Estate Planning Basics
Common Questions About Estate Planning
This page outlines 36 estate planning topics to help you understand the importance of having a complete estate plan and answer questions you may have about estate planning tactics and strategies.
Estate planning is the process of planning for the efficient transfer of assets at one’s death. In other words, it is planning what will happen to your assets when you die.
Although a Will and a Living Trust are well-known vehicles for disposing of assets upon death, there are other ways in which this can happen. Let’s examine three of the most common.
Probate is a process that starts at your death. This process transfers title of your assets to your beneficiaries. A person’s estate is Probated if they die with a Will or they die intestate (without a Will). During this process, your creditors can make claims against your estate and anyone not satisfied with your Will can contest it.
The estate tax is a tax on your right to transfer your assets when you die. Your estate, also known as your “gross estate,” includes everything you owned or in which you had an interest at the time of your death.
A marital deduction is a deduction reducing the value of what is taxable for gift and estate tax purposes. It allows an individual to transfer some assets to his or her spouse, estate and gift tax free. The IRS allows an individual to leave any amount of assets to his or her U.S. citizen spouse without taxation.
Joint Tenancy is a form of property ownership where, upon the death of one of the owners, all of the deceased owner’s interest in the property is transferred immediately to the surviving owners. Whether you realize it or not, if you are married, you probably own property in Joint Tenancy. Do you have a joint checking account? Then you probably own property in Joint Tenancy. Do you have a car or a home in both your and your spouse’s names? Then you probably own property in Joint Tenancy.
A Power of Attorney is a legal document executed to appoint an Agent to make financial decisions for the Principal, the person executing the Power of Attorney. In Georgia, the Power of Attorney must meet statutory requirements, including but not limited to being signed by the Principal, acknowledged by the Agent, witnessed and notarized.
In the year 2025, the annual gift tax exclusion amount is $19,000 per recipient. There is no limit on the number of recipients to which qualifying gifts can be made. The key word here is qualifying. The IRS does not consider a gift to be qualified unless the person receiving the gift possesses a “present interest,” an immediate ownership, in the asset. This means that, in general, transfers in Trust are not considered present interests, but future interests.
A Living Probate can arise if you become mentally or physically disabled. It is generally referred to as either a “guardianship” or “conservatorship.” A guardian is someone appointed by the Court to look after you. A conservator is someone appointed by the Court to look after your assets. Guardianship and conservatorship were designed to protect people that could not protect themselves.
- Assets held in the FLP are substantially shielded from potential claims.
- Income taxes can be shifted to lower bracket family members to take advantage of deferral and savings techniques.
- Estate taxes on accumulated wealth and future appreciation can be minimized or eliminated by gifting discounted interests in the FLP to children or Trusts established for their benefit.