picture. Twelve states and the District of Columbia impose their own estate taxes, and their exemption thresholds start far below the federal $15 million. Oregon’s begins at just $1 million; Connecticut’s aligns with the federal amount; most of the others cluster between $1 million and $7 million. Six states impose an inheritance tax, paid by the person receiving the bequest rather than by the estate. Maryland is the only state that imposes both.
Inheritance tax rates in these states vary with the heir’s relationship to the decedent. Spouses and children usually pay little or nothing; more distant relatives and unrelated beneficiaries face higher rates and lower exemptions. An estate that owes zero federal tax can still owe a meaningful amount to the state, so the executor should check the rules of the decedent’s state of residence and any state where they held real property.
Do Not Confuse Form 706 With Form 1041
Form 706 taxes the transfer of wealth at death. It is a one-time return. If the estate continues to earn income after the decedent dies (interest, dividends, rent, or business earnings during the settlement period), a separate estate income tax return, Form 1041, is required for any year in which the estate generates more than $600 in gross income.14Internal Revenue Service. File an Estate Tax Income Tax Return Many executors who correctly conclude that no Form 706 is needed overlook Form 1041 entirely, especially when settlement drags on for months while investment accounts keep producing returns.