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The recent bill which was designed to avoid what was termed as the ‘fiscal cliff’ made significant changes to the tax policies in the U.S. Many people in Florida who were concerned with estate planning were watching to see if there would be any changes in the way estates are taxed. The American Taxpayer Relief Act has benefited farmers because it extends the same tax rates which had already been in place.
The legislation is especially advantageous for farmers who usually have a large amount of assets in their estates that they plan to leave to their heirs in order to continue their family farm businesses. The estate tax inclusion was increased from $5.12 million to $5.25 million. Married couples are allowed to exclude up to $10.5 million. Farmers who currently do not have assets above these amounts may want to consider the rising value of certain assets, such as farm equipment and land, which may eventually put them over the amount of the exemption.
The new law also retained the marital deduction. This deduction is an exemption from taxation on property spouses inherit from each other. The exemption offers an unlimited deduction for property that postpones taxation until after the second spouse passes away. Also, the new law keeps the gift tax exemption equal to the amount allowed in the estate tax exemption.
Despite the advantages for farmers or anybody else in Florida, it is important for consumers to understand that estate laws are subject to change in the future. Consumers should be vigilant of any new proposed legislation which may make a difference in estate planning decisions. This will help individuals quickly make alterations to their estate plans if it becomes necessary.