Estate Settlement · Estate Tax & Complex Administrations
Estate Tax and Complex Administrations
Federal estate tax returns, portability elections, and administration of complex estates.
Most estates owe no federal estate tax. A meaningful number of them should still file a return, and a great many complex administrations fail not on the tax but on the assets nobody could find, value, or transfer. This page covers the federal estate tax as it now stands, the portability election that is quietly forfeited every year, and the administrations that run past two years because of what is in them.
Where the law now stands
The federal estate tax exemption
For years estate planning ran against a scheduled sunset: the exemption was set to roughly halve at the start of 2026. It did not. The One Big Beautiful Bill Act (P.L. 119-21), signed 4 July 2025, set the federal basic exclusion amount at $15 million per person and made it permanent, indexed for inflation. The top rate remains 40 percent under IRC § 2001(c).
Two consequences follow. Plans built around the sunset — aggressive gifting to use exemption before it disappeared — were solving a problem that no longer exists, and are worth revisiting. And the estates that now owe federal estate tax are a genuinely small group.
Missouri has no separate state estate or inheritance tax, so for most Missouri families the federal return is the only one in question.
$15 million
Federal basic exclusion per person for 2026, made permanent by P.L. 119-21 and indexed going forward. Roughly $30 million for a married couple using portability.
Nine months
Form 706 is due nine months after the date of death, with a six-month extension available on request. The extension is to file, not to pay.
40 percent
The top federal estate tax rate, unchanged. It applies only to the amount above the exclusion, which is why the marginal analysis matters more than the headline.
The most expensive thing a small estate can do is not file.
Portability is elected on a timely Form 706. No return means no election, and the first spouse’s unused exemption disappears.
A surviving spouse can carry over the deceased spouse’s unused exclusion — potentially another $15 million of shelter — but only if the executor elects it. Estates well under the threshold skip the return because no tax is owed, and forfeit the election. The IRS has published relief allowing certain estates with no other filing obligation to make a late election within a defined window, but it has conditions and it runs out.
What makes an administration complex
Assets that complicate an administration
Closely held business interests. A valuation is required, and the standard applied for an estate tax return is not the standard used for a buy-sell agreement or a divorce. Discounts for lack of marketability and lack of control are legitimate, contested, and worth real money.
Mineral rights, oil and gas leases. Frequently unrecorded in any obvious place, often spanning counties or states, and routinely missed entirely. Tracking them down is specialised work — and it is work Derek did at institutional scale.
Real estate in more than one state. An ancillary administration is generally required wherever the decedent held real property outside Missouri, which means a second proceeding on a second court’s schedule.
Retirement accounts. The distribution rules for inherited accounts changed substantially and depend on who the beneficiary is. Getting this wrong is an income tax problem for the beneficiary, not an estate tax problem — which is why it is so often overlooked.
Assets nobody knew about. Old accounts, uncashed instruments, unclaimed property, digital assets, and interests in entities the family had never heard of. Locating them is a discipline rather than a search.
Illiquidity. An estate can be taxable and have no cash. Where the estate is largely a farm or a business, deferral provisions may apply — but they have to be elected on the return.
Related reading
From the firm’s blog
- No Estate Tax Doesn’t Mean No Tax Return: A Missouri Executor’s Form 1041 Obligations
- The Inherited House Nobody Appraised: Why a Date-of-Death Valuation Matters Under a Beneficiary Deed or in Probate
- Charitable Remainder and Lead Trusts: How They Work and How They Save You Taxes
- Fiduciary duties and why them matter when settling an estate.
Meet Derek Haake
About the attorney
Derek spent three years as a Vice President and Estate Settlement Officer at Bank of America Private Bank — the country’s largest provider of managed personal trust services — administering estates for ultra-high-net-worth families. The largest estate he worked on was valued at $2.2 billion.
The work was precisely what this page describes: collaborating with internal tax and financial specialists, coordinating with tax professionals to gather what was needed for accurate and timely filings, researching and transferring mineral rights and oil and gas leases, coordinating property transfers from the decedent to heirs, vetting and managing outside vendors from law firms to appraisers, and communicating with beneficiaries through multi-year administrations.
Very few solo and small-firm attorneys have run administrations at that scale, because the estates that require it are normally handled by institutions. The advantage for a client is not the size of the numbers — it is that the procedures used on a nine-figure estate work perfectly well on a seven-figure one, and most complex administrations fail on procedure rather than on law.
Common questions
Frequently asked questions
Will my estate owe federal estate tax?
Almost certainly not. The basic exclusion is $15 million per person for 2026, made permanent and indexed by the One Big Beautiful Bill Act (P.L. 119-21), so a married couple can shelter roughly $30 million using portability. Only estates above that pay, at a top rate of 40 percent on the excess.
Missouri imposes no separate estate or inheritance tax, so the federal return is generally the only question.
Two caveats. Lifetime taxable gifts reduce the exclusion available at death, so the analysis is cumulative rather than a snapshot. And the exclusion is a political number — “permanent” means it has no scheduled sunset, not that a future Congress cannot change it.
The more common tax problem in a Missouri estate is income tax: the decedent’s final return, the estate’s income during administration, and the rules governing inherited retirement accounts.
My spouse died and our estate is nowhere near $15 million. Do we still file?
Often yes, and this is the most valuable thing on this page. Filing a Form 706 is how the executor elects portability — carrying the deceased spouse’s unused exclusion over to the survivor. No return means no election, and the unused amount is simply gone.
Why it matters for an estate that owes nothing: the survivor may remarry, may sell a business, may receive an inheritance, or may simply live another thirty years while assets appreciate. Preserving a second exclusion costs the price of a return now and can be worth a great deal later.
The return is due nine months after death, with a six-month extension available. The IRS has published relief permitting certain estates that had no filing obligation apart from portability to make a late election within a defined window measured from the date of death — but it is conditional and it expires. See the IRS estate tax guidance.
If your spouse died recently, this is worth a conversation now rather than later. It is one of the few estate decisions with a genuinely asymmetric payoff.
How is a closely held business valued for the return?
By a qualified appraiser applying fair market value — what a hypothetical willing buyer would pay a hypothetical willing seller, neither under compulsion. That is not the same as the number in a buy-sell agreement, the figure an owner has in mind, or the value used in a divorce.
Legitimate discounts frequently apply: lack of marketability, because there is no ready market for a minority interest in a private company, and lack of control, because a minority holder cannot direct distributions or force a sale. These are contested by the IRS and are worth substantial sums, which is why the appraisal has to be defensible rather than merely favourable.
Practical point for the fiduciary: get the valuation early. It drives the return, the distribution, and often the family’s expectations — and it takes longer than anyone plans for.
We found mineral rights nobody knew about. What now?
They are an estate asset, they need to be valued, and they need to be properly transferred — and they are among the most commonly missed assets in Missouri estates.
The difficulty is that mineral interests are often severed from the surface estate generations back, recorded in a county the family has no connection to, and producing royalties into an account nobody is monitoring. Finding them requires searching records where the interest sits rather than where the decedent lived.
Transfer requires a properly drafted conveyance and, usually, dealing with the operator’s division-order requirements. Done wrong, the royalties keep accruing to a dead person and the problem lands on the next generation.
This is specialised, it was a routine part of the Private Bank work, and it is one of the areas where an institutional method genuinely helps.
Why is this administration taking two years?
Usually one of a short list. A federal estate tax return holds the estate open past nine months by definition, and the estate is generally not closed until the filing is resolved. A business valuation takes months. Real estate in another state means a second proceeding on another court’s calendar. Mineral interests take time to find and longer to transfer. Illiquid assets have to be sold before anything can be distributed. And a dispute among beneficiaries stops everything.
What should not be happening is silence. A fiduciary running a complex administration can always explain which of those is the current constraint. If nobody can tell you why, that is a different problem — see Beneficiary Representation.
Should I get an appraisal, and of what?
Date-of-death values are needed for the inventory, for any return, and for the beneficiaries’ basis. Real estate, closely held business interests, and unique personal property generally need a qualified appraisal. Publicly traded securities are valued from market data. Ordinary household goods rarely justify one.
There is a reason beyond compliance. Beneficiaries take an income tax basis equal to the date-of-death value, so a properly documented appraisal reduces capital gains tax when the asset is later sold. Undervaluing an asset to keep an estate simple can cost a beneficiary more in gains tax than it ever saved.
In a probate administration the court may authorise a disinterested appraiser where value is uncertain, and the cost is an administration expense.
Free consultation
Schedule a free consultation
Twenty minutes, no commitment. We will tell you whether a return is required, whether one is worth filing anyway to preserve portability, and what a complex administration will realistically involve.
Schedule a Free Consultation(314) 732-1547
Email derek@haakelawgroup.com · Offices in Wildwood, MO & St. Louis, MO (by appointment)
This page is general information, not legal or tax advice, and does not create an attorney-client relationship. Exclusion amounts, elections and deadlines change and depend on the particular facts. Nothing here is a substitute for advice from a licensed attorney and your tax advisor about your own estate.