Estate Tax Planning Attorney in Austin, TX

Estate Tax Planning for Austin Families

If your estate is approaching $15 million, or $30 million as a married couple, the federal estate tax is worth planning for now. We help Austin families keep more of what they built for their children and grandchildren, using the federal exemption, trusts and lifetime gifts, and planning for the income tax their heirs will face too.

Reviewed by Turner Henington, attorney and former KPMG tax accountant, Texas Bar No. 24148206 · Updated November 2026

Does Texas Have an Estate Tax or Inheritance Tax?

No. Texas has no state estate tax and no state inheritance tax. The Texas inheritance tax was repealed effective September 1, 2015, and it had not been collected for deaths after 2004. Your heirs won’t owe Texas anything because they inherited from you.

The tax that can apply is the federal estate tax. It is charged against the estate itself, before your beneficiaries receive anything, and only when the estate is larger than the federal exemption.

How the Federal Estate Tax Works in 2026

The $15 million exemption was set by Public Law 119-21, signed July 4, 2025, and replaced the scheduled drop to about half that amount. It has no expiration date and is adjusted for inflation after 2026. The exemption is shared between lifetime gifts and what you leave at death, so large gifts during life reduce what is left to shelter your estate.

Who Needs Estate Tax Planning?

• Married couples with $15 million or more. One exemption may already be at risk, and growth can push the estate over $30 million.
• Business owners and real estate investors. Values can climb quickly, and illiquid assets make an estate tax bill hard to pay.
• Families who want wealth to reach grandchildren. The generation-skipping transfer tax is a separate tax with its own exemption.
• Anyone who may move. Some states have their own estate tax with much lower exemptions. See our page for people new to Texas.
• Everyone, for income tax. Even estates far below $15 million can save their heirs real money on capital gains and retirement accounts.

Estate Tax Planning Strategies We Use

Portability

When a married person dies, the surviving spouse can add the deceased spouse’s unused exemption to their own. It is not automatic: the executor has to file a complete Form 706 to elect it, even when no tax is due. Estates that were not otherwise required to file can make a late election up to five years after the death (Rev. Proc. 2022-32).

Credit shelter (bypass) trusts

Instead of relying on portability, a credit shelter trust uses the first spouse’s exemption at the first death and keeps all later growth out of the survivor’s estate. It also protects the inheritance for children from a first marriage and from creditors. Portability does not carry over the GST exemption; a trust can.

Marital trusts and QTIP trusts

The part of the first spouse’s estate above the exemption usually goes to a marital trust, which qualifies for the unlimited marital deduction, so no estate tax is due at the first death. A QTIP trust pays the survivor all of the income for life while the first spouse chooses who receives the property afterward, which protects the children’s inheritance if the survivor remarries. The property receives a new income tax basis at the survivor’s death.

Reverse QTIP elections

Portability carries over the estate tax exemption but not the generation-skipping transfer tax exemption. A reverse QTIP election on the estate tax return lets the first spouse’s GST exemption be used for property in a QTIP trust, which matters for trusts that will benefit grandchildren.

Lifetime gifts

Each person can give $19,000 a year to as many people as they like without using any exemption. Paying a grandchild’s tuition or someone’s medical bills directly to the school or provider doesn’t count as a gift at all. Larger gifts move future growth out of your estate.

Spousal lifetime access trusts (SLATs)

One spouse makes a gift to an irrevocable trust for the other spouse and the children. It uses exemption now, moves growth out of the estate, and keeps indirect access to the money through the beneficiary spouse.

Irrevocable life insurance trusts (ILITs)

Life insurance you own is counted in your taxable estate. Holding the policy in an irrevocable trust keeps the death benefit out of it, and the proceeds can give your family cash to pay any estate tax without selling the business or the ranch.

Dynasty and generation-skipping trusts

Lifetime trusts for your children, with GST exemption allocated to them, can let wealth pass to grandchildren without being taxed again in each generation. For trusts created on or after September 1, 2021, Texas allows a trust to last up to 300 years (Tex. Prop. Code § 112.036). Our inheritance protection planning is built on these trusts.

Family LLCs and grantor retained annuity trusts (GRATs)

A family LLC or partnership can centralize management of real estate or a business, and gifts of minority interests may be valued at a discount. A GRAT moves appreciation above an IRS interest rate to your children with little or no gift. Both need careful documentation and an independent appraisal.

Charitable planning

Gifts to charity are fully deductible for estate tax purposes. Charitable remainder trusts and donor-advised funds can reduce estate tax and capital gains while supporting the causes you care about.

The Tax Most Families Actually Face: Capital Gains and Income Tax

For most families, the bigger tax is the one their heirs pay after the estate is settled. Good planning protects against both.

• Step-up in basis. Property you own at death generally gets a new tax basis equal to its value at death (26 U.S.C. § 1014), wiping out the built-in capital gain.
• Texas community property. When one spouse dies, both halves of community property can receive a step-up, not just the deceased spouse’s half (26 U.S.C. § 1014(b)(6)). Keeping community assets clearly community can save the survivor a large tax bill.
• Don’t deed the house to the kids. A lifetime gift keeps your old basis, so your children could owe capital gains tax when they sell. A lady bird deed or a living trust passes the home at death and keeps the step-up.
• Inherited retirement accounts. Most beneficiaries other than a spouse must empty an inherited IRA or 401(k) within 10 years, and every withdrawal is taxed as income. Naming the right beneficiaries, or a trust, can spread that tax out. See retirement accounts and probate.

Can the Estate Tax Exemption Change?

Yes, but only through new federal legislation. The current $15 million exemption has no expiration date. Changing it would take a bill passed by both the House and the Senate and signed by the President. Because the exemption has moved several times since 2001, we build plans that work if it stays where it is and if it changes, such as trusts that can use portability or a disclaimer, and lifetime gifts that lock in today’s exemption. IRS regulations generally protect gifts made while a higher exemption was in effect.

Why Work With Us

• Tax background. Turner Henington is a former KPMG tax accountant who prepared individual income tax returns before practicing law.
• We work with your CPA and advisor. Estate tax plans touch income tax, investments and insurance, so we coordinate with the people who already know your finances.
• Flat-fee quotes. After a free consultation, you get a written flat-fee quote before any work starts.
• Two attorneys. Samantha Lewis handles trust and estate disputes, so your plan is written by people who see how plans are challenged.

Next step: call (512) 737-8404 or book a free estate planning consultation. Bring a rough list of what you own and how it is titled.

What Our Clients Say

Estate Tax FAQ

Does Texas have a death tax or inheritance tax?

No. Texas has no state estate tax and no inheritance tax. The Texas inheritance tax was repealed effective September 1, 2015. The federal estate tax still applies to Texans whose estates are large enough.

What is the federal estate tax exemption in 2026?

$15,000,000 per person for deaths and gifts in 2026, set by Public Law 119-21 (signed July 4, 2025). The amount is adjusted for inflation in later years.

How much can a married couple leave without paying federal estate tax?

Generally $30 million in 2026, if the plan uses both spouses’ exemptions, either through portability or a credit shelter trust at the first death.

What is the federal estate tax rate?

The top federal estate tax rate is 40% on the amount above the exemption.

Do I have to file an estate tax return if no tax is owed?

A return (Form 706) is required only when the estate is above the filing threshold. But when a married person dies, the surviving spouse should usually file one anyway to elect portability and keep the deceased spouse’s unused exemption. The return is due 9 months after death, with a 6-month extension available, and estates that were not required to file can make a late portability election up to 5 years after death.

Do beneficiaries pay tax on an inheritance in Texas?

There is no Texas or federal inheritance tax on beneficiaries. Income tax can still apply: withdrawals from inherited IRAs and 401(k)s are taxable, and selling an inherited asset can trigger capital gains on growth after the date of death.

Does a revocable living trust avoid estate tax?

Not by itself. A revocable trust avoids probate, but its assets still count in your taxable estate. It can, however, hold the tax provisions that matter, such as a credit shelter trust or lifetime trusts for children.

What is the annual gift tax exclusion for 2026?

$19,000 per recipient, or $38,000 per recipient for a married couple who split gifts. Gifts above that use part of your lifetime exemption and are reported on Form 709, due April 15 of the following year.

What happens if Congress lowers the exemption later?

The exemption is set by Congress and has no scheduled expiration, but a future law could change it. IRS regulations generally protect gifts made while a higher exemption was in effect, which is why some families with larger estates use part of their exemption now.

Related Services and Guides

• Austin Estate Planning Attorney
• Estate Planning for Married Couples
• Estate Planning for Business Owners
• Estate Planning for Real Estate Investors
• The Best Type of Trust for a Married Couple in Texas
• How Much Does Estate Planning Cost in Texas?

Sources

• IRS: What’s new — Estate and gift tax (2026 exemption and annual exclusion)
• Texas Comptroller: Texas inheritance tax repealed effective Sept. 1, 2015
• Rev. Proc. 2022-32: late portability election up to five years
• 26 U.S.C. § 1014 (basis of property acquired from a decedent); Tex. Prop. Code § 112.036

This page is general information, not tax or legal advice for your situation.