Nearing the Proposed Tax Limits? Here are Some Estate Planning Tips to Consider

Print Friendly, PDF & Email

Reviewed by Alison Hickman, Esq.

Is the current value of your estate near the proposed tax limits? One of the many reasons people conduct estate planning may be to designate the beneficiaries of their assets and to avoid unnecessary payment of taxes. Currently, Florida residents are subject to only federal estate planning taxes, as there is no inheritance or estate tax in the state of Florida. The current federal estate tax exemption is $11.7 million dollars per individual and $23.4 million dollars per married couple. The federal exemption amount, however, is set to change in the year 2026, if not sooner, and is expected to be lowered drastically. This is why now may be the best time to plan for a reduced estate tax exemption if you are nearing the proposed tax limits.


As the current federal gift tax has an annual exemption of $15,000 per gift and no exclusion on the number of beneficiaries, making annual gifts to family members can be a smart strategy for transferring funds while avoiding tax liability. For example, if a person has ten grandchildren, they could gift them $15,000 per year for the total amount of $150,000. Additionally, a married couple has the ability to transfer $30,000 annually. Therefore, in the above example, they would be able to transfer $300,000 per year to family members, while reducing the value of their taxable estate.


Often, when conducting estate planning, people neglect to factor in the value of life insurance proceeds. In the case of a significant life insurance policy, the value of an estate can drastically increase in value, subjecting it to the estate tax. If you hold high value life insurance policies, consider creating an irrevocable life insurance trust. Upon your passing, the proceeds from your life insurance policy will automatically transfer to the beneficiary and the death benefit will not be included in the calculation of your estate value. This, however, may be an estate planning tool that you do not want to put off the use of, as the irrevocable life insurance trust must be created more than three years prior to your passing in order to be valid.


Giving to charity can be another excellent way to reduce the value of your estate. There may be several charitable trust options, which a qualified estate planning attorney can walk you through and recommend the best structure for you, based upon the assets in your estate and your charitable giving wishes.


If you are nearing the proposed tax limits, many of the attorneys in our organizations can help you avoid estate tax liability. Contact one of our members today for more information.