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The estate tax and its exemptions

| Mar 2, 2018 | Firm News, probate |

There are a lot of considerations that have to go into estate planning. As we have discussed on this blog previously, individuals must consider whether wills and trusts will be beneficial to them and, if so, how best to craft them to meet their needs. While the focus of these legal instruments is often to protect assets from creditors and ensure asset distribution in accordance with an individual’s wishes, there may be another major issue that needs to be considered: taxes.

Many Floridians have heard of the estate tax, a tax that many refer to as the “death tax.” Under federal law, as of 2017, those who have an estate with a gross value of more than $5.49 million will be required to pay the tax, which can be quite significant. When determining the gross value of an estate, the government will consider everything from real estate and mortgages to stocks, cash and insurance policies. It is worth noting that the tax applies only to the amounts that exceed the estate limit, that being $5.49 million in 2017.

There are, of course, exemptions that one can utilize to minimize the valuation of his or her estate. For example, a marital deduction can be taken for assets that are passed to one’s spouse. Also, funeral expenses, assets left to charity and any payments made due to claims against the estate may all be deductible.

Those who engage in estate planning as a way to protect their beneficiaries’ financial interests need to make sure that they are aware of the changing tax laws and how they could affect one’s tax liabilities. Failing to do so could result in significant financial losses. So, those who want to learn more about how to build a strong estate plan that meets their needs should discuss their situation with an experienced estate planning and probate attorney.