Understanding the Law on Georgia Inheritance Tax

 

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What Is an Inheritance Tax?

Explore the essentials of Georgia inheritance tax, from understanding rates and regulations to key exemptions. Perigon Legal Services brings clarity to estate law complexities. Call us today for more info.

Author: Stan Faulkner, Founder, Perigon Legal Services, LLC

Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on December 13, 2023.

An inheritance tax is a tax the government imposes on someone who inherits assets from a deceased person. It belongs to the informal category of taxes known as death taxes, which are payable over a person’s assets after they die.

This tax is not required in all U. S. states, but in states where it is payable, the rates can go as high as 16 percent of the inherited assets. Paying such amounts would add an unnecessary financial burden to a deceased person’s heirs and deplete their inheritance.

As such, many people seeking to leave their properties to their loved ones often seek legal and proactive ways to help their beneficiaries avoid this tax through advanced estate planning. However, whether or not this tax can be avoided depends on the law of the state where the assets are located.

Suppose you’re in the above situation as a Georgia resident or have assets in Georgia. In that case, the information provided in this guide can help you understand the position of Georgia law on inheritance tax and other taxes that may be payable over your estate after your Georgia and also suggest some strategies that could help you bypass the relevant tax requirements for the benefit of your loved ones.

Keep reading to learn more.

Is There an Inheritance Tax in Georgia? 

Inheritance tax payment is not required under Georgia state law. However, the law only applies to tangible assets, such as real estate located within Georgia’s borders, or intangible assets, such as intellectual property covered and regulated by Georgia law.

If you’ve acquired assets in different states, please confirm whether inheritance taxes are required in any of those states and the circumstances in which the tax would be payable as you plan your estate. This would allow you to take the necessary steps to help your beneficiaries inherit without having to worry about the tax.

An estate planning lawyer can provide you with the information you seek and help you learn your options in such circumstances.

Inheritance Tax and Estate Tax: Are They the Same?

People sometimes confuse inheritance taxes with estate taxes. But they are not the same.

Estate tax is a death tax payable from the estate of a deceased person after their death. It is paid from a deceased’s estate as a whole before the remaining assets are distributed to those entitled. In contrast, inheritance tax is usually paid after each beneficiary receives their share of a deceased’s estate

Is There an Estate Tax in Georgia?

By now, you may be wondering if estate taxes are payable in Georgia. Thankfully, the answer is no. Georgia state law does not require the collection of estate taxes from the estates of deceased Georgia residents.

However, a federal estate applies across all U.S. states regardless of the state’s specific estate tax laws. The executors of estates that qualify for federal estate tax must pay the tax and file the relevant tax returns with the Internal Revenue Service (IRS) within months after the person dies.

Who Should Pay Federal Estate Taxes in Georgia?

The federal estate tax targets wealthy estates valued in millions of dollars.

 Every year, the federal government, through the IRS, sets a monetary limit or threshold for estate tax purposes. Estates valued below the limit qualify for a federal exemption and do not need to pay the federal estate tax. Only those valued at or above the limit are caught by the tax

The federal estate tax threshold for the estates of those who died in 2023 is $12.92 million for individuals and $25.84 million for married couples. If your Georgia estate is valued at or above that amount, your estate will likely be charged for federal estate tax when you’re no longer around.

Federal estate tax rates can go as high as 40 percent of the entire estate. Paying that amount would significantly affect the value of the estate, which would mean that your beneficiaries would be left with far less than what you intended.

Is There a Way To Avoid Federal Estate Tax?

There are federal exemptions that allow those who should ordinarily qualify for federal estate taxes to avoid them. The most common one is marital exclusion, in which property that passes directly to a surviving spouse is exempt from estate tax payment.

There are also estate planning strategies that could help to avoid or minimize the payment of this tax. Some of those strategies include:

Establishing a Trust

A trust is an arrangement permitted by law that allows those who create them (trust settlors) to transfer their assets to a trustee to benefit those named by the settlor.

You can create different types of trusts under Georgia law, depending on your specific goals. But the critical point is that once you create a trust, especially an irrevocable trust, the assets you transfer to the trustee are no longer counted as part of your property and would not be calculated for estate tax purposes in the event of your death.

Giving Gifts

Instead of waiting to distribute your assets through your will, you can distribute portions of your estate as gifts during your lifetime. Doing this over time would reduce your estate’s value and possibly bring it below the federal estate tax limit.

However, you must be cautious with this approach because the federal government also taxes gifts made by individuals or married couples if the value of the gift is above a certain amount($17000 for individuals in 2023 and double that for married couples). 

So, while exploring this approach, you need to ensure that the gift you give each beneficiary does not exceed the exemption amount; otherwise, you could be liable for the federal gift tax.

There are several other strategies that could help you avoid or minimize estate taxes for your beneficiaries in the future. However, the common denominator with all of them is that they have to be initiated by the estate owner (you) during their lifetime rather than posthumously.

If you’d like to help your loved one avoid this tax, you need to take action immediately and begin the estate planning process because a delay could be dangerous. That way, you can rest easy knowing that you’ve done all you can to secure the future of your loved ones. 

Contact an Estate tax planning lawyer in Marietta, Georgia, today to help you get started.

Contact an Experienced Estate Planning Lawyer at Perigon Legal Services

Although there is no inheritance or estate tax in Georgia, your assets could still be subject to federal estate tax and inheritance taxes in other states, depending on the nature of your estate.

These taxes could constitute a huge burden on your loved ones when you’re no longer around. But you can help them manage the situation and avoid those taxes by creating a comprehensive estate plan today.

The estate planning process could be complex depending on your estate and your reasons for wanting to organize it. That’s where we come in.

At Perigon Legal Services, we offer comprehensive estate planning and probate services. We can help you organize your estate and manage any future tax liability on behalf of your loved ones.

If you have further questions about inheritance or estate tax, Settling an estate in Georgia, or creating a Living trust in Georgia, do not hesitate to contact us. We’d be happy to share your concerns and help you take the necessary legal steps toward your goals. That way, you can rest easy knowing that the future of your loved ones is secure.

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