Scholle Law Hero Banner

Estate Tax Planning

Experienced Georgia Estate Planning Attorney

CALL NOW FOR A FREE CONSULTATION Main: 770-717-5100 Toll Free: 866-972-5287

estate planning Proper drafting of estate planning documents is essential in avoiding unnecessary estate tax payments.  You do not want to find out after the death of a Georgia loved one that the proper estate planning steps were not taken.  Estate taxes are due in only a very small fraction of estates, but the estate tax rates are extremely high and the chance of being audited for an estate or gift tax return is also very high.  Consequently, a proper evaluation of one's estate tax planning should only be accomplished by an experienced estate and gift tax attorney, reviewing not only the value of one's assets, but also the type of asset and how it is titled.


The Internal Revenue Service imposes excise taxes upon the privilege of transferring wealth during life and at death. The taxes consist of three distinct regimes: the estate tax, the gift tax and the generation skipping tax.


Taxation of property transferred by an individual at death is one of the oldest and most common forms of taxation. Death transfer taxes take one of two structures:

  • Estate tax: an excise tax levied on the privilege of transferring property at death, measured by the amount of property transferred by the decedent and taxable in the estate of the decedent;
  • Inheritance tax: an excise tax levied on the privilege of receiving property from a decedent, measured by the amount received by the beneficiary and taxable to the beneficiary.

United States federal estate and gift taxes are example of the former. Enacted in 1916 the federal estate tax was promulgated in part to raise revenue but mainly as an attack on the huge estates of the leading industrialists of that era. The federal government sought to redistribute wealth from the hands of a few, like the Carnegies, Vanderbilts, etc., to the citizens of the entire nation. Soon after its enactment, many people sought to avoid taxes on their estates at death by transferring property during life while on their "death beds". This led to the enactment of the federal gift tax in 1924.

For many years estate taxes and gift taxes were taxed at different rates, with estate taxes being slightly higher than gift taxes. Well-advised individuals would take advantage of this disparity by transferring most of their property during life, rather than at death. In 1976, Congress unified the federal gift and estate tax rates using a single tax rate table.

Also in 1976, Congress enacted a new tax system called the "Generation Skipping Tax", separate and apart from the federal estate and gift tax. Under prior law, an effective way to avoid the imposition of multiple estate taxes on wealth passing through successive generations was to transfer the property to lower-generation beneficiaries, effectively "skipping" the intermediate generation beneficiaries. The GST was designed to tax individuals who avoided estate taxes in this manner through the imposition of a 55% tax.

What Is Included in My Taxable Estate for Estate Tax Purposes?

The IRS takes an extremely broad view of what is included in one's estate. Generally, your taxable estate will include all property in which you possess "incidents of ownership" at the time of your death, including life insurance death benefits, and any property which you control at the time of your death. More specifically, the following list provides some frequently overlooked items that are includible in one's taxable estate:

  • Transfers made within 3 years of death;
  • Annuities;
  • Jointly held property (subject to special rules);
  • Insurance on your life in which you hold incidents of ownership of the policy;
  • Insurance on another's life in which you hold incidents of ownership of the policy;
  • Income payable after death;
  • Power of Appointment;
  • Distributions from pensions and profit-sharing plans;
  • Generation-skipping trusts;
  • Taxable transfers made after December 1, 1976;
  • Gifts where the donor retained the right to the income or a power to designate who should enjoy the income;
  • Gifts in which the beneficiary can only enjoy or possess the gift property if he or she survives the donor;
  • Gifts in which the donor retains the right to change the beneficial enjoyment of the property through a power to alter amend or revoke.

Once it has been determined that certain property is includible in one's estate, the next question raised is "at what value?" The IRS regulations provide that the value shall be the "fair market value" according to the following terms "the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of all relevant facts." This valuation method assumes that the property will be sold for its "highest and best use," ie., the use at which the property would generated its highest value, irrespective of its actual use. The time of valuation for an estate is either at the date of death or 6 months later, the "alternate valuation date." The time of valuation of gift is at the date of transfer.

Amount of the Estate Tax.

Congress has seriously debated estate tax reform and the so called "death tax" has become a hot button issue.

In the past fifteen years, there has been a gradual increase in the exemption amount for individuals. Estates of those dying in 1997 did not see estate taxes on the first $600,000 of their value. In 1998, estates paid estate taxes on property exceeding $625,000. This meant that each dollar over $625,000 was taxed at rates ranging from 37% to 55%.

In 2000-2001, the federal tax code exempted the first $675,000 from estate taxes under what is known as the Unified Credit. Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the Estate and Generations Skipping Transfer Taxes are to be phased out through 2010. However, there is a sunset provision in the legislation which provides that should congress not again agree to repeal the tax in 2010, the tax regime will be reinstated to the pre-tax legislation system. In addition, the fair market value "step-up" in basis that many assets now receive at death for income tax purposes would be eliminated. In effect, the estate tax is converted into a future capital gains tax.

Economic Growth and Tax Relief Reconciliation Act of 2001 phase out terms:
Deductions, Exclusions and The Unified Credit

Any property left by a husband or wife to his or her spouse which qualifies for the marital deduction passes tax-free pursuant to the Unlimited Marital Deduction. There are some restrictions to this deduction, mainly concerning certain trusts and foreign nationals. For tax planning purposes, the marital deduction is the most important deduction.

Another important deduction is the Charitable Deduction. Property which passes to a governmental unit; an organization organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes; or a veteran's organization qualifies for the charitable deduction.

Another tax avoidance opportunity is the Gift Tax Annual Exclusion. The Economic Growth and Tax Relief Reconciliation Act of 2001 DOES NOT REPEAL THE GIFT TAX. Every individual is entitled to $13,000 per year annual exclusion. This amount is indexed each year. If the exclusion amount is not exceeded for a year, no gift tax return need even be filed. The exclusion permits a person to give away $13,000 ($26,000 per couple) a year in cash or property to as many individuals as he wishes.

As you can read above, the federal government allows for a unified credit from estate and gift taxes, which is equivalent to an exemption of $3,500,000 in 2009. Accordingly, an estate of that amount or less is no longer liable for any federal estate tax and no tax return need be filed. This credit is a "per person" credit, meaning that if a husband and wife properly plan their estate, they can effectively shield twice the amount of the credit from transfer tax.

Payment of the Estate Tax.

Federal estate taxes are generally due and payable in cash within nine months after death, although extensions may be available under certain circumstances, and can be paid in installments over 10 years if over 35% of the estate value consists of an interest in a closely held business.

Besides a will or revocable living trust, one should look at alternative estate tax avoidance vehicles like an Irrevocable Life Insurance Trust.  Understanding when to change or update your Georgia will is also very important.

If you would like to discuss estate tax planning, then Charles Scholle can help. Since 1995, he has represented Georgia individuals and families seeking to minimize their estate and gift tax liability via legal, established trust vehicles and planning techniques. If you would like estate tax planning advice, then please contact Charles Scholle for a free consultation today. From a main office in Gwinnett County, he represents clients throughout Metro Atlanta and the state of Georgia. To learn more about your rights and your options, please contact Scholle Law online or call toll-free at 866-972-5287 or in Atlanta at 770-717-5100.

Client Reviews
I have had a great experience with Scholle Law. Since day one I was treated like family and everyone was very professional. Cherie
Charles Scholle is trustworthy. He is a man of his word. He has a heart of compassion, which is needed during a time of hardship and trauma. Joseph
My experience with Scholle Law was very positive. The people I dealt with were very forthcoming with information. They were always available when I had questions. They worked hard for me. Tabatha
Scholle Law was great. Staff was excellent, above and beyond - always! Enjoyed working together, I always felt informed. Michele
I was hit by a tractor trailer and Scholle Law was fantastic about finding me treatment. They were readily available with any questions, concerns and worked in my best interests. I have referred friends and family. Ten Stars for communication, responsiveness, quality of service and value! Five is not enough!! Sarah