You need to file a federal estate tax return, Form 706, if the person who died in 2026 left a gross estate plus lifetime taxable gifts of more than $15 million.1Internal Revenue Service. What’s New – Estate and Gift Tax That threshold clears most families. But it isn’t the only reason to file. A surviving spouse who wants to inherit the deceased spouse’s unused exemption needs a Form 706 too, even when no tax is owed, and some states impose their own estate or inheritance taxes with exemptions as low as $1 million.
The $15 Million Federal Threshold
For deaths in 2026, the executor must file Form 706 when the gross estate plus adjusted taxable gifts exceeds $15 million.2Internal Revenue Service. Estate Tax This figure is the basic exclusion amount. The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently set it at $15 million and indexed it for inflation starting in 2027.3Office of the Law Revision Counsel. 26 U.S. Code 2010 – Unified Credit Against Estate Tax
“Adjusted taxable gifts” means lifetime gifts that exceeded the annual gift tax exclusion, less any gifts already pulled back into the gross estate. So if the deceased made $3 million in taxable gifts over their lifetime and died with a $13 million gross estate, the combined $16 million crosses the line and a return is required.
Married couples using portability can effectively shelter up to $30 million combined. For years, planners had prepared for the Tax Cuts and Jobs Act sunset that would have cut the exemption roughly in half. That sunset no longer applies for 2026 and beyond.
Filing to Preserve Portability When No Tax Is Owed
Even when an estate falls well below $15 million and owes nothing, the executor of a married decedent should seriously consider filing Form 706. Filing is the only way to transfer the deceased spouse’s unused exclusion amount, called the DSUE, to the surviving spouse.4Internal Revenue Service. Frequently Asked Questions on Estate Taxes That election, known as portability, can shelter millions in additional wealth when the surviving spouse eventually dies.
Portability requires a timely filing, meaning within nine months of death or by the end of any extension the executor requested.5Internal Revenue Service. Instructions for Form 706 Miss the deadline and the DSUE is gone permanently. If the first spouse to die used only $2 million of their $15 million exemption, skipping the portability filing throws away $13 million in sheltered capacity.
What Counts Toward the Gross Estate
The gross estate includes the fair market value of everything the deceased owned or held an interest in at death.6Office of the Law Revision Counsel. 26 U.S. Code 2031 – Definition of Gross Estate Real estate, bank accounts, investments, business interests, vehicles, jewelry, personal property. Valuation is as of the date of death unless the executor elects an alternate date.
A few categories catch families off guard and can push a borderline estate above the filing threshold.
Life insurance is the biggest one. If the deceased held any ownership rights over a policy on their own life, the full death benefit is part of the gross estate even though the money goes directly to a named beneficiary.7Office of the Law Revision Counsel. 26 U.S. Code 2042 – Proceeds of Life Insurance Ownership rights include the power to change the beneficiary, borrow against the policy, or cancel it. A $5 million payout on a policy the deceased controlled goes right into the gross estate calculation.
Retirement accounts, including IRAs and 401(k)s, are included at their full date-of-death value. And certain transfers made within three years of death get pulled back in. Gift taxes paid during that window are added to the gross estate, and if the deceased transferred ownership of a life insurance policy within three years of dying, the proceeds snap back into the estate as though the transfer never happened.8Office of the Law Revision Counsel. 26 U.S. Code 2035 – Adjustments for Certain Gifts Made Within 3 Years of Decedent’s Death
Non-Citizen Surviving Spouses
The unlimited marital deduction that most married couples rely on to defer estate tax does not apply when the surviving spouse is not a U.S. citizen. Without a qualified domestic trust (QDOT), property passing to a non-citizen spouse is included in the taxable estate with no marital deduction to offset it.9Office of the Law Revision Counsel. 26 U.S. Code 2056A – Qualified Domestic Trust The QDOT election is made on Form 706 and cannot be undone once filed. Couples where one spouse is not a citizen should plan for this well before death rather than discover it after.
State Estate and Inheritance Taxes
The $15 million federal threshold isn’t the end of the analysis. Twelve states and the District of Columbia impose their own estate taxes, and five states levy inheritance taxes. Maryland does both. State exemptions are often far lower than the federal figure, with some set at $1 million. An estate that owes nothing federally can still face a meaningful state tax bill and a separate state filing obligation.
An estate tax is calculated against the entire estate before distribution. An inheritance tax is paid by individual beneficiaries on what they receive, often at rates that vary with the beneficiary’s relationship to the deceased. Close family members typically pay lower rates or are exempt; more distant relatives and unrelated beneficiaries face higher rates.
Where the deceased lived matters, and so does where any real property sits. Someone who lived in a state with no estate tax but owned a vacation home in a state that imposes one may trigger a filing in that second state. Rules vary enough that checking each relevant state’s requirements is worth the time.
Who Is Responsible for Filing
The executor named in the will, or the personal representative appointed by the probate court, files Form 706.10Internal Revenue Service. About Form 706, United States Estate and Generation-Skipping Transfer Tax Return When no executor has been formally appointed, federal law defines “executor” to include anyone in actual or constructive possession of the deceased person’s property.11Office of the Law Revision Counsel. 26 U.S. Code 2203 – Definition of Executor A family member holding assets while waiting for probate may technically carry the obligation.
Estate tax is paid from the estate, not from the executor personally. That protection has a limit. An executor who distributes assets to beneficiaries before settling federal tax debts can be held personally liable for the unpaid taxes, up to the amount improperly distributed.12Office of the Law Revision Counsel. 26 U.S. Code 6901 – Transferred Assets Federal tax claims also take priority over state and local taxes and general creditors. Funeral expenses, administration costs, and secured creditors can be paid first, but distributing what’s left while a federal balance is still outstanding creates personal exposure.
The Filing Deadline
Form 706 is due nine months after the date of death.13eCFR. 26 CFR 20.6075-1 – Returns; Time for Filing Estate Tax Return Death on March 10 means the return is due by December 10 of the same year. When the ninth month has fewer days than the month of death, the deadline lands on the last day of the ninth month.
An executor who needs more time can request an automatic six-month extension by filing Form 4768 before the original due date.14Internal Revenue Service. Instructions for Form 4768 The extension buys time to file, not to pay. Any estate tax owed is still due nine months after death, and the IRS charges interest on late payments from that original due date.15Internal Revenue Service. Filing Estate and Gift Tax Returns If the exact amount owed isn’t yet known, paying an estimated amount by the nine-month mark keeps interest and penalties down. Estates that include a closely held business interest may qualify to pay in installments, deferring the first payment for up to five years and then spreading the remaining balance over ten annual installments, with interest accruing on the deferred amount.