People in Georgia planning to leave a substantial inheritance to their heirs may want to learn more about strategies used for reducing estate taxes. The highest federal estate tax rate is currently 40 percent. However, the federal estate tax for 2015 only applies to the value of the estate that is in excess of the $5.43 million lifetime basic exclusion amount.
It may be worth noting that the annual gift exclusion allows people to make gifts of up to $14,000 tax-free per recipient. When the gifts are distributed over a span of several years, the exclusion may provide many people with an effective strategy to minimize the amount collected by the federal government in estate taxes after the donor dies.
For some people, reducing the estate tax involves addressing the largest asset in the portfolio, the family home. A qualified personal residence trust allows an owner to transfer the home into a trustfor a predetermined amount of time. Under a QPRT, the homeowner can live in the house, choose how long the trust lasts and decide which beneficiary will receive the home when the trust ends. Another way to potentially reduce the estate tax burden is to move to a state like Georgia that does not have a state estate or inheritance tax.
People who are interested in learning more about the available options for reducing future estate tax burdens may want to meet with an estate planning lawyer. Legal counsel might review the situation and help identify the strategies and types of documents, such as irrevocable life insurance trusts, that might meet the client’s priorities.