The Estate Tax Mistake That Could Wipe Out Your Family’s Inheritance

by

Think estate taxes are just a “rich people” problem? Think again. One missed deadline or forgotten form could cost your family hundreds of thousands—maybe even millions—of dollars. And yep, it happens all the time.

Table of Contents

Why Young Americans Should Care About Estate Taxes

Estate planning feels like something only your grandparents need to worry about, right?
Wrong. If your parents, grandparents, or even an older sibling own a house, stocks, or a small business, the IRS might take a huge chunk when they pass away—unless everything is set up correctly.

Did You Know?
In 2024, the federal estate tax kicks in at $13.61 million (IRS), but some states have way lower limits—like New York, where it starts at just $6.94 million.

The Million-Dollar Oversight Nobody Talks About

Here’s how it usually goes:
A loved one passes. The family scrambles to figure out assets, debts, and property transfers. Meanwhile, the IRS clock is ticking.

Miss the deadline for filing an estate tax return? You might lose the right to claim key benefits—like the portability election, which lets a surviving spouse use their partner’s unused exemption. That window? Usually only nine months. Miss it, and there’s no undo button.

State Taxes Can Be Even Worse

Even if you dodge federal estate taxes, your state might still hit you hard.

  • Maryland and New Jersey? They have both estate and inheritance taxes.

  • Washington state’s top estate tax rate? 20%.

  • Some states start taxing estates as low as $1 million.

Check out this state-by-state estate tax chart to see where your state lands.

How to Keep the IRS From Becoming Your Biggest Heir

  1. Have both a will and a trust – They do different things, and you might need both.

  2. Always file the portability election – Even if you think you won’t need it now.

  3. Know your state’s rules – They can vary wildly.

  4. Get professional help – Don’t DIY something that could cost millions.

For more ways to avoid losing money you didn’t know you could lose, check out our guide to hidden financial traps.

The Takeaway

Estate taxes aren’t just a problem for billionaires. Without the right planning, your family could hand over a fortune to the IRS—and there’s no getting it back.

So here’s the real question: If something happened tomorrow, would your family be ready… or would Uncle Sam cash the biggest check?

Leave a Comment