Understanding Inheritance and Estate Taxes

In the process of estate planning, you should speak with your Norcross estate planning lawyer about potential tax consequences concerning assets that you are planning to leave to your loved ones in a will or by other particular means. It is important to understand the potential application of inheritance and estate taxes, whether your estate will be subject to estate tax, and what steps you may be able to take with assistance from your estate planning lawyer to reduce or minimize estate taxes. The following information clarifies key information about inheritance and estate taxes. To understand how these taxes may or may not apply to your estate, it is important to discuss your specific circumstances with an estate planning lawyer.

What is the Difference Between Inheritance and Estate Tax? 

Estate tax and inheritance tax are both types of taxes that are paid on assets of a deceased’s estate. They differ largely in terms of who pays the taxes.

Estate tax is paid by the estate of the deceased, and it applies to the total value of the deceased’s estate. It is a federal tax and only exists in some states (not in Georgia). Accordingly, only federal estate taxes can be due on Georgia estates.

An inheritance tax is paid by the beneficiaries who receive the deceased’s assets. This is a state-based tax, and since Georgia does not have an inheritance tax, you will not need to be concerned with inheritance tax (only a very small number of states still have an inheritance tax).

How Federal Estate Tax Works 

Estate tax is also only due if the total value of the estate exceeds the “threshold” amount, which increases each year. As the IRS explains, “most relatively simple estate (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return. In 2025, the threshold amount to file an estate tax return and to pay estate tax is $13,990,000.

Estate Taxes and Surviving Spouses 

Since January 2011, it has been possible for a decedent spouse to pass any of their unused exemption to their surviving spouse. In such circumstances, a surviving spouse may ultimately have an estate, then, with a higher threshold amount for estate taxes becoming due.

Reducing Estate Taxes

 If your estate is likely to be subject to federal estate tax, there may be steps you can take now to help reduce estate taxes. Setting up an irrevocable trust is a common way of reducing or minimizing estate taxes, but you will not be able to alter the trust or terminate it once it is created. Giving annual gifts to loved ones during your lifetime can also be a way of ultimately reducing estate taxes.

Contact a Gwinnett County Estate Planning Lawyer 

While a large percentage of Georgia residents will not need to worry about the federal estate tax because their estate will have a total amount below the threshold, it is nonetheless important to discuss the issue of taxes with your estate planning lawyer. If your estate is likely to be subject to estate tax, your estate planning lawyer can discuss various options for potentially reducing estate taxes. An experienced Gwinnett County estate planning attorney at Bowman Law Firm can discuss the details of your estate and various options for estate planning with you today. Contact us to learn more about how we can assist you.

Sources:

irs.gov/businesses/small-businesses-self-employed/estate-tax

dor.georgia.gov/estate-tax-faq