Estate planning isn’t just about who gets what—it’s about how much of your estate actually reaches your family versus how much is lost to taxes or tied up in court. BSF&B Partner Megan Conroy joined WGNY to cut through the confusion around estate taxes, capital gains, and the probate process. Here’s what she wants families to understand heading into 2026.
The Estate Tax Reality: Most Families Don’t Owe a Dollar
An estate tax is a tax on the right to transfer property at death—applied to everything you own, from your home and business to life insurance and savings. But here’s what most people don’t realize: the exemption thresholds are high enough that the vast majority of families will never owe a cent.
For 2026, those thresholds are:
- Federal exemption: $15 million per person
- New York State exemption: $7.35 million per person
If your estate falls below these limits, you owe nothing. Any tax that does apply is paid by the estate before assets are distributed—beneficiaries receive their inheritance without having to write a check. These figures adjust annually, so it’s worth a periodic review. But for most families, the real planning opportunity isn’t estate taxes—it’s capital gains.
Capital Gains and the Step-Up in Basis: The Detail That Saves Families Thousands
A capital gains tax is owed on the appreciation of an asset—the difference between what you originally paid (your “basis”) and what it sells for. The rate can reach as high as 28%. What most people don’t know is that how an asset is transferred at death can eliminate that tax almost entirely.
This is where the “step-up in basis” matters. When an asset passes through an estate, the beneficiary’s basis is reset to the fair market value on the date of death—not what you originally paid. If they sell shortly after inheriting, the taxable gain is often zero.
The gifting trap: Megan strongly cautions against gifting assets—like a home—to your children during your lifetime. When you gift an asset, the recipient takes on your original basis. Buy a home for $75,000, watch it appreciate to $500,000, and gift it to your child: they now face a potential $425,000 taxable gain when they sell. Pass that same home through your estate instead, and the basis resets to $500,000. The taxable gain drops to zero.
The instinct to simplify things by transferring assets early is understandable—but without proper guidance, it can cost your heirs significantly more than doing nothing.
The Probate Process: What Executors Need to Know
Probate is the court-supervised process for distributing assets held in a deceased person’s name alone. Even with a clear will, the process typically takes about a year—and assets are often frozen for the first several months.
During that time, the executor is responsible for identifying and settling all outstanding debts—credit cards, liens, and other obligations—before a single asset can be distributed to beneficiaries. The complexity varies widely depending on the estate, but one thing is consistent: executors who understand the process ahead of time are far better positioned to manage it.
If you’re named as an executor in someone’s will—or expect to be—understanding what that role actually requires is essential.
Hear the Full Interview
Megan covers all of this in detail—including the math behind the step-up in basis and what the probate timeline really looks like—in her full interview with WGNY.
—
Most clients come in thinking they’ve waited too long. They haven’t. A 90-minute consultation with our team is enough to build a clear picture of where you stand and what, if anything, needs to change.
Contact the attorneys at Blustein, Shapiro, Frank & Barone, LLP to schedule your consultation.