Although most people are familiar with income taxes, sales taxes, and even ad valorem taxes, the subject of estate taxes, or death taxes, is an area that remains mysterious and confusing. Let’s pull back the curtain and unveil the truth about estate taxes.
The first rule of taxes is that they change. Estate taxes are creatures of the legislature so they can change when Congress or the State changes the tax laws.
Second, there are no estate taxes currently imposed by Georgia law. For Georgia residents, the estate taxes that could apply are Federal taxes or taxes in other states (or countries) where you own property.
The third thing to keep in mind is that only a very few estates, about 0.1%, will have any tax liability. No, that’s not a typo. To put this in perspective, the Tax Policy Center estimates about 2.7 million people died in 2018. Of that, only about 4,000 estate tax returns will be filed, and of that only about 1,900 will actually owe any taxes. That is because, under the current Federal laws, each person has a death tax exemption of $11.2 million. That means that a person’s estate must be valued at over eleven million dollars before there’s a possibility of any tax liability.
You may be wondering, then, what is all the hype over estate taxes about? Estate taxes are largely misunderstood and feared, in part because they have historically been a much greater concern for a larger percentage of the population. The exemptions were much lower and more estates were taxed. In recent years, the increasingly higher exemption amounts imposed by Congress have significantly reduced the possibility of estate taxes affecting the majority of the population. However, just because estate tax exemptions are favorable now, they may not remain that way.
Fortunately, planning for estate taxes is currently not a concern for most people. Because the law is ever changing, and each situation is different, it’s best to discuss your individual circumstances with your attorney, CPA, and/or financial advisor.