The federal estate tax exemption is the highest it’s ever been. At the time of this blog post, a single person can leave up to $13.99 million when they pass away without being impacted by federal estate taxes, and a married couple can leave up to $27.98 million. But on December 31, 2025, that will change.
The Federal Estate Tax
Your estate is everything you own when you pass away. It includes your real estate, bank accounts, retirement savings, investments, business interests, and life insurance proceeds (unless you plan now, but more on that below).
If the total value of everything you leave behind when you pass away is over your exemption, the IRS will tax the excess at a 40% rate. And that tax bill is due just nine months after you pass away.
What Happens on December 31, 2025?
At midnight on December 31, 2025, the federal estate tax exemption will decrease to approximately $7 million for an individual and around $14 million for a married couple.
This means more people could be impacted by estate taxes when passing down wealth. While Congress has the power to change this, it would have to take action to do so.
Does Georgia Have a State Estate Tax?
Georgia doesn’t currently have a state estate tax. However, Georgia residents are still subject to the federal estate tax rate of 40%.
How to Protect Your Assets from Estate Taxes Before the Sunset
- Gift real estate or business shares to your loved ones while the values are manageable.
- Use irrevocable trusts to shift assets out of your taxable estate.
Revisit Your Business Succession Plan
If your business makes up a significant portion of your estate, you’ll want to ensure it transitions smoothly to the next generation. A good business succession plan prevents the following:
- Taxes taking a huge cut of what you’ve worked hard to build.
- Family disputes over who runs the company.
- A forced sale to pay the estate tax bill.
Use a Georgia Irrevocable Life Insurance Trust to Provide Liquidity
If your wealth is tied up in a business, real estate, or other assets, your family could face a tough situation when you pass away. Estate taxes can be steep, and without enough cash on hand, your loved ones might be forced to sell valuable assets (often at a loss) just to cover the tax bill.
How Does an Irrevocable Life Insurance Trust Work?
- Instead of your loved ones scrambling to come up with cash, the proceeds from the insurance policy may be available to minimize the estate tax bill. This means your loved ones don’t need to sell property, a business, or stocks to cover taxes.
- The trust (not you) owns the policy, so the life insurance proceeds are not included in your taxable estate. This preserves more of your wealth for your family.
Who Should Consider an Irrevocable Life Insurance Trust?
ILITs can be especially useful for:
- Business Owners – If your wealth is tied to your company, your family may have to sell part of the business or take on debt to pay estate taxes.
- Real Estate Investors – Rising property values can push your estate over the tax threshold.
- Anyone with Illiquid Assets – If your money is tied up in things that aren’t easy to sell quickly (like real estate, stock investments, or business interests), your loved ones might be forced to sell at a loss to pay the estate tax and other expenses.
An Irrevocable Life Insurance Trust is a powerful estate planning tool that ensures your loved ones retain the assets you worked hard to build.
Speak With an Atlanta Estate Planning Attorney
At Thrift McLemore, our estate planning attorneys work with families in Atlanta, Cobb County, and across Georgia to create strategies that reduce or eliminate estate tax exposure.
Call us today at 678-882-0830 to schedule a consultation with one of our experienced Georgia estate planning attorneys. Let us help you preserve more of what you’ve worked so hard to build.
