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Florida Estate Tax Planning

What is the Current Estate Tax or “Death Tax”?

While we know what the federal estate tax rules will be for 2011 and 2012, what will happen beyond 2012 is really up in the air. Under current law the estate tax exemption is scheduled to drop significantly from $5,000,000 to $1,000,000 and the estate tax rate is scheduled to jump from 35% to 55%, both effective January 1, 2013.

That’s right — effective January 1, 2013 the exemption and rate are scheduled to revert back to a $1,000,000 exemption and 55% estate tax rate. While many commentators believe this is unlikely to happen, this is the current law. If Congress continues to be locked-up and unable to pass new legislation, the current law will mean high estate taxes for many Americans.

What Assets are Included in the Estate Tax?

To determine your current net estate, add up the present value of your assets and subtract your debts. Your assets include everything you own: home, other real estate, investments, personal belongings, retirement benefits, IRAs, death benefits and life insurance. Many persons do not know this latter fact: Most persons believe life insurance benefits are not subject to the estate tax because such benefits generally are not subject to income tax. This is wrong. If you own the policy, the life insurance benefits will be subject to the estate tax if you are over the exemption amount listed above.

Is there anything I can do about estate taxes?

YES! — IF YOU PLAN NOW. One thing you can do, if you are married and your spouse is a U.S. citizen, is to use Uncle Sam’s plan - the marital deduction. (If you or your spouse are not U.S. citizens, there are other options we should discuss.) When you die, you can leave an unlimited amount to your spouse tax-free. And when your spouse dies, the estate will be entitled to a tax exemption. But what many people don’t realize is that every U.S. citizen is entitled to an exemption. And when you leave everything to your spouse through the marital deduction, you forfeit your valuable exemption.

Learn More About Trusts to Preserve Your Exemption

Living revocable trusts properly structured and funded, are powerful and valuable legal tools to protect your estate tax exemption. To learn more about such trusts, request the booklet Understanding Living Trusts for Florida Residents at info@raricklaw.com.

Experience Matters

Rarick, Beskin & Garcia Vega, P.A. has assisted Florida families and business persons for the past 17 years. Our firm has been asked by over 400 similar law firms located in states outside of Florida to assist them in representing their clients for legal matters concerning Florida estate tax planning, asset protection, probate, and other issues. To schedule a meeting, call (305) 556-5209 or (954) 566-1151, or email info@raricklaw.com. We look forward to meeting you!

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