Don’t let tax deadlines add stress during an already difficult time.
Our estate planning attorneys help families navigate federal estate and gift tax returns with clarity, strategy, and care.
Estate & Gift Tax Returns
Protecting Family Wealth with Smart Tax Planning
At a Glance
Federal estate and gift tax returns report certain transfers of wealth to the IRS—either during your lifetime or at death—to determine whether federal transfer tax is owed. Even when no tax is ultimately due, these returns are often required to preserve valuable tax exemptions, properly document large gifts or inheritances, and avoid IRS penalties and future disputes.
Understanding Estate and Gift Taxes in Texas
Hardie Alcozer focuses on simplifying these tax rules, helping families understand how they fit into an estate plan, and how to reduce their overall tax burden.
The Federal Estate Tax Explained:
The federal estate tax applies when the value of an estate exceeds a set exemption. Under 2025 legislation, the current estate exemption amount is $15 million per person, indexed for inflation, meaning estates below this amount owe no federal estate tax. Married couples can effectively double this amount by electing portability, allowing a surviving spouse to use a deceased spouse's unused exemption. Estates that exceed the exemption generally require filing a federal estate tax return (Form 706). Although the exemption level is historically at its highest, thoughtful planning remains essential for families with significant assets. Amounts exceeding the exemption are taxed at a 40% federal rate, and proper timing, valuation, and elections (like portability) can materially affect tax outcomes. Because the exemption is subject to potential legislative change and could be reduced in the future, strategic planning and careful reporting are critical to preserving available tax benefits.
The Federal Gift Tax Explained:
Federal gift taxes are part of the same unified transfer tax system as the federal estate tax, meaning gifts made during life and transfers at death are measured against a single lifetime exemption. Under current law, individuals may give up to $19,000 per recipient per year without gift tax or reporting. Gifts that exceed the annual exclusion generally require filing a federal gift tax return (Form 709), even though no tax may be due at the time of the gift. Instead, these gifts reduce the donor’s available lifetime exemption. Gift tax is only owed if cumulative lifetime gifts exceed the lifetime exemption, but because larger gifts can significantly impact the exemption available at death—and because the exemption may be reduced by future legislation—strategic planning and accurate reporting are essential.
When Tax Returns Are Required
Estate Tax Returns
Form 706: United States Estate (and Generation-Skipping Transfer) Tax Return
A Form 706 must be filed when the gross estate, plus adjusted taxable gifts and applicable exemptions, exceeds the current set exemption amount. Even if the estate is below the exemption threshold, filing may be beneficial to preserve the deceased spouse’s unused exclusion (DSUE) for the surviving spouse. The return is due within nine months of death, with a six-month filing extension available, although any tax owed must still be paid within the original deadline.
What the Estate Tax Return Covers:
- All assets owned or controlled at death, including financial and personal property
- Debts, funeral and administrative expenses, and charitable gifts that may reduce the taxable estate
- Accurate valuation of assets, especially those subject to close IRS review
Gift Tax Returns
Form 709: United States Gift (and Generation-Skipping Transfer) Tax Return
A Form 709 is required when a gift in a calendar year exceeds the annual exclusion or meets certain reporting conditions. Filing does not necessarily trigger gift tax, as the return primarily tracks the use of the lifetime exemption. Accurate reporting helps preserve available exemption amounts for future gifts and ensures that transfers during life are properly accounted for under our tax system.
Gifts That Do Not Require Reporting:
- Payments made directly to educational institutions for tuition (excluding room, board, or books)
- Payments made directly to medical providers for qualifying medical care
- Gifts to qualified charities
- Unlimited gifts to U.S. citizen spouses
These exclusions can be effective planning tools, such as paying tuition directly to support education without using annual or lifetime exclusions.
The Unified Credit and Lifetime Exemption
How Does the Exemption System Work?
The federal government uses a unified credit to integrate estate and gift taxes. Your lifetime exemption amount can be used to shelter either lifetime gifts or transfers at death, but each dollar can only be used once.
Taxable gifts during your lifetime that exceed the annual exclusion reduce your remaining lifetime exemption. At death, the estate calculates tax based on the total value of the estate plus all prior taxable gifts, then applies whatever exemption remains.
This system allows strategic lifetime gifting to be an effective way to transfer wealth while minimizing overall transfer taxes, especially if gifted assets appreciate significantly after the transfer.
Generation-Skipping Transfer Tax Considerations
What Is the GST Tax?
The Generation-Skipping Transfer (GST) tax applies to transfers that skip a generation, typically gifts or bequests to grandchildren or more remote descendants. It exists to prevent families from avoiding estate taxes by transferring wealth directly to grandchildren.
The GST exemption mirrors the estate tax exemption. Proper allocation of this exemption is essential when creating trusts or making gifts to grandchildren or future generations. Mismanaging the GST exemption can result in a 40% tax on transfers that could have otherwise been sheltered.
Portability: Preserving the Unused Exemption
How Do You Preserve the Unused Exemption?
Portability allows a married person who dies without using their full estate tax exemption to pass the unused portion to the surviving spouse (known as the deceased spouses unused exemption amount, or DSUE), potentially doubling the total exemption available to the couple.
To claim portability, the deceased spouse’s executor must file a complete and timely Form 706, even if the estate would not otherwise be required to file. Many families overlook this opportunity, leaving millions in potential tax protection.
How Hardie Alcozer Helps with Estate and Gift Tax Returns
Comprehensive Tax Planning:
Our estate planning attorneys take a holistic approach to minimize estate and gift taxes through strategic gifting, trusts, charitable giving, and coordinated estate and tax planning.
Return Preparation Support:
We guide you through estate and gift tax filings, organizing assets, coordinating appraisals, reviewing returns for accuracy, advising on portability elections, and ensuring gift reporting aligns with your overall estate plan.
Audit Support and Compliance:
We help ensure estate and gift tax returns are well-documented and accurate, providing support and guidance if IRS questions or audits arise.
Common Questions
No. Texas does not impose a state-level estate tax, gift tax, or inheritance tax. However, Texas residents remain subject to federal estate and gift taxes when their wealth transfers exceed the applicable exemption amounts.
Missing the nine-month deadline to file a Form 706 can have serious consequences. Penalties and interest may apply to any tax owed, and more importantly, the opportunity to make a portability election may be lost. The IRS has procedures that allow late portability elections for certain estates within five years of death, but these require meeting specific criteria. We strongly encourage families to address estate tax filing requirements promptly after a death.
It depends on the amount and structure of the gift. If you give $19,000 or less in 2026, no gift tax return is required. If you are married and both you and your spouse agree to split gifts, you can give up to $38,000. Larger gifts require filing a Form 709, but you typically will not owe actual tax unless you have used your lifetime exemption. We can help you structure significant gifts to minimize tax implications.
When the first spouse dies, any unused portion of their exemption can transfer to the surviving spouse through a portability election. The surviving spouse can then use this DSUE amount on top of their own exemption. To claim portability, a complete Form 706 must be filed for the deceased spouse's estate within the deadline (or within five years under certain conditions). This election can provide substantial tax protection for the surviving spouse and their heirs.
The gross estate includes nearly everything you own or control at death, valued at fair market value. This encompasses real estate, bank accounts, investments, retirement accounts, life insurance, business interests, personal property, and even certain assets you gave away but retained some control over. The estate can then take deductions for debts, funeral expenses, administrative costs, and bequests to spouses or charities.
Preparing federal estate and gift tax returns involves far more than completing forms—it often requires making strategic elections, interpreting complex laws, and considering long-term estate planning goals. While some CPAs are skilled at preparing these returns, an estate planning attorney brings a unique perspective. Attorneys can evaluate how gifts, estate transfers, and elections fit within your overall estate plan and may affect future legal rights or obligations. Decisions made on an estate or gift tax return can have lasting consequences, including preserving exemptions for heirs or coordinating multiple estate planning tools. By working with an experienced estate planning attorney, you gain guidance that addresses both the legal and tax implications of your wealth transfer strategies, helping you make informed decisions with confidence.
The Hardie Alcozer Approach
Why Tax Planning Matters
Even when an estate falls below current exemption limits, estate and gift tax rules still matter. Changing exemptions, asset growth, and transfer timing can affect long-term outcomes. We explain these rules in clear, practical terms so you understand how they apply to your situation.
Tailored Guidance for Your Situation
Every family’s circumstances are different. Business owners, retirees, and blended families all face unique planning challenges. We tailor our guidance to your goals, family dynamics, and financial picture, whether you are planning ahead or handling tax filings after a loved one’s passing.
Take the Next Step
Estate and gift tax returns can feel overwhelming, but you do not have to navigate them alone. Hardie Alcozer helps families understand their options and move forward with clarity.
Schedule a Consultation
Contact our office to discuss your estate and gift tax planning needs. During our consultation, we will review your current situation and goals, explain how federal estate and gift taxes may apply to you, discuss strategies to minimize tax exposure, answer your questions about filing requirements and deadlines, and outline recommended next steps for your planning.
Our website provides a general overview of estate and gift tax planning and cannot cover every issue or circumstance. While we make every effort to ensure the information is accurate and up to date, any express or implied warranties are disclaimed, and we accept no liability for reliance on the content provided. We encourage you to schedule a consultation with one of our experienced attorneys to discuss your specific situation in detail.
Practice Attorneys
Ellen Dickerson