Tax strategies for estate plans

On Behalf of | Dec 9, 2021 | Blog, Estate Planning |

Those working through their estate plans in Georgia quickly realize that the process reveals several opportunities to preserve assets to pass on to their beneficiaries. Many fear that after working their entire lives to accumulate wealth to then benefit their children and grandchildren, administering their estates takes away a good portion of that wealth. However, structuring an estate to avoid probate (when possible) and settling debt prior to death avoid many of those potential liabilities.

Yet most assume that they cannot avoid estate taxes. According to the website, however, the state of Georgia does not impose an estate tax on residents. One might even be able to mitigate the estate tax liability coming from the federal level with the right plan in place.

Understanding the federal estate tax exemption

Doing this requires that one comprehends the estate tax exemption the federal government offers. Per the Internal Revenue Service, the exemption amount for 2021 is $11.7 million. This elevated amount allows many estates (indeed, even a majority) to avoid a federal estate tax liability altogether.

Leveraging estate tax portability

Married couples might even optimize their estate plans through estate tax portability. “Portability” refers to the sharing of certain tax benefits between eligible parties. In terms of estate taxes, people may claim the unused portion of their deceased spouse’s estate tax exemption and combine it with their own.

Leveraging portability may allow a couple to effectively double one’s exemption. To do this, spouses must plan to leave their estates to their partners. This allows those assets to pass tax-free thanks to the unlimited marital deduction (while also preserving their entire estate tax exemption). The surviving spouse then claims that unused $11.7 million exemption by filing an estate tax return electing portability.

FindLaw Network