Georgia-Specific Wealth Transfer and Tax Updates: Critical Considerations for High-Net-Worth Families in 2026 and Beyond
The landscape of estate and gift taxation has undergone a remarkable transformation, and Georgia families with significant wealth must now reassess their planning strategies in light of both federal legislative developments and the unique characteristics of Georgia’s tax environment. The enactment of the One Big Beautiful Bill Act (“OBBBA”) on July 4, 2025, has fundamentally altered the calculus that practitioners and their clients have been wrestling with since the Tax Cuts and Jobs Act of 2017 first introduced the specter of a 2026 sunset.
This article examines three critical areas that Georgia practitioners and their high-net-worth clients must carefully consider: the mechanics and implications of the new permanent exemption increases, the practical lessons from recent Tax Court jurisprudence—particularly the cautionary tale of Estate of Rowland v. Commissioner—and the interplay between federal rules and Georgia’s distinctive state tax landscape.
For families in the Atlanta metropolitan area and throughout Georgia with estates valued in the millions of dollars, understanding these developments is not merely an academic exercise. The decisions made in the coming months regarding trust structures, lifetime gifts, and estate plan documentation will have consequences that extend for generations. This analysis aims to provide both the theoretical framework and practical guidance necessary to navigate these waters successfully.
I. The 2026 Federal Estate Tax Framework: What the One Big Beautiful Bill Act Means for Georgia Families
For the past several years, estate planners have operated under a cloud of uncertainty. The TCJA’s temporary doubling of the basic exclusion amount—from approximately $5 million to over $11 million per individual—was scheduled to sunset on December 31, 2025, reverting to pre-2018 levels adjusted for inflation (approximately $7 million per individual). This created what practitioners colloquially termed a “use it or lose it” planning environment, driving significant lifetime gifting activity and the creation of sophisticated trust structures designed to lock in the higher exemption before its anticipated disappearance.
The OBBBA has eliminated this uncertainty, though the resolution differs markedly from what many practitioners anticipated. Rather than merely extending the TCJA’s provisions, Congress has permanently increased the federal lifetime gift, estate, and generation-skipping transfer (“GST”) tax exemptions to $15 million per individual beginning January 1, 2026. For married couples utilizing proper planning, this translates to $30 million of combined exemption—a figure that will continue to grow as the exemption is indexed for inflation beginning in 2027. The federal estate tax rate remains unchanged at 40% for amounts exceeding the exemption. The IRS has formally confirmed these figures in its announcement of inflation adjustments for tax year 2026.
The Planning Implications of Permanence
The most significant aspect of the OBBBA’s estate tax provisions is not the increased exemption amount itself—though that is certainly welcome news for wealthy families—but rather the elimination of the sunset provision. For the first time since 2017, practitioners can advise clients with reasonable confidence that the current exemption levels represent a stable planning baseline rather than a temporary opportunity requiring immediate action. This stability fundamentally changes the nature of the advice we provide to clients.
This does not mean, however, that the urgency for sophisticated estate planning has diminished. Several considerations warrant immediate attention from Georgia families with substantial wealth:
First, while the OBBBA’s provisions are technically permanent, future legislative changes remain possible. A subsequent Congress could reduce exemption amounts, and indeed, there is no constitutional barrier to doing so. Political winds shift, and the estate tax has been a perennial target for legislative modification. Clients who have not yet utilized a substantial portion of their exemption may still benefit from making strategic lifetime gifts, particularly of appreciating assets. The transfer of such assets removes not only the current value from the taxable estate but all future appreciation as well—a benefit that compounds significantly over time and can shelter substantial wealth from eventual taxation.
Second, the anti-clawback regulations promulgated under Treasury Regulation §20.2010-1(c) remain in effect. These regulations, finalized in November 2019, provide that if a taxpayer makes gifts using the increased exemption and subsequently dies after the exemption has been reduced by later legislation, the estate will not be penalized by having to pay tax on those prior gifts at the higher rate applicable to a reduced exemption. The IRS has explicitly confirmed this protection, stating that individuals taking advantage of the increased exclusion amount will not be adversely impacted after any future reduction. This protection applies equally under the OBBBA framework, meaning that clients who made substantial gifts between 2018 and 2025 retain the benefit of those transfers regardless of any future legislative changes.
Third, practitioners must help clients recalibrate estate plans that were drafted in anticipation of the sunset. Many documents executed between 2018 and 2025 contain formula clauses designed to maximize the use of the potentially expiring exemption, sometimes at the expense of flexibility or family harmony. With the permanence of higher exemptions now established, clients should review these instruments to ensure they still achieve the intended objectives without creating unintended consequences. Formula provisions referencing “the largest amount that can pass free of federal estate tax” may now produce dramatically different results than originally contemplated.
Fourth, the annual gift tax exclusion remains at $19,000 per donee for 2026—unchanged from 2025. For married couples electing gift-splitting, this permits $38,000 of transfers per year per donee without consuming any lifetime exemption. Additionally, the annual exclusion for gifts to a non-citizen spouse has increased to $194,000 for 2026. These annual exclusion gifts remain a valuable planning tool for gradually transferring wealth outside the taxable estate without any reporting requirements or exemption usage.
Timing Considerations and Action Steps
For Georgia families contemplating significant wealth transfers, the following action steps merit consideration:
Review and potentially revise existing estate planning documents to remove provisions based on the anticipated sunset. Formula clauses that reference the “largest amount that can pass free of federal estate tax” or similar language may produce different results under the new higher exemption than originally intended. Documents drafted with sunset-contingent provisions should be examined carefully to ensure they continue to implement the client’s objectives.
Evaluate whether existing irrevocable trusts—particularly those funded with large gifts made in anticipation of the sunset—continue to serve the family’s objectives. Some clients may have transferred assets to trusts primarily for tax purposes and may now prefer greater flexibility or access to those assets. While irrevocable trusts cannot simply be undone, various modification techniques may be available depending on the trust’s terms and applicable state law.
Consider the continued utility of Spousal Lifetime Access Trusts (“SLATs”), Intentionally Defective Grantor Trusts (“IDGTs”), Grantor Retained Annuity Trusts (“GRATs”), and similar vehicles. While the tax urgency has diminished, these structures continue to offer significant benefits for asset protection, creditor protection, divorce protection, and multi-generational wealth preservation. The November 2025 Section 7520 rate of 4.6% creates favorable conditions for certain transfer techniques, though this rate will continue to fluctuate.
Reassess the portability election for first-to-die spouses. As discussed in greater detail below, the mechanics of portability elections require careful attention, and the importance of proper execution has not diminished under the new exemption regime. Indeed, with exemptions now at $15 million per spouse, a proper portability election can preserve up to $15 million of unused exemption for the surviving spouse’s eventual use.
II. Lessons from Recent Federal Estate Tax Jurisprudence: The Cautionary Tale of Estate of Rowland v. Commissioner
The Tax Court’s decision in Estate of Billy S. Rowland v. Commissioner, T.C. Memo. 2025-76 (July 15, 2025), provides a stark reminder that procedural compliance in estate tax matters admits of no shortcuts. The case offers important lessons for Georgia practitioners and their clients regarding the portability election—lessons that have become only more important as exemption amounts have increased and more families rely on portability as a cornerstone of their estate planning.
The Facts and the Failure
Rowland involved a married couple from Ohio—Fay and Billy Rowland. Fay died in April 2016 with an estate valued at approximately $3 million, well below the then-applicable basic exclusion amount of $5.45 million. Her trust agreement, executed in 1990 and amended in 2002 and 2010, directed specific bequests totaling $950,000 to children, grandchildren, and friends; a twenty percent distribution to a charitable family foundation; one-fourth of the gross estate to her surviving husband Billy; and the residue to fund trusts for grandchildren. Because Fay’s estate was below the filing threshold, no estate tax return was required for tax purposes. However, to elect portability of Fay’s unused exclusion to Billy—the Deceased Spousal Unused Exclusion amount, or “DSUE”—a timely-filed Form 706 was necessary.
The executor obtained an automatic extension, moving the filing deadline to July 8, 2017. The estate tax return was not filed until December 29, 2017—nearly six months after the extended deadline. Recognizing the late filing, the executor attempted to rely on the safe harbor provided by Revenue Procedure 2017-34, which permitted certain late portability elections if filed within two years of the decedent’s death on a “complete and properly prepared” estate tax return. The return included a statement reading “Filed Pursuant to Rev. Proc. 2017-34 To Elect Port Sec. 2010(c)(5)(A).”
Here, however, the wheels came off. Fay’s Form 706 reported only estimated values for the gross estate and failed to provide the detailed itemization and valuation information required by Treasury Regulation §20.2010-2(a)(7). The return did not adequately describe or value the assets subject to the various fractional and percentage bequests contained in the trust agreement. Billy died in January 2018 with a taxable estate exceeding the 2018 exemption of $11.18 million. Billy’s estate tax return claimed the DSUE amount of $3,712,562, adding it to Billy’s own exemption for a total applicable exclusion of $14,892,562. The IRS examined Billy’s return and disallowed the claimed DSUE amount, concluding that Fay’s return had not made a “proper, complete, and effective portability election.”
The Tax Court’s Analysis
Chief Judge Urda’s opinion systematically rejected each of the taxpayer’s arguments. The estate had contended that the relaxed reporting rules of Treasury Regulation §20.2010-2(a)(7)(ii)—which permit simplified valuation for assets passing to charity or a surviving spouse—excused the incomplete return. The Court disagreed, noting that the relaxed reporting rules apply only when the value of such property does not affect the calculation of property passing to non-charitable, non-marital beneficiaries. Because Fay’s trust contained specific bequests to children and grandchildren calculated as fractions or percentages of the gross estate, proper valuation of all assets was necessary to determine the amounts passing to non-charitable and non-marital beneficiaries.
The estate also argued substantial compliance, regulatory murkiness, and equitable estoppel based on the IRS’s alleged “misleading silence” in not alerting the estate to problems with Fay’s return before Billy’s death. The Court rejected each argument. Substantial compliance doctrine, the Court noted, applies to procedural rather than substantive requirements, and the detailed reporting requirements go to the substance of the portability election itself. The regulations were not murky; they clearly specified what constitutes a “complete and properly prepared” return. And equitable estoppel against the Commissioner requires affirmative misconduct—mere silence or delay in identifying return deficiencies does not suffice. The Sixth Circuit, to which an appeal would lie, requires a showing of intentional or reckless misleading conduct, which the Court found entirely absent.
The practical consequence was severe: Billy’s estate owed tax calculated on the $11.18 million exemption alone, without the benefit of Fay’s $3.7 million DSUE. At a 40% marginal rate, this procedural failure cost the family approximately $1.5 million in additional estate tax.
Practical Lessons for Georgia Practitioners
Rowland offers several important lessons for estate planning practitioners advising Georgia families:
First, the safe harbors for late portability elections are not as forgiving as they might appear. Revenue Procedure 2022-32 (which superseded Revenue Procedure 2017-34) now permits late portability elections up to five years after the decedent’s death, but the requirement of a “complete and properly prepared” return remains. Practitioners cannot assume that because an estate is non-taxable, corners can be cut in preparing the Form 706. The extended deadline is a procedural accommodation, not a substantive relaxation of filing requirements.
Second, the simplified reporting rules have a narrower application than many practitioners realize. When a trust agreement or will contains bequests calculated by reference to the total estate—whether as percentages, fractions, or formulas—full valuation of all assets becomes necessary even if the ultimate recipients include charities or the surviving spouse. The lesson is clear: practitioners should carefully review the governing instruments before concluding that simplified reporting is appropriate. Any dispositive provision that mathematically depends on total estate value triggers full reporting requirements.
Third, even for non-taxable estates, the Form 706 serves critical functions beyond the portability election. It establishes the stepped-up basis for inherited assets—a benefit that can generate substantial income tax savings when heirs eventually sell appreciated property. A well-documented Form 706 with proper valuations creates a presumption of value that can be invaluable in subsequent transactions or disputes. For families holding concentrated positions in closely-held businesses, real estate, or other hard-to-value assets, the Form 706 provides an opportunity to establish defensible values that may prove important for years or decades to come.
Fourth, reliance on IRS silence is not a viable planning strategy. The Rowland estate’s argument that the IRS should have warned them of return deficiencies finds no support in the law. The burden of compliance rests squarely on the taxpayer and the practitioner. We cannot expect the Service to identify problems with returns before the client suffers adverse consequences; our responsibility is to get it right the first time.
III. State Tax Considerations: Georgia’s Estate and Gift Tax Landscape
Georgia families enjoy a significant advantage in estate and gift tax planning: the Peach State imposes neither an estate tax nor an inheritance tax at the state level. This stands in marked contrast to the twelve states and the District of Columbia that impose estate taxes, often with exemption thresholds far below the federal level, and the five remaining states that impose inheritance taxes on beneficiaries. Georgia’s favorable position creates meaningful opportunities for wealth preservation that practitioners should fully exploit.
The Absence of State-Level Transfer Taxes
Georgia’s lack of a state estate tax simplifies planning considerably. Unlike residents of New York (where the estate tax cliff creates an effective 100% marginal rate for estates just over the exemption threshold due to the recapture feature) or Massachusetts (with its $2 million exemption), Georgia families need focus only on federal transfer tax planning. This single-layer analysis reduces complexity and often permits simpler trust structures than would be necessary in states with independent estate tax regimes. Practitioners need not worry about creating state-only QTIP trusts, making state-only exemption bypass gifts, or employing the various techniques designed to minimize state estate tax exposure while preserving federal benefits.
Georgia also imposes no state-level gift tax. Only one state—Connecticut—imposes gift taxes. This means that lifetime transfers by Georgia residents are subject only to federal gift tax rules, including the unified $15 million lifetime exemption (beginning in 2026) and the $19,000 annual exclusion per donee (unchanged for 2026). For medical or educational expenses paid directly to providers, no limit applies—such payments are entirely excluded from gift tax without consuming any exemption.
Planning Implications for Multi-State Families
While Georgia’s favorable tax environment benefits resident families, practitioners must remain vigilant regarding multi-state considerations:
Real property located in other states may subject a Georgia decedent’s estate to that state’s estate or inheritance tax. A Georgia resident owning a vacation home in Vermont (estate tax), a rental property in Maryland (estate tax), or a beach house in New York (estate tax) must factor those state-level obligations into the overall estate plan. Ancillary probate proceedings may also be necessary, adding administrative complexity and cost. Strategic planning might include transferring out-of-state real property to limited liability companies or other entities that convert the taxable asset from real property to intangible personal property, which generally is taxable only at the owner’s domicile.
Beneficiaries residing in states with inheritance taxes may owe tax on their share of a Georgia estate. The states imposing inheritance taxes (Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania—Iowa having repealed its inheritance tax effective 2025) tax the beneficiary rather than the estate. A Georgia decedent leaving assets to a nephew in Pennsylvania may find that the nephew owes Pennsylvania inheritance tax on the bequest at rates up to 15%, even though Georgia imposes no such tax. While estate planning by the decedent cannot directly avoid such taxes, awareness of these obligations should inform the overall planning approach.
Domicile planning remains important for individuals with connections to multiple states. While Georgia’s lack of transfer taxes makes it an attractive domicile from an estate planning perspective, establishing and maintaining domicile requires careful attention to the traditional factors: physical presence, voter registration, driver’s license, vehicle registration, location of primary residence, and statements of intent in estate planning documents. For clients who divide their time between Georgia and states with estate taxes, documenting Georgia domicile becomes critically important.
Income Tax Considerations for Trusts and Estates
Although Georgia imposes no transfer taxes, practitioners must not overlook the state’s income tax implications for estate and trust administration. Georgia imposes a flat income tax rate of 5.19% (as of 2025), which applies to trust and estate income in appropriate circumstances. The question of when Georgia may tax trust income depends on various nexus factors, including the location of trustees, beneficiaries, and trust administration.
The increasing prevalence of Incomplete Gift Non-Grantor Trusts (“INGs”) and similar vehicles in state income tax planning has limited applicability in Georgia due to its relatively low income tax rate compared to states like California (13.3%) or New York (10.9%). However, for clients with connections to high-tax states, structuring trusts to minimize state income tax exposure may warrant consideration—though such planning must be undertaken with care, given the aggressive positions some states have taken regarding trust taxation. Georgia’s relatively taxpayer-friendly environment makes it an attractive jurisdiction for trust situs when properly structured.
The Interplay with Federal Planning
Georgia’s absence of state transfer taxes does not eliminate the need for sophisticated estate planning. The federal estate tax—with its 40% top rate on amounts exceeding the exemption—remains a significant concern for families with estates approaching or exceeding $15 million per individual ($30 million for married couples). For such families, the techniques discussed above—portability elections, lifetime gifting, irrevocable trust structures, charitable giving strategies, and valuation planning—remain essential tools in the estate planner’s arsenal.
Moreover, the step-up in basis rules at death create important income tax planning opportunities that exist independently of estate tax exposure. Even clients whose estates fall comfortably below the federal exemption threshold benefit from proper planning to maximize basis step-up, minimize capital gains exposure for heirs, and ensure efficient administration. The basis rules also inform decisions about which assets to gift during life versus retain until death—low-basis assets generally should be held for the step-up, while high-basis or depreciating assets may be better candidates for lifetime transfer.
Conclusion
The estate planning landscape for Georgia families has evolved significantly with the enactment of the OBBBA and the permanent establishment of $15 million individual exemptions (indexed for inflation) beginning in 2026. While this development removes the immediate pressure of the anticipated sunset, it does not diminish the importance of careful, thoughtful estate planning. Indeed, the increased exemption amounts make proper planning more valuable than ever for families seeking to maximize the wealth transferred to future generations.
The lessons of Estate of Rowland v. Commissioner remind us that procedural compliance—particularly regarding portability elections—requires meticulous attention to detail. The “complete and properly prepared” standard for late portability elections admits of no shortcuts, and practitioners must ensure that Form 706 returns, even for non-taxable estates, satisfy all applicable requirements. The cost of non-compliance can be measured in millions of dollars of unnecessary tax.
Georgia’s favorable state tax environment—with no estate tax, inheritance tax, or gift tax—provides a solid foundation for estate planning, but multi-state considerations and federal obligations continue to demand attention. For high-net-worth Georgia families, the combination of increased federal exemptions and favorable state rules creates significant opportunities for tax-efficient wealth transfer—opportunities that are best realized through careful planning with qualified professionals.
As we enter 2026, Georgia families should seize this moment of clarity in the tax law to review existing plans, consider new strategies, and ensure that their wealth transfer objectives are fully aligned with the current legal framework. The stability provided by the OBBBA is welcome, but experience teaches that such stability is never permanent. Prudent planning—executed while the rules are clear and favorable—remains the surest path to achieving one’s legacy objectives and protecting the family’s wealth for generations to come.
Contact Slowik Estate Planning Today
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