‘I need to get my financial ducks in a row’: I’m 80 with $1 million. How do I prevent my son from being hit with inheritance tax?

Core Points - The article addresses concerns regarding estate planning and tax implications for an octogenarian's inheritance to her son, emphasizing the importance of understanding tax laws and exemptions [1][4]. Group 1: Inheritance and Tax Implications - Inherited investments receive a "step-up in basis," resetting their cost basis for tax purposes to fair market value at the time of death [3]. - The lifetime estate-tax and gift-tax exclusion for 2026 is approximately $15 million per individual, allowing significant wealth transfer without incurring federal estate tax [4][5]. - Inheritances are not considered taxable income, meaning the son will not owe income tax on the received assets, although potential capital gains and retirement account withdrawals may be taxed [6]. Group 2: State Regulations and Life Insurance - Some U.S. states impose inheritance taxes, but many exempt close relatives like children, making state laws crucial for estate planning [7]. - Life insurance death benefits are generally free of income tax for beneficiaries, and it is advised to name the son directly as the beneficiary to avoid complications [8].