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Recently passed legislation has made planning an estate significantly simpler by making permanent the current exemption limit on the inheritance tax. Lawmakers established the exemption limit at $5.25 million per individual. By passing this estate planning law, Congress avoided having an automatic lowering of the exemption limit which was required by the previously effective law. This could have had a significant effect on many looking to plan an estate in Florida or in any other state.
Many estate planning professionals have expressed relief at the increase in certainty regarding the inheritance tax exemption limit. For years, professionals and consumers looking to plan estates would have to watch lawmaker decisions with anxiety over possible changes to the inheritance tax laws. If lawmakers did not decide to make the current exemption level permanent, the exemption would have automatically decreased to $1 million.
Now, with the relatively high exemption limit being made permanent, even those with a high level of assets will be able to avoid having to pay inheritance taxes. In 2013, only about 3,800 estates will be required to pay inheritance tax, according to the Tax Policy Center. The new law also requires adjustment of the exemption rate based upon inflation. Additionally, the new law increases the exemption level for gifts to $14,000 per individual.
However, many estate planning and financial professionals in Florida do not believe that this new law will mean that lawmakers will never attempt to change the exemption level in the future. When lawmakers are looking to increase revenue for the government in the future, they may again consider trying to lower the exemption level. This means that people should still be vigilant and revisit their estate plans periodically.