The probate process involves settling debts, distributing assets, and possibly dealing with taxes. Without a solid plan, taxes can reduce the estate’s value. However, there are ways to reduce these costs and protect more of the estate’s worth.
Plan asset distribution wisely
The distribution of assets affects the estate’s tax liability. Certain assets, such as life insurance proceeds, are not usually subject to probate or income taxes in Georgia if there is a named beneficiary. Naming beneficiaries for retirement accounts, life insurance policies, and payable-on-death accounts can help avoid probate entirely.
Jointly held property also avoids probate. For example, property owned jointly with rights of survivorship passes directly to the co-owner. This keeps the property out of probate and reduces associated costs.
Use tax-advantaged strategies
Estate tax laws in Georgia are favorable because there is no state-level estate tax. However, federal estate taxes might apply if the estate exceeds the federal exemption amount, which is over $13,990,000 in 2025.
Gifting is one way to reduce the taxable value of an estate. The IRS allows individuals to gift up to $19,000 annually to each recipient without triggering gift taxes.
Setting up a trust can also reduce tax liabilities. Trusts let you transfer assets while avoiding probate and sometimes reducing taxes. For instance, irrevocable trusts can shield certain assets from estate taxes and probate proceedings.
Keep organized records
Detailed records make it easier to account for the estate’s value and confirm compliance with tax laws. Record all assets, including real estate, bank accounts, investments, and personal property. Keep receipts and documentation for any debts paid or assets transferred. This organization helps avoid errors that could lead to penalties or higher taxes.
Minimizing taxes during probate requires careful planning and knowledge of Georgia’s laws. With thoughtful strategies, families can protect their loved ones’ legacies and reduce unnecessary costs.