Many estate planning strategies aim at helping you avoid unnecessary costs at the time of the administration of your estate in Gainesville. Yet one expense that you may believe you (or more specifically, your beneficiaries) cannot avoid is taxes. That may not necessarily be the case, however.
As of 2014, Georgia no longer imposes a state estate tax on its residents. That means that the only potential tax liability you have to worry about comes at the federal level. There are strategies, however, that can help you limit (or even avoid) that liability.
The federal estate tax threshold
A federal estate tax threshold exists to limit the tax liability facing estates. If the total taxable value of your estate comes in under the threshold amount, your estate will not owe any federal tax. Per the Internal Revenue Service, the threshold amount for 2020 is $11.58 million. Estate tax portability also offers the option to married couples to combine their unused exemption amounts. With careful planning, you and your spouse can take advantage of other tax benefits to effectively double their extension amount.
To do this, you need to take advantage of the unlimited marital deduction. This allows you to pass an unlimited amount to your spouse without it being subject to tax. Thus, if you plan to leave your entire estate to your spouse upon your death, not only will you void having those assets taxed, but you also preserve your entire estate tax exemption.
Electing estate tax portability
This process is not automatic, however (and if you do not do it right, you could inadvertently push your spouse’s estate above the threshold amount). To elect portability, your spouse must file an estate tax return within nine months of your death. In that return, they need to express their intent to elect portability.