Will My Family Have to Pay a Tax on Their Inheritance From Me?

Estate planning is an important part of life. It allows you to handle your affairs before you pass away— leaving less stress for your grieving loved ones.

When someone you love is figuring out how to live without you, not having to show up in court repeatedly is a kindness. That’s what good estate planning can do. It lifts that burden of showing up in court, spending hours and hours gathering documents, and second guessing your wishes off of your loved ones shoulders and puts some of that pressure on you now.

But did you know proper estate planning can also help ease tax liability from your loved ones?

We are often asked if loved ones will be taxed for receiving an inheritance. Today, we take a closer look at inheritance and estate taxes and how they may affect your estate and loved ones.

Inheritance Tax

Are you wondering if the inheritance you leave for someone will turn out to be more of a burden than a gift? In order to know that, you need to understand what inheritance tax is.

Inheritance tax is a tax that is assessed on an inheritance. Inheritance tax is to be paid by the beneficiary. Inheritance taxes are only assessed at the state level, and Georgia does not have an inheritance tax. However, that may not matter if the loved one you are passing an inheritance on to lives in a state that does.

The states that currently have inheritance taxes are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

It’s important to work closely with a skilled estate planning attorney to help you minimize tax liability for your loved ones. Because taxes are stressful, and the whole purpose of your estate plan is to cut down on stress!

That being said, most of the time when people refer to inheritance tax, they are actually thinking about estate tax.

Estate Tax

Estate taxes are paid by the estate and assessed at the federal level for estates above the federal exemption limit. The 2025 federal exemption is $13.99 million for an individual and double that for a married couple.

This means that if your estate clocks in a value of less than that limit, there is no federal estate tax.

Like inheritance tax, Georgia does not assess an estate tax. As long as your estate is fully based in Georgia, then your estate should not be taxed if it is under that threshold.

If parts of your estate are outside of the state of Georgia, then your estate may have to pay estate taxes for the portion of the estate residing in a state that does have an estate tax.

But what if your estate is valued over the federal exemption? I’m glad you asked because it’s very important to understand that any portion of your estate above and beyond the federal estate tax exemption will be steeply taxed. Estimates are that these portions will be taxed at approximately 40%. Ouch! That’s nearly half!

2026 Tax Changes?

Keep in mind that the numbers listed above still fall under the Tax Cuts and Jobs Act (TCJA). This act was put into place and more or less doubled the exemption limit since its inception. But this act is set to sunset at the end of 2025– which means if nothing is done to extend this, the exemption will go back to its original rate plus inflation. This means that in 2025, your exemption limit is almost $14 million, but when the ball drops into 2026, the exemption limit may be around $7 million. It’s important to plan for that scenario.

How Do You Plan?

So the question remains, how do you plan to leave the largest, least taxed legacy for your loved ones?

I know I sound like a broken record, but while the exact verbiage within the plan may vary, the basic roadmap is the same: the use of a Trust (or multiple Trusts).

Setting up a Trust will allow you to avoid the probate process— saving your loved ones the hassle, headache, and time suck that it is.

It gives more space and time to grieve without handling big decisions or the stress of court paperwork.

And a Trust can also help you set up your estate to limit tax liability. Your family has already lost you. Your good planning can prevent some monetary loss to taxes.

I know talking about taxes is dry and boring. But if you could cut down on the stress of those taxes by planning ahead, isn’t it worth the boring conversation?

Call us at (404) 736-6066 or visit our website to schedule a consultation about how we can help you avoid tax liability for your estate and your loved ones’ lives after your death.