When you die, your estate will typically need to go to your heirs through the probate process, which can take several months, might be expensive and will be stressful for loved ones. As part of the process of managing an estate, the executor may also have to pay an estate tax, which can significantly impact an estate’s value. Estate tax is levied on the estate’s total value at death before distribution to beneficiaries. While some states also have an inheritance tax that is imposed on the beneficiaries based on the value of assets received, the state of Georgia does not have this tax. Effective estate planning with a professional estate planner enables you to apply strategies that include trusts to minimize taxes and avoid probate.
What is Estate Tax?
The estate tax, often called the “death tax,” is a tax levied on the total value of a person’s estate upon their death. Georgia’s estate tax is based on the federal estate tax. For 2024, the federal estate tax exemption is $13.61 million per individual, with estates exceeding this threshold taxed at up to 40%. Estates valued below this limit are exempt from federal estate taxes. High-net-worth Atlanta residents benefit significantly from these exemptions that are currently set to change to lower thresholds in 2026, making now an important time to update or create an estate plan.
Why Is Estate Tax Planning Essential?
Proactive estate tax planning is crucial to preventing your heirs from facing unexpected tax burdens. Without careful planning, a significant portion of the estate you’ve worked hard to build could end up in the hands of the government, instead of your loved ones.
Tax planning involves a comprehensive look at your assets and potential tax liabilities, ensuring that your beneficiaries are safeguarded. The goal is to reduce estate tax significantly, allowing more wealth to transition to the next generation.
How Trusts Can Mitigate Tax Impact
Proper estate planning can significantly mitigate the impact of taxes on an estate. Incorporating trusts into your estate plan can be a strategic move to minimize estate taxes. Trusts, particularly irrevocable ones, allow you to transfer wealth from your estate, reducing the overall value subject to estate taxes upon your death.
Trusts offer control over assets even after death, ensuring that your wishes concerning asset distribution are honored. Grantor trusts and other types of trust arrangements are advanced estate planning tools that can significantly reduce your taxable estate. The Wooten Firm, a trusted estate planning resource in Atlanta. can help explore various strategies, ensuring compliance with tax laws and maximizing available deductions and exemptions.
Why Do You Want to Avoid Probate?
Probate is the judicial process through which your will is validated, and your assets are distributed under court supervision. Probate is public, which means the details of your estate become a matter of public record. It’s also often a lengthy and costly process that can deplete your estate’s value and delay asset distribution to your beneficiaries.
How Trusts Transfer Your Assets Privately and Efficiently
With proper planning, trusts are a powerful tool that offers a seamless transfer of assets outside of probate. Probate addresses the property and assets that were owned in a decedent’s name. When assets are placed in the trust, they are owned by the trust and not the person who created the trust (the grantor). Trusts provide both privacy and efficient distribution of property. No one but the trustee and, depending on the trust, the beneficiaries, know what is in it. Assets in the trust are also distributed as directed in the trust, so they go directly to beneficiaries without court involvement.
Conclusion: Navigating Taxes in Estate Planning
For affluent Atlanta residents who want to ensure a smooth and private transfer of wealth, working with our experienced estate law firm can help safeguarded your loved ones from unnecessary legal hurdles and minimize taxes. Schedule a call with our office to learn more about how a comprehensive estate plan can prepare for any eventuality, ensuring peace of mind for you and your loved ones.