If your loved one’s estate includes significant wealth, you probably have concerns about how the government will tax it during probate. The various taxes that might affect the estate may take a considerable chunk from the inheritance your loved one hoped to leave for you and others, as well as leaving complex and confusing work for you if you are the executor your loved one chose to manage the estate after his or her death.
Ideally, your loved one took certain steps while preparing the estate that will minimize the impact taxes will have on its assets. Your first step is to learn about the various ways the government can tax an estate’s assets, along with the tools your loved one may have used to legally protect the estate.
Complex estate tax laws
Most people in Georgia worry unnecessarily about estate taxes. Only a handful of states impose a tax on estates or inheritances, and Georgia is not one of them. Meanwhile, the federal government is only concerned with estates with a total market value of $11.7 million or more. This includes the value of all your loved one’s assets, such as real estate, cash, stocks and investments, as they receive an appraisal at the time of his or her passing. An estate that falls below that amount is exempt from federal estate tax.
Other taxes that might affect your loved one’s estate include:
- Gift tax on any amount over $15,000 per year to the same person, or on any amount over $11.7 million that your loved one gave away during his or her lifetime.
- Generation-skipping transfer tax, which involves gifts over $11.7 million that he or she gave to grand- or great-grandchildren or to any non-relative who is at least 37 years younger than your loved one.
- Income taxes, including the final assessment during your loved one’s life and any income their assets earn after their death, such as interest or appreciation.
Of course, the laws for any kind of tax may change at any time, so it is wise to discuss your situation with a knowledgeable legal professional. It is easy to become confused when facing the maze of tax regulations involved in probate, especially one with complex assets that qualifies for federal estate taxes. Additionally, you have certain deadlines to meet for filing any taxes the estate owes, and you have the right to contest tax bills you believe are not valid.