Planning for Inheritance Tax

Information from a Pembroke Pines Probate Attorney

Who has to pay federal estate taxes, or "death taxes?"

Your estate may have to pay federal estate taxes before your assets can be fully distributed to your loved ones depending on the value of your assets when you die. Your estate will have to pay federal estate taxes if its net value when you die is more than the "exempt" amount set by Congress at that time.

In year 2024 the amount that a single person can pass tax free by life time gift or at death equals $13,610,000.00 for a single person and $27,220,000.00 million for married couples with a 40% rate on amounts in excess of those exemptions. However, since these amounts will revert back to pre-2018 credit amounts in year 2026 ( ie 5.6 million per individual, 11.2 million for a married couple) there is still justification for considering measures to eliminate or reduce potential estate tax liability when implementing an effective Estate Plan. For more information on federal estate taxes and your own situation, contact a Pembroke Pines probate attorney from my firm.

Determining the Net Value of Your Estate

To determine the current net value of your estate, add all of your assets, add any assets over which you exert control, and then subtract your debts. Include your home, business interests, bank accounts, investments, personal property (including jewelry), IRAs, retirement plans and death benefits from your life insurance.

How to Reduce or Eliminate Estate Taxes

If you are married, then through relatively simple estate tax planning utilizing credit shelter and QTIP trusts you can presently shelter up to $27,220,000.00 million from any inheritance tax and still retain ownership and use of your assets and income upon each spouse's death.

You can also make annual tax-free gifts to beneficiaries and to charity or medical / educational expenses. For year 2024, federal law allows you to gift up to $18,000.00 per person, per year, and if you are married, $36,000.00 per person per year, and you can make unlimited gifts to charity.

With proper trust planning, if you transfer life insurance policies to irrevocable life insurance trusts, then this will remove the death benefits of any existing life insurance policies from your estate. A qualified personal residence trust can remove your home from the estate at a discounted value, and you may continue to live there.

Proper Inheritance Tax Planning Is Important

Finally, a family limited partnership lets you begin transferring assets to children now, in order to reduce your taxable estate. Through proper planning, the family limited partnership serves to create discounted valuations of assets including business, farm, and real estate, or stock designed to keep the net taxable estate below the exemption amounts. In addition, a family limited partnership can protect assets from future creditor claims while you keep control. If you are residing in Hollywood, Davie, Cooper City, or Weston, Florida, my firm can assist you through this process! Seek the representation of a Pembroke Pines estate planning attorney from my firm in your case today.