When people hear “legacy planning,” they often jump straight to federal estate tax. We do have a few clients where federal estate tax planning is very real. But for the majority of our clients, whose net worth falls in the $2 million to $10 million range, that is not the main issue.

Right now, the federal basic exclusion amount is $15 million per person in 2026, and the annual gift exclusion is $19,000 per recipient in both 2025 and 2026. So most of the families we work with are not facing a federal estate tax bill.

That does not mean legacy planning is simple. For many families, the bigger mistakes involve basis, portability, inherited IRA rules, gifting strategy, charitable planning, and state-level issues when property is owned outside Texas.

What matters more for many families

For households in that $2 million to $10 million range, we are usually focused on questions like these:

• Are the right assets going to the right people?
• Are we preserving a step-up in basis where it matters?
• Are loved ones inheriting a tax problem inside a traditional IRA?
• Are gifts being made in the most tax-aware way?
• Are there out-of-state estate or inheritance tax issues nobody has looked at?

1. Step-up in basis can save heirs a lot of tax

Under current IRS rules, inherited property generally gets a basis tied to fair market value at death. That can be a big deal for appreciated stock, real estate, or a business interest.

That is why “let’s just gift it now” is not always the smart move. Sometimes gifting makes sense. Sometimes it quietly passes a low cost basis to the next generation and creates a capital gains problem that might have been reduced or avoided.

2. Portability does not happen automatically

When the first spouse dies, families often assume everything is handled because the estate is nowhere near taxable. But portability is not automatic.

To preserve a deceased spouse’s unused exclusion amount, the IRS generally requires a timely filed Form 706. Even if that election is never needed, it can preserve flexibility for a surviving spouse if assets grow or the rules change later.

3. Inherited IRAs can create a tax headache for kids

Many parents still assume adult children can stretch an inherited IRA over life expectancy. That old playbook is gone.

For many non-spouse beneficiaries, the IRS says the account must be fully distributed by the end of the 10th year after death, subject to certain exceptions. If a non-spouse beneficiary is in their peak earning years when that happens, that inherited IRA can become a painful tax bill.

This is one reason legacy planning and tax planning overlap so much. It is also why we spend so much time helping clients think through Roth conversion opportunities before RMD age.

4. Gifting and charitable planning still require good asset selection

The annual gift exclusion is helpful, but the bigger question is often what you are gifting. Giving cash is one thing. Giving highly appreciated stock is another. The right answer depends on cash flow needs, the embedded gain in the asset, and whether the asset might otherwise receive a basis step-up later.

The same logic applies to charitable planning. Pre-tax IRA dollars, appreciated brokerage assets, and cash do not all carry the same tax baggage. Good legacy planning means being intentional about which assets go to loved ones, which go to charity, and which are better spent during your lifetime.

5. State-level tax issues are easy to overlook

At NTX Wealth, we work with clients in roughly half of the 50 states, so this comes up often. Texas does not have a state estate tax, but some states still impose estate taxes, inheritance taxes, or both. So even if federal estate tax is not the issue, state-level rules still might be.

That is especially true when a family has moved, owns property in another state, or wants to pass along assets across multiple households and locations.

The bottom line

A few of our clients do need advanced federal estate tax planning. But most do not, and almost every family can benefit from better legacy planning. The families who tend to do this best usually:

• Keep beneficiary designations current
• Think carefully about basis before making gifts
• Review inherited IRA exposure for their heirs
• Coordinate with their CPA and estate attorney
• Make sure the right assets are going to the right people

Legacy planning is not just about avoiding a tax that many families will never owe. It is about avoiding the other tax mistakes that still matter. If you want help pressure-testing your estate and legacy plan, we do that work with clients.

Any opinions are those of Robert Hrnicek and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Unless certain criteria are met, Roth IRA owners must be