It’s true: taxes are one of life’s certainties. Almost everything we do in life and in death triggers a tax consequence.

That’s why we encourage our clients to look at taxes as part of their overall estate planning. With proper planning, we can often help them significantly reduce or eliminate the wealth transfer taxes that may be levied against their assets when transferred to their beneficiaries.

In addition to allowing assets to be passed on to beneficiaries, proper estate planning can allow you to provide your beneficiaries with estate tax protection.

Taxes That Affect Estate Planning
The various wealth transfer taxes that clients need to address include gift, estate, and generation skipping transfer (GST) taxes.

• Gift taxes apply to gifts made during the giver’s lifetime.
• Estate taxes apply to transfers made at a person’s death.
• GST taxes may apply to either lifetime or at-death transfers.

For many of our clients, it makes sense to look at GST planning, which uses a client’s GST tax exemption to help improve the benefits available to the client’s desired beneficiaries. Clients’ GST exemptions are used to make long-term or dynasty trusts that will last for as long as possible, without repeated estate tax hits to the trust assets. Long-term and dynasty trusts offer many potential tax advantages over outright distributions to beneficiaries. Without GST planning, estate taxes may apply to outright distributions made through a Will.

Minimizing Gift Taxes
Some clients may also want to make outright gifts to loved ones before they die. There are several strategies for minimizing the tax consequences for gifts. One is to take advantage of the gift tax annual exclusion. The IRS recently increased the annual exclusion to $16,000 in 2022 and $17,000 in 2023 (previously, it was $15,000). This means that, in 2023, an individual may make gifts of up to $17,000 each to an unlimited number of recipients in a calendar year. This is a use-it-or-lose-it exclusion: you cannot apply one year’s gift tax annual exclusion to gifts made in a prior or subsequent year.

In addition to giving cash gifts, money can be gifted to others in a number of ways, including contributing to 529 Plan accounts, IRAs, or Roth IRAs for children or grandchildren.

If you’re looking for an estate planning attorney in Georgia who can help with tax planning, making gifts, and GST trusts, please call us at 678-720-0750 or email us at info@MorganDiSalvo.com to set up an estate planning consultation.