INHERITANCE AND ESTATE PLANNING

Tampa Inheritance And Estate Tax Planning

Beginning in 2018, any amount in excess of an adjusted gross value totaling approximately $11.2M will be subject to federal estate taxes. While Florida does not impose a state inheritance tax, estates and trusts that exceed the state exemption will still owe income taxes. Gift taxes, property taxes, or generation skipping taxes are examples of other possible tax liabilities. The advice of an experienced estate planning attorney can guide you through careful tax planning, and can prevent taxes from significantly reducing the inheritance amount your heirs will receive.

The Florida estate planning attorneys at MMJ Law, are skilled and very knowledgeable at creating tax reduction strategies that will help to protect your assets. We will assist you with our experience to create the types of gifts and trusts, which you will fund prior to your death, in order to remove those assets from your estate and reduce its taxable value.

Distributing Assets by Making Tax-free Gifts

You are currently allowed to annually gift up to $15,000 to as many recipients as you wish without any tax obligation as of Florida 2018 law. This method is a way to reduce the size of a large estate and transfer assets to whomever you wish before your death. Charities, educational institutions, health care expenses on behalf of family members can receive as much as you would like tax free, and will be deducted from the value of your estate. Gift giving should be done with the advice of your estate planning attorney, however, in order to avoid pitfalls that might negate the potential benefit.

Trust Creation to Avoid Estate Taxes

We can assist you with various types of irrevocable trusts that will allow you to transfer assets from your estate. You will no longer own those assets; the assets will instead belong to the trust, however, you still benefit from the trust while you are alive. Below are some types of irrevocable trusts that can be used to reduce the size of your taxable estate:

Qualified Personal Residence Trust (QPRT)

A qualified personal residence trust is set up to only hold your residence as an asset. You can transfer the title of your home to the irrevocable trust but still retain the right to use it. The purpose of this trust is to transfer your residence out of your estate at a low gift tax value.

Bypass Trust

Bypass trusts are set up for the benefit of your spouse or children. In a spousal trust, the funds are removed from your estate while still allowing your spouse to draw on the trust, thus keeping the income within the household. When the spouse dies, the trust can then be passed to his or her heirs without incurring estate taxes. A similar arrangement can be made for your children, in which case it is referred to as a sprinkle trust or spray trust.

Irrevocable Life Insurance Trust (ILIT)

Irrevocable trusts are created specifically for the purpose of purchasing a life insurance policy. If you own a life insurance policy, its proceeds are not taxable, but they are considered part of your estate. An irrevocable allows having the trust purchase the policy which can then lower your estate’s value while protecting your family.

Intentionally Defective Grantor Trust (IDGT)

This particular type of trust holds shares of a privately held company that are undervalued and then allowed to appreciate. Because it belongs to the trust, the appreciation in the value of the shares is not taxable.

Experience Counts in Estate Planning and Asset Protection

Trusts and Gifts can be complicated to set up and structure correctly, but the right estate planning attorney will help you navigate and prepare an estate plan that will incorporate the legal instruments that will best serve you and your family. Gifts and trusts have both advantages and disadvantages and you should carefully review every aspect of your estate and your wishes for its distribution with an expert attorney who will ensure whichever tax-sparing devices you decide on will be implemented properly.

At MMJ Law, our attorneys have many years of experience planning and administering estates of all types and sizes, and we are able to advise you appropriately and to devise a strategy that will work for you and your heirs.

Call us today at (813) 856-5625 to schedule a free consultation to learn how we can assist you in preserving your assets for those you love and the causes you support.