Georgia abolished its estate tax in 2014. However, you might still have to pay federal estate taxes, depending on the size of your estate. The exemption amount has increased over the years. In 2005, if the value of your prior taxable gifts and gross assets were over $1,500,000, you were required to file a federal estate tax return. In 2018, the federal estate tax exemption was increased to $11,180,000. Since that time, an adjustment has been made annually for inflation and the exemption was increased to $11,400,000 in 2019 and increased to $11,580,000 in 2020. The current law is set to sunset (end) in 2026 with federal estate tax exemptions returning to the levels in place in 2017 of $5,490,000, with an adjustment for inflation.
Decreasing Your Tax Burden
You have several ways to decrease your tax burden, including gifting assets prior to your death.
As of 2011, the Internal Revenue Service allowed you to pass a decedent’s unused exemption to his or her surviving spouse as long as the decedent’s estate filed the estate tax return on time. This means that more of the surviving spouse’s estate is exempt from taxes. If the deceased spouse’s share of the exemption does not cover the entire estate, the spouse has other options he or she can implement prior to death.
If your estate is large enough to be taxable, you should create a plan to reduce the estate tax. While you probably would not want to gift your entire estate during your lifetime and may not be able to do so without incurring tax penalties, you can establish an annual gifting plan. In an annual gifting plan, you take advantage of the IRS’s annual gift exclusion that allows you to transfer $15,000 per year to any one person without incurring taxes. Since the gift tax is exclusive – that means that the IRS looks at each gift separately – you can make several $15,000 gifts each year to different people.
In addition, you can create estate documents that simplify the distribution of assets upon the death of a loved one, including a trust that holds all of your assets and that includes tax planning to take advantage of the estate tax exclusions. You can also consider including charities in your estate plan to reduce your taxable estate. When you consider creating a trust as a part of the plan, not all trusts are equal. Some will help you protect assets from creditors and help you lower your tax burden if they are properly set up.
Contact a Georgia Estate Lawyer
If you have a large estate, regardless of your age, you should work with our estate attorneys to set up an estate plan that best benefits your family situation during and after your life.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.