What our new estate planning guide reveals about state-level taxes most people overlook
Key Takeaways
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When you die, where do you want your money to go?
Most people’s answers fall into the “family” or “charities” buckets.
I’ve never had someone answer “taxes.” And it makes sense; nobody dreams of leaving a big chunk of their life’s work to the IRS.
But without proper estate planning, the gap between your ideal outcome and your actual outcome can be enormous.
One of my clients in Illinois nearly learned this the hard way. He had worked hard to save up a nice nest egg for his children, but when we sat down and mapped out what would happen to his estate if something happened tomorrow, we discovered his kids would owe the state of Illinois over $1 million in estate taxes.
The good news is that we caught the problem early, and we could fix it.
Moments like that are exactly why I wrote our new eBook, Estate, Tax, and Gifting Strategies. It’s a practical guide to understanding how estate taxes work, why they matter, and what you can do to keep more of your wealth where you actually want it.
Here’s a quick look inside.
Two Levels of Estate Tax (and Why That Matters)
Most people know about the federal estate tax. In 2026, the lifetime exemption is $15 million per person, which means a married couple can pass up to $30 million to their heirs without triggering federal estate tax. For a lot of families, that feels like plenty of breathing room.
But federal isn’t the whole story.
Seventeen states (plus Washington, D.C.) have their own estate or inheritance taxes, and the exemptions are often much, much lower. This is the part that catches people off guard:
You can be comfortably under the federal threshold and still owe your state a significant amount.
One more wrinkle: estate taxes are levied against the estate before heirs receive the money, while inheritance taxes are levied against the people who inherit. And one lucky state—Maryland—has both (so maybe cross that one off your retirement list).
When we think about where you will eventually retire and which state’s taxes you’ll likely encounter, this is a big part of the decision-making process, particularly because your state of choice can affect not just you, but your children and grandchildren as well.
Related: Retirement Planning for High Achievers
What If I Just Move States?
Remember the client I mentioned earlier who learned his kids would have to write a million-dollar-plus check for the state of Illinois if he were to pass away? His immediate reaction was that he and his wife would move permanently to their home in Palm Springs, California, to avoid the state estate tax.
They already owned a property in Palm Springs, and it felt like an easy fix for an expensive problem.
But here’s the catch: he had an IRA worth over $3 million. While California doesn’t have a state estate tax, it does assess income tax on IRA withdrawals. At an average state income tax rate of around 10%, that’s potentially $300,000 of additional income tax to pay while he’s still alive, should he live long enough to take the money out and enjoy it (which was the whole point of saving it in the first place).
I’m telling you this because these decisions involve more than one variable. That’s why it’s so important to work with a financial planner who collaborates with your estate planning attorney and tax advisor. This team can help you understand all of the moving pieces and make decisions that actually fit your full picture.
The States with the Lowest Exemptions
If you live in certain states, the estate tax conversation becomes a lot more urgent. Here are a few that stand out:
- Oregon has the lowest exemption in the country at just $1 million. If you die in Oregon with a $3 million estate, your heirs could face over $200,000 in state estate taxes. And $3 million isn’t as rare as it sounds; a home, retirement savings, and a life insurance policy can get you there pretty quickly.
- Washington comes in at $2.19 million, which is still well below what most people expect when they hear “estate tax exemption.”
- Minnesota sets the bar at $3 million. High enough to miss some families, low enough to catch plenty of others.
- Illinois has a $4 million exemption. That’s where my client was, and even at that level, the tax bill was significant.
A Plan Is Only Good If You Can Execute It
Here’s the thing about estate planning: it’s not a solo sport. The strategies that actually work require coordination between your financial planner, your CPA, and your estate attorney:
- Gifting strategies need to align with your tax picture.
- Trust structures need to reflect your family dynamics.
- Insurance policies need to be owned correctly, or they end up right back in your taxable estate.
At TNLPG, we work collaboratively with your other professionals to build a plan that’s custom fit to you, your family, and your goals. We’re here to quarterback the process and help make sure nothing falls through the cracks, so you can actually execute the plan we build together.
Related: Click here to read “Family Values and Traditions: How Wealthy Families Turn Generosity into Legacy”
State Taxes Are One Piece of a Bigger Picture
Estate taxes, gifting strategies, lifetime exemptions, state vs. federal rules; it’s a lot to keep track of, and can easily feel overwhelming.
That’s exactly why we’re here. Our job is to help coordinate your taxes both in the present day and with an eye on the future, leveraging gifting strategies and providing financial guidance designed to help minimize what you and your loved ones will owe Uncle Sam.
We created Estate, Tax, and Gifting Strategies to give you a clear, straightforward resource you can actually use. It covers the fundamentals of estate planning, walks through the major strategies for reducing your tax exposure, and helps you understand what questions to ask as you start thinking about your own situation.
Click here to request your free copy of the eBook. We’ll send it straight to your inbox, free of charge.
And if you’re ready to talk through how any of this applies to your specific situation, we’d love to help. Schedule a complimentary SWOT Session and let’s take a look at your current estate plan, where you want to go, and what it’ll take to get there.