What are estate taxes in Atlanta, why do you have to pay them, how do they work and should they be on your estate planning checklist? If you’re an heir to an estate, you’ve probably wondered this. What’s more, if you’re the person setting up your estate for potential heirs, the same questions likely have also crossed your mind. Simply put: Estate taxes are taxes that are imposed on monies/values that surpass a certain threshold on any estate that you inherit. The idea is that these taxes force heirs to contribute back to the country some portion of the wealth that’s being transferred to them.
An estate tax is a tax imposed on the transfer of wealth from any estate. The taxation includes taxing the value of items like jewelry, fine art, stocks, cash, property and other types of assets. Not every estate is taxed – generally speaking the ultra-wealthy have the most tax exposure on an estate. With the right estate plan in place, however, tax liability can be greatly reduced.
Another type of estate tax is called gift tax. These have a certain limit, too. Once you gift beyond a certain amount of money to any given person, the IRS will impose a tax on you, the donor, but not the recipient. You are allowed to give a certain amount in “gifts” each year to other people before the IRS imposes these taxes.
To offer tax-free gifts, you’d just need to make sure that you’re not exceeding the annual gift tax allotment as set by the IRS for that fiscal year. As of 2021, the IRS has stated that this allotment is $15,000.There are, however, certain types of gifts that are never taxed. These include things like gifts that you give to your spouse; gifts or donations that you make to a political organization; medical expenses; college tuition, charitable donations; and others.
When considering your estate and its potential tax exposure during transfer of wealth, it’ always wise to talk to an experienced legal professional. Call us today to learn more about the methods we use to protect your assets and reduce your tax liability with proper estate planning in Atlanta.