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Preparing for estate taxes

On Behalf of | Jan 19, 2017 | Estate Taxes

When an estate is worth more than the federal exemption, estate tax rates could be as high as 40 percent. Georgia residents may need to know about the importance of taking into account these contingencies when they are planning their estates.

While estate tax burdens fall to heirs and not owners, those leaving behind a legacy still need to think about possible tax ramifications. Otherwise, a relatively large portion of the estate might go to the government instead of the loved ones or charities a decedent cared about. Reducing taxes maximizes the estate one leaves behind. An individual or couple can minimize taxes by reducing an estate’s value while still alive. Individuals can give away assets under the lifetime estate and gift exemption, which for 2017 is $5.49 million. A married couple may give away double this amount.

People should not assume that they are not “rich” enough for their assets to warrant estate taxes. The size of an estate is determined by multiple factors like property, businesses, bank accounts, life insurance policies and investments. The total of all these assets can reach $5.49 million, and this is especially true when one has a successful business or multiple properties like a home and a vacation home.

Preparing for estate taxes is only one part of estate planning . One big decision involves deciding whether a will is sufficient or if a trust is needed. Some people establish trusts because they do not go through probate and are private, but trusts have their own rules and come with associated costs. An attorney could suggest other tools that could be appropriate for a client’s financial and family situation.