The state of Georgia does not impose an estate tax on its residents, but there are 15 states that do. That’s why residents of states such as New York, Illinois and Washington often move elsewhere during their golden years. According to a National Bureau of Economic Research study that was conducted in 2004, retirement-age moves by wealthy individuals cause states to lose about one-third of their estate tax revenue.
A majority of the states that have estate taxes do not allow residents to claim an exemption that is as large as the federal estate tax exemption of $5.43 million per person. In some states, taxes are collected from estates that have at least $1 million in assets. When an estate is only subject to the federal estate tax, a married couple can combine their exemption limit to protect as much as $10.86 million from taxation.
A report by the Heritage Foundation explained how 13 of the states that tax people’s assets after they die experience a lot of outward migration. When so many wealthy seniors move their resources out of a state, the effects of the economic loss can be felt over a long period of time, according to the report. The Heritage Foundation also reported that nine of the 10 states that have more inward migration than outward migration are states without any inheritance or estate tax requirements.
Even though most estates in Georgia won’t be taxed, beneficiaries could lose a significant chunk of their inheritance if they are required to go through probate court. People may be able to help their children and other beneficiaries to avoid probate by creating trusts with the assistance of an estate planning attorney.