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There are various aspects to consider when estate planning. One of these factors may require considering the tax implications of planning an estate. This is especially pertinent to some people, since previous cuts to the estate tax are set to expire at the end of this year if Congress does not act to extend them. This could affect individuals and families in Florida and may require.
The law which had previously provided a decrease in estate taxes was the 2010 Tax Relief Act. This legislation affected the estate tax exemption amount, which is the amount an individual can pass on to beneficiaries without being subject to estate taxes. If Congress does not take action, this elevated exemption amount will expire and the amount will drop to $1 million. Also, the estate tax rates will increase from 35 percent to 55 percent.
Some married couples with total assets, including insurance benefits, of $2-5 million are considering what is known as a disclaimer trust. This type of trust, following the death of a spouse, would allow the surviving spouse the option of rejecting a portion of the spouse’s estate. This would allow the assets to be redirected into a trust which retains the decedent’s estate tax credit.
Those Florida residents with moderately high assets will want to stay abreast on what Congress does or does not do regarding the estate tax. This could significantly impact important decisions regarding an estate plan. However, one should make sure to draft any estate planning document carefully, since failing to do so could lead to unwanted and potentially expensive legal consequences.