Florida residents who have large estates are likely aware that over the last decade, there have been changes to federal estate tax exemptions and capital gains rates that may change how they want to approach their estate planning. Capital gains tax rates have gone up from 15 percent to 24 percent, while the federal estate tax exemption rose from $1.5 million to $5.43 million between 2004 and 2015.
This means that while gifts to family members while an individual was still alive used to be a smart method of avoiding estate tax, it is no longer necessary. Furthermore, such gifts may come with a hefty capital gains attached now.
Trusts are no longer as necessary as they once were for protecting assets from estate tax either although there are other reasons individuals may wish to establish trusts. However, administrative costs and other associated expenses may outweigh any tax savings. Married couples should also keep in mind that they can claim almost $11 million between the two of them. Older individuals may do better financially either taking money from a retirement account or taking out a loan to access ready cash rather than selling an asset and paying a capital gains tax.
Estate planning can be complicated not only by changes in tax laws and the complexity of those laws but also due to the numerous choices available. Those who have not updated their estate plan for some time or who have never done any estate planning may wish to consult an attorney who might be able to inform them regarding the current laws as well as the options available with different types of trusts, the use of a power of attorney and other tools.