In 2013, certain laws about end-of-life assets were permanently altered. The threshold for estate tax was increased, meaning that most individuals will not be responsible for paying such taxes. Other high-asset individuals, including many Florida residents, have options available to them to reduce the amount of taxes paid on their estates at the end of their lives.
At the time of the law change, taxable estates up to $5 million became exempt from the estate tax. Those above $5 million could then be charged, up to the maximum rate of 40 percent. Today, a person’s estate would have to be at $5.49 million of above to be subject to the 40 percent rate. If a person is married, then that number is doubled.
In order to reduce the reportable amount of assets, a person has a few options. An individual is able to gift up to $14,000 per year free of taxes. A person may also reduce their reportable assets by contributing to charity. Options such as revocable and irrevocable charitable trusts are valuable tools to reduce the amount of taxes paid to the IRS and have the added benefit of supporting a good cause. These trusts can ensure that income is given as the individual desires and not swept away by government agencies.
Proper estate planning includes questions about how a person intends to deal with floridaelderlaw.net/Estate-Planning.shtml”>estate tax. Up-to-date knowledge of federal and Florida state law is particularly helpful when making final plans. If a person isn’t comfortable with their own knowledge on the subject, an estate planning attorney can be a valuable guide.
Source: thetimesherald.com, “You do not have to pay federal estate tax“, Matthew M. Wallace, Aug. 14, 2017