Estate Tax Planning Strategies in Georgia

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Do you need estate planning strategies in Georgia? Turn to The Law Office of Paul Black for guidance. Book an appointment with us today for a deeper conversation.

Author: Paul Black

Paul’s experience as the son of two parents with big health challenges is what led him to the work he does today and gives him first-hand knowledge of the challenges that many caregivers and family members face. After graduation from GSU Law, Paul was chosen from dozens of applicants nationwide as one of three 2010-2011 Borchard Foundation Law & Aging Fellows. Paul has been named as  a SuperLawyers “Rising Star” in the area of Estate Planning and as a member of Georgia’s “Legal Elite” by Georgia Trend magazine. Published on: January 05, 2024. 

Effective Estate Tax Planning Strategies in Georgia

Effective Estate Tax Planning Strategies in Georgia sect

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Estate tax is a compulsory charge on people’s right to transfer their assets to others when they die. When this tax is payable, it must be deducted from a deceased person’s estate before the assets are distributed to the deceased’s beneficiaries and heirs.

However, estate tax rates in the U.S. are high and could go as high as 40% of the deceased’s estate, depending on the circumstances. When that happens, a massive chunk of the properties the deceased left for their loved ones to enjoy would be used to settle the tax at the assessed rate, leaving the beneficiaries with a fraction of their original entitlement. 

The good news is that there are ways to minimize or avoid payment of this tax. However, that can only be achieved with proper planning by the owner of the estate while they are still alive.

If you own assets in Georgia and you’d like to minimize the estate tax liability that could apply to your estate and preserve your wealth for your heirs, it is important that you understand how estate taxes work in the state and the strategies that could help you achieve your goals.

The Law Office of Paul Black can provide personalized estate tax planning guidance suitable for your unique situation. Below, we discuss Georgia’s estate tax laws and common estate tax planning strategies to help you anticipate and prepare for possible estate tax liabilities on behalf of your loved ones.

Understanding Georgia’s Estate Tax Laws 

If you own property in Georgia, you’ll be happy to learn that Georgia does not collect estate taxes. The state also does not collect inheritance tax from those who inherited property.

This means that under state law, you can currently transfer assets to your beneficiaries with zero estate tax liability.

Federal Estate Taxes and Exemptions

Regardless of the cancellation of Georgia estate taxes, the federal government charges a federal estate tax for certain estates in all 50 states. 

Federal estate taxes are assessed at 18 to 40 percent of a deceased person’s estate. If you own assets in Georgia or elsewhere in the U.S., the assessed amount must be paid from your estate unless your estate qualifies for the federal estate tax exemption.

The federal exemption excludes certain estates valued below a threshold amount from payment of estate taxes. The estate tax threshold for those who die in 2024 is $13, 610 000. Any estate valued above that amount must pay estate tax.

Because the exemption amount is high, most Americans would not need to worry about paying the federal estate tax since the value of their estate is below the threshold.

However, if you have many assets or investments, there’s a good chance you’ll be caught by the federal estate tax law. In that case, you’ll need to adopt appropriate estate tax planning strategies to avoid or reduce your future federal estate tax liability and preserve the bulk of your estate for your beneficiaries.

Top 3 Estate Tax Planning Strategies in Georgia

Setting Up a Trust

A trust is a legal arrangement that allows a person who owns assets to transfer their property to a third party (the trustee) for the use and benefit of those named by the creator/property owner.

Setting up a trust is one of the most effective strategies for passing wealth to heirs without stress. Because the trust property has been transferred to the trustee or the trust in some cases, it is no longer counted as part of the owner’s estate for estate tax purposes, making it a practical estate tax planning tool for people.

If you’re also considering incorporating charitable contributions into your estate planning, creating a trust can help you achieve a seamless donation or transfer of assets to the charity of your choice during your lifetime and after you pass.

There are different types of trusts in Georgia, including:

  • Revocable living trusts

  • Irrevocable trusts

  • Charitable remainder trusts

  • Special needs trusts

  • Asset protection trusts.

Each type of trust has different purposes and offers different levels of protection for estate taxes and other purposes. Before you create a trust, it is important that you consult an estate planning attorney to help you understand the estate planning and tax implications of different types of trusts so you can determine which is most appropriate for you.

Gifting Strategies

You can reduce the value of your taxable estate by giving out money or assets to your loved ones instead of living it to them in a will. Doing this over a long period can help to bring the value of your remaining estate below the federal estate tax exemption threshold while ensuring that your loved ones are not left destitute during your lifetime and while waiting to receive the bulk of your estate when you pass on.

However, you must be cautious with this strategy because there is a gift tax imposed by the federal government that you may be liable for. This gift tax is payable if the value of the gift given to a specific person exceeds a certain amount each year ($18000 for individuals and twice that if the giver is a married couple in 2024).

Investing in Life Insurance

Investing in a life insurance policy is a good way to ensure your beneficiaries receive a huge payout after your death without estate tax liability.

However, you’ll need to name a specific person or people as your beneficiary for this to work. Otherwise, the funds would be counted as part of your estate, which could make it subject to estate tax.

Risk Management in Estate Tax Planning 

Adopting one estate tax planning strategy could open you up to other risks or liabilities. The gift-giving strategy discussed above is a good example. In that section, we explained that giving gifts could lead to liability for gift taxes, so those who choose to adopt that strategy must be cautious while implementing it.

In the same vein, you must be aware of the possible risks with any other strategy you choose and take steps to guard against them.

 Managing risks in estate planning is one of the critical roles of an estate planning attorney. That is why it is important that you work with one throughout the estate tax planning process. Your attorney can help identify the risks of any strategy that you choose and find ways to mitigate them before they become a problem or lead to further liability for you or your beneficiaries.

Do You Need More Information About Estate Tax Planning in Georgia? Contact The Law Office of Paul Black for Assistance 

Estate tax planning may sound complex, and you may be tempted to overlook it while planning your estate. However, failing to make adequate preparations could lead to significant tax liabilities for your future beneficiaries. You alone can help them avoid that liability and the hardship that could arise if large portions of your estate are lost to the government through the federal estate tax.

If you’re worried about beginning the process, we can help. At The Law Office of Paul Black, we can assess your circumstances and help you formulate an appropriate estate tax planning strategy or determine whether you need estate tax planning in the first place.

We can also create the necessary legal documents, such as a trust, that would give life and legal backing to your chosen strategies to help your loved ones get the bulk of your estate.

Contact us today to get started.

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