Estate Tax Attorney in Phoenix, Arizona

It is a tax on the transfer of property after death.

The estate tax is a federal tax imposed on the transfer of a deceased person’s “taxable estate.” unlike income tax, which is based on earnings, this tax is based on the fair market value of everything you own at the time of your passing. It is often referred to as a “death tax,” though it only applies to estates that exceed specific value thresholds set by the IRS.

No, Arizona does not impose a state-level estate tax.

Arizona is one of the many states that has repealed its estate tax (often called a “pick-up” tax). This means that if you are a resident of Phoenix or anywhere else in Arizona, you do not have to worry about paying a separate state tax on your estate. However, your estate may still be liable for federal estate taxes if your assets exceed the federal exemption limit.

The federal exemption is $15 million per individual.

For the tax year 2025, the IRS allows an individual to transfer up to $15 million to heirs without owing any federal estate tax. For married couples, this exemption is effectively doubled to nearly $30 million with proper planning and portability elections. Estates valued below this amount generally do not need to file an estate tax return (Form 706) purely for tax payment purposes.

Estate tax is paid by the estate; inheritance tax is paid by the beneficiary.

These terms are often used interchangeably but are legally distinct. An estate tax is deducted from the estate’s assets before distribution to heirs. An inheritance tax is a state-levied tax that beneficiaries must pay on what they receive. Fortunately, Arizona does not have an inheritance tax, meaning your beneficiaries in Phoenix will not owe state taxes simply for receiving assets.

It is calculated based on the net value of assets exceeding the exemption.

To calculate the tax, you first determine the “Gross Estate” (total value of all assets). You then subtract allowable deductions (like debts, mortgages, and charitable donations) to find the “Taxable Estate.” The tax is only applied to the portion of the taxable estate that exceeds the $15 million exemption. The federal estate tax rate for 2025 tops out at 40% for amounts over the threshold.

Everything you own is included in your gross estate for estate tax purposes.

Your gross estate includes cash, securities, any real estate (foreign or domestic), business interests, trusts, annuities, and personal property like cars or jewelry. Crucially, it also includes the death benefit proceeds of life insurance policies if you owned the policy at the time of your death.

Strategic gifting and trusts are primary methods.

Reducing estate tax often involves lowering the value of your estate before you pass away. Common strategies include making annual tax-free gifts to family members, paying for a grandchild’s tuition or medical expenses directly (which is tax-exempt), and transferring ownership of life insurance policies into an Irrevocable Life Insurance Trust (ILIT).

Yes, if your assets approach or exceed the exemption limit.

Estate tax laws are complex and high stakes; a simple error can cost your heirs 40% of their inheritance. A qualified estate tax attorney in Phoenix can help you navigate federal regulations, structure your assets to maximize exemptions, and ensure all necessary filings are accurate and timely. Copper State Planning specializes in these high-net-worth strategies.

Strategies range from simple gifting to complex irrevocable trusts.

Effective planning may involve setting up Credit Shelter Trusts (Bypass Trusts) to preserve both spouses’ exemptions, creating Family Limited Partnerships (FLPs) to discount asset values, or utilizing Charitable Remainder Trusts (CRTs). These tools allow you to pass wealth to the next generation while legally minimizing the “taxable” value of those transfers.

The return is due nine months after the date of death.

The executor of the estate must file IRS Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return) within nine months of the decedent’s passing. An automatic six-month extension is available if requested prior to the due date, but the estimated tax must still be paid by the original nine-month deadline to avoid interest and penalties.

It defers taxes, but does not eliminate them permanently.

The unlimited marital deduction allows you to leave an unlimited amount of assets to your surviving spouse (provided they are a U.S. citizen) tax-free. However, this only postpones the tax until the second spouse dies. Without proper planning, the combined estate might then exceed the single exemption limit, resulting in a significant tax bill for your children.

You can gift $19,000 per person, per year, tax-free (2026 limit).

In 2025, you can give up to $19,000 to as many individuals as you like without it counting against your lifetime estate tax exemption. For a married couple, this means you can jointly gift $38,000 per recipient. This is a powerful, simple way to reduce the size of your taxable estate over time.

It allows a surviving spouse to use the deceased spouse’s unused exemption.

If one spouse passes away and does not use their full $15 million exemption, the “Deceased Spousal Unused Exclusion” (DSUE) can be transferred to the surviving spouse provided they do not remarry. However, this is not automatic; the executor must file a timely estate tax return (Form 706) to elect portability, even if no tax is currently due. (Note: While it is best to do this immediately, the IRS currently allows a grace period of up to 5 years to file this form if the estate is below the filing threshold.)

Yes, if the deceased owned the policy.

Many people mistakenly believe life insurance is tax-free. While the income tax on proceeds is generally exempt, the value of the death benefit is included in your taxable estate for estate tax purposes. To avoid this, high-net-worth individuals often use an Irrevocable Life Insurance Trust (ILIT) to remove the policy from their personal estate.

We offer personalized, strategic wealth preservation for Arizona families.

At Copper State Planning, we don’t just draft documents; we design comprehensive strategies to protect your hard-earned legacy from unnecessary taxation. Our Phoenix-based team understands the nuances of Arizona law combined with federal tax codes, ensuring your wealth goes to your loved ones, not the IRS.