Georgia residents who are thinking about buying a property overseas for either investment or retirement purposes should be aware that foreign real estate holdings are considered part of an individual's gross estate by the government. This means that the value of these holdings is included when federal estate taxes are calculated. Gross estates are made up of all of the assets owned at the time of death, and they may even include life insurance proceeds that have been paid to other beneficiaries.
Determining the value of the gross estate is an important step in estate planning. Once these calculations have been completed, estate taxes may become a factor even for individuals who do not consider themselves wealthy. For the 2018 tax year, estate tax exemptions, which are linked to increases in the cost of living, are $11,180,000 for an individual and $22,360,000 for a married couple. They are scheduled to rise to $11,400,000 for an individual and $22,800,000 for a married couple in 2019.
Other assets included in a gross estate include bank accounts, artwork, stocks, bonds, automobiles and personal possessions. Gifts, retirement accounts and other investment funds are also considered part of a taxable estate. The net value of the estate is determined by taking the gross estate figure and deducting liabilities such as mortgages, unpaid taxes and funeral costs.
Attorneys with experience in this area could suggest using estate planning tools like trusts, charitable gifts and private foundations to protect assets and reduce federal estate tax exposure. Legal counsel might also take steps to ensure that the values placed on assets reflect prevailing market conditions. In addition to managing tax exposure, a carefully constructed estate plan could help estates to avoid the public scrutiny of the probate process and greatly simplify the financial matters left for loved ones to attend to.