Many Georgia residents have a very negative view about estate taxes, often calling them “death taxes.” Very few Americans will actually have to think about paying estate taxes, however, as there is a federal estate tax exemption that removes a large amount from the calculus.
The federal estate tax exemption for 2015 is $5.43 million, and the amount is scheduled to rise to $5.45 million in 2016. This means that estates valued at less than the exemption amount will not face estate taxes. For those that are worth more, only the portion above the exemption amount is taxable.
It is important to understand that gifts made come out of the exemption amount, unless they are made to a spouse. Each spouse has their own $5.43 million exemption, meaning a married couple can pass double that amount to children without estate taxes. A surviving spouse must elect to also take their spouse’s exemption amount in order to get the combined exemption when they later pass away. Families whose estates are above the exemption amount have other ways they can reduce their estate tax liability through tax planning.
People who believe at least a portion of their estates will be subject to estate tax may want to meet with their estate planning or tax law attorney. An attorney may be able to help them further reduce the size of their estates in order to minimize the taxes their estates will be required to pay. Gifts made to a spouse are unlimited and not taxable, so people may want to keep that in mind. An attorney may help their clients use a variety of different tools in order to help reduce the overall tax burden.