Estate planning is a crucial step for individuals in Georgia who want to ensure their assets are distributed according to their wishes while minimizing potential tax burdens. In 2025, some notable changes in tax laws and regulations are expected, making it essential for Georgia residents to review their estate plans. This article will outline the current state of estate planning in Georgia, highlight upcoming changes for 2025, and discuss the role of key legislation and political figures in shaping the future of estate tax policy.
Current Georgia Estate Planning Overview
Estate planning in Georgia involves creating legal documents such as wills, trusts, powers of attorney, and healthcare directives. Georgia law allows residents to utilize both revocable and irrevocable trusts to manage and protect their assets. One of the key considerations in estate planning is avoiding probate, a legal process that can be lengthy and costly for heirs. Establishing a trust or ensuring assets are properly titled can help bypass probate.
In terms of taxes, Georgia does not impose a state-level estate tax or inheritance tax. However, estates exceeding the federal estate tax exemption threshold ($12.92 million in 2023, indexed annually for inflation) are still subject to federal estate taxes. This exemption level is subject to change, and it’s crucial for individuals with sizable estates to monitor potential federal changes.
What to Expect for 2025
As we approach 2025, several federal and state tax laws may influence estate planning in Georgia. The most significant potential change is the sunset of provisions from the Tax Cuts and Jobs Act (TCJA) of 2017. The TCJA temporarily doubled the federal estate tax exemption, but these provisions are set to expire in 2025, potentially reducing the exemption to around $6 million (based on inflation-adjusted projections). This change could result in more estates becoming subject to federal estate taxes.
Additionally, capital gains tax reform has been a topic of discussion among lawmakers. “If legislation is passed to increase capital gains taxes or eliminate the step-up in basis, it could have a major impact on the transfer of assets,” shares Stephen Scriber, Georgia Estate Planning attorney. In such a scenario, heirs may face higher taxes on inherited property.
Relevant Georgia Politician and Estate Tax Law
A key political figure shaping Georgia’s tax policy is Senator Jon Ossoff, who has been involved in federal tax reform discussions. Ossoff’s position on tax legislation and estate planning reforms will be crucial for Georgians to watch, particularly as changes in federal tax laws could directly impact estate planning strategies in the state.
At the state level, while Georgia currently has no estate or inheritance tax, legislation like the Georgia Uniform Trust Code (HB 121), enacted in 2018, has modernized trust law in the state. This law makes it easier for residents to create and manage trusts, providing greater flexibility in estate planning. Estate planners in Georgia should keep an eye on any potential modifications or updates to this law as we approach 2025, particularly if federal tax changes prompt revisions in state-level regulations.
How to Prepare for 2025
For Georgia residents, preparing for potential changes in 2025 means reviewing current estate plans with a focus on minimizing tax liabilities. Steps to consider include:
- Reevaluating trusts: With potential changes in the federal estate tax exemption, it may be wise to revisit existing trust structures to ensure they align with tax planning goals.
- Gifting strategies: Taking advantage of the current federal gift tax exemption ($17,000 per recipient in 2023) can help reduce the size of taxable estates before the potential drop in the estate tax exemption.
- Reviewing capital gains considerations: If capital gains tax changes occur, it may affect strategies for transferring assets such as real estate or investments to heirs.
Consulting with an experienced estate planning attorney in Georgia is critical, as the intersection of federal and state laws can be complex. Proactive planning now can help protect assets and avoid unnecessary tax burdens in the future.
Conclusion
As we look toward 2025, Georgia residents should be mindful of potential changes in federal estate tax laws, including the reduction of the federal estate tax exemption. With Senator Jon Ossoff and other lawmakers at the forefront of tax policy discussions, Georgians need to stay informed and work closely with estate planning professionals to adjust their plans as needed. By taking action now, individuals can ensure their estates are protected for future generations.