Florida residents who would like to avoid federal taxes on their estate may want to consider giving regular gifts to their loved ones. For people with large estates, strategic gifting can be an important part of an estate plan. Wealthy individuals may be able to use the annual gift tax exclusion to reduce the size of their estate before they die.
Before giving monetary gifts to loved ones, it is important to know the annual limits on tax-free gifting. Every year, a single person may give individual gifts of no more than $14,000 each without having to pay any gift tax. A married couple can combine their annual tax-free gift allowances and give gifts of $28,000 or less.
When a person or couple gives monetary gifts that are over the annual tax-free gift limit, the value of the gifts will get deducted from their estate tax exemption. Right now, a person is able to leave $5.43 million to heirs when they die without incurring any estate taxes. If a person gives a single gift of $1 million during their lifetime, their estate tax exemption would be reduced to $4.43 million. However, a married couple may transfer an unlimited amount of money between each other without having to pay any estate or gift taxes.
Understanding estate and gift tax laws can be important for an individual who is planning to leave behind a sizable estate. An attorney who has experience with the tax implications of estate planning may be able to assist clients in preparing a plan for the transferring of their wealth to beneficiaries in the most tax-efficient manner possible.