Introduction Estate and gift taxes are among the most emotionally charged — and financially significant — aspects of tax planning. Getting it wrong can mean your heirs pay 40% or more on the wealth you have accumulated over a lifetime. Getting it right can mean transferring millions in assets with minimal tax cost. In Day […]
Estate and gift taxes are among the most emotionally charged — and financially significant — aspects of tax planning. Getting it wrong can mean your heirs pay 40% or more on the wealth you have accumulated over a lifetime. Getting it right can mean transferring millions in assets with minimal tax cost.
In Day 10, we cover the key strategies for estate and gift tax planning in 2026, with specific focus on US estate and gift tax rules, India’s wealth transfer framework, and cross-border considerations for NRIs and US citizens with Indian assets.
The US imposes estate tax on the total value of a deceased person’s estate before distribution to beneficiaries, and gift tax on transfers made during lifetime above annual exclusion amounts.
– Federal estate and gift tax exemption: $13.99 million per person ($27.98 million for married couples)
– IMPORTANT: The TCJA doubled exemption expires after 2025. Unless Congress acts, the exemption reverts to approximately $7 million per person (inflation-adjusted) after December 31, 2025. For 2026, check current legislation.
– Top estate tax rate: 40%
– Annual gift tax exclusion: $19,000 per recipient (2026)
1. Annual Gift Exclusion Strategy
Gift up to $19,000 per year per recipient without using any lifetime exemption. A married couple can gift $38,000 per recipient annually. Over 10 years, this can transfer significant wealth tax-free.
2. 529 Education Plans (Superfunding)
Contribute up to 5 years of annual exclusions upfront: $95,000 per beneficiary (2026). No gift tax applies if the donor makes no other gifts to that person for 5 years. Ideal for grandchildren’s education funding.
3. Irrevocable Life Insurance Trust (ILIT)
Place a life insurance policy in an irrevocable trust. Death benefit is excluded from the estate. Proceeds pass to heirs free of estate tax.
4. Grantor Retained Annuity Trust (GRAT)
Transfer assets expected to appreciate to a GRAT. The grantor receives fixed annuity payments for a term; remaining value passes to heirs with minimal or zero gift tax if the assets outperform the IRS hurdle rate (Section 7520 rate).
5. Spousal Portability
A surviving spouse can use the deceased spouse’s unused exemption (DSUE). This requires filing an estate tax return even if no tax is due.
6. Charitable Remainder Trust (CRT)
Transfer assets to a trust that pays income to you or your heirs for a period, with the remainder going to charity. Provides income tax deduction, avoids capital gains on appreciated assets, and reduces estate.
India abolished estate duty in 1985. As of 2026, India does not impose an estate or inheritance tax. However:
– Gift tax provisions apply under the Income Tax Act: Gifts received by an individual above Rs 50,000 from non-relatives are taxable as income
– Relatives as defined under the IT Act are exempt from gift tax
– Immovable property transferred as gift is subject to stamp duty
– Gifts to a Hindu Undivided Family (HUF) have specific tax treatment
Cross-Border Estate Planning: US Citizens with Indian Assets
1. Indian assets are included in the US estate (US taxes worldwide estate of US citizens and domiciliaries)
2. No estate tax treaty between US and India: Both countries may claim jurisdiction
3. Foreign Tax Credit: US estate tax on Indian assets can be reduced by any inheritance taxes paid in India, but since India has no estate tax, this credit is unavailable
4. Indian succession laws (Hindu Succession Act, Muslim Personal Law, etc.) govern distribution of Indian assets — independent of US estate plan
5. Consider establishing a trust for Indian assets, reviewed by both US and Indian counsel
– Non-domiciliaries of the US are only subject to US estate tax on US situs assets
– US situs assets include: US real estate, US stocks, US bank accounts (some exceptions)
– Non-domiciliaries receive only a $60,000 estate tax exemption (not $13.99 million)
– Planning: Use non-US holding company (e.g., Singapore) to own US assets, potentially avoiding US estate tax on those assets
Estate and gift tax planning is one of the highest-leverage areas of tax planning — the stakes are high and the window to act may be closing if the TCJA exemption sunset is not extended. The best time to plan is well before the estate event.
For cross-border families, the complexity is compounded by different succession laws, no US-India estate tax treaty, and dual tax obligations. Specialist cross-border estate planning counsel is essential.
In Day 11, we cover Tax-Efficient Entity Structuring — choosing the right legal entity for your business operations to minimise the combined tax burden across jurisdictions.
Moiz Ezzi is a Certified Public Accountant (CPA) and Chartered Accountant (CA) specialising in cross-border tax advisory for multinationals, NRIs, and non-US founders with India-US and India-global operations. He advises clients across transfer pricing, international holding structures, DTAA planning, and entity structuring.
Connect with Moiz Ezzi on LinkedIn for weekly cross-border tax insights.
