Some entrepreneurs and business owners in Georgia have worked hard to amass significant estates over time. They may want to protect these assets and pass them on to future generations without losing a significant amount to estate taxes.
Many people greeted the rising estate tax exemption with relief after it went into effect in 2018. Individuals can leave behind up to $11.58 million without their beneficiaries being required to pay estate taxes, and married couples can leave double that amount. The exemption is set to further increase alongside inflation. This amount is more than twice the approximately $5 million estate tax exemption per person in place before 2018.
However, the elevated estate tax exemption is not necessarily permanent. Under the provisions of the law, it will automatically sunset in 2025 unless Congress acts to restore it. If it’s not renewed, the exemption would return to its pre-2018 level, adjusted for inflation. However, there are ways that people may be able to take action now to make use of the elevated exemption level, even if it’s allowed to sunset in 2025. One way is to transfer an estate in advance is by making lifetime gifts to beneficiaries, which are also counted as part of the exemption.
An irrevocable trust could also achieve the goal of removing wealth from an estate and providing for future generations without providing full control of business interests. Others may choose to gift assets at their current value rather than wait for them to appreciate. This could be a wise strategy for assets like shares in a business.
There are many ways estate owners can protect assets from estate taxes and provide for future generations. An estate planning attorney may help to develop a comprehensive plan and draft key documents like wills and trusts.