It’s April, which means the weather is getting warmer, the days are getting longer, and all the joy this could cause is tainted by the fact that taxes are soon due. Yes, April is a month of split character. You love it and you hate it. With proper tax planning, this need not be the case, though. An experienced estate planning attorney can explain how to get set up so that when next April arrives you aren’t ruing missed opportunities and stressing about getting your return in on time.
What Does an Estate Planning Attorney Have to do With Tax Time?
When most folks think of taxes, they think only of income tax when, in reality, this is just one of the numerous types of taxes you need to plan for. Others include gift taxes, estate taxes, inheritance taxes, and capital gains taxes. Each of these, along with income taxes, influence one another and so a robust tax plan takes them all into account.
In a future article, we will detail the nuances of each of these different tax types. Here, we focus only on estate taxes as it is in pursuit of minimizing these while also maximizing the value of your estate that other tax considerations come into play.
What Are Estate Taxes?
Estate taxes are complex, and the details vary depending on individual circumstances. Because of this, it is important to consult an experienced estate planning attorney when designing a plan to minimize or eliminate estate taxes. That said, it helps to gain a general understanding of the subject.
Both the federal government and some states collect estate taxes. Georgia is not one of these states and yet if you have assets elsewhere or if you move, knowing this is important. Many states have a much lower estate tax exemption than the federal government and so, again, it is important to consult an estate planning attorney when evaluating your position.
The federal estate tax exemption is set at just over $12 million for 2022 (just over $24 million for married couples). This means that any estate worth more than this amount is subject to a 40% tax when the owner dies.
While $12 million may sound like a lot of money, the federal estate tax exemption is variable and may soon be much lower. The current level was set by the Tax Cuts and Jobs Act of 2017 which will sunset (or expire) on 12/31/2025. This means that unless new legislation is introduced, the federal estate tax exemption will return to its 2017 level of $5.49 million (adjusted for inflation) on this date.
Estate tax planning is not just about avoiding estate taxes. A robust tax plan ensures you maximize the value of your life’s work so that the beneficiary or beneficiaries of your estate receive the maximum possible inheritance (regardless of your estate’s value). Furthermore, tax planning in consultation with an estate planning attorney also serves to maximize retirement savings by ensuring your different income streams don’t intersect to create an unnecessary tax bill.
To learn more about estate taxes or any other issue related to the matter, do not hesitate to reach out to the Estate Planning Law Group of Georgia either by calling 770-822-2723 or using the contact form on our website.
Contact the Estate Planning Law Group of Georgia