Transfer Tax Planning

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    Transfer Tax Planning

    Transfer Tax Planning

    If you want to minimize the bite estate and gift taxes take out of your estate, you should contact a transfer tax planning attorney. They can help you legally minimize or potentially eliminate federal estate taxes, allowing your family to retain its wealth.

    Please note that the information provided aren’t recommendations. Before you make any estate planning decision, you should speak to a transfer tax attorney to ensure you do everything legally and in your family’s best interests.

    What is the Estate and Gift Tax?

    When you give assets to someone, the government will want to know about it and, in some cases, collect taxes. This can include cash, stocks and cars.

    Thankfully, with the help of a transfer tax planning attorney, you can utilize numerous legal methods to give assets to your loved ones tax-free. These include:

    • Annual gift tax exclusions
    • Lifetime gift and estate tax exemptions
    • Making direct payments to medical or educational

    Does Florida Impose Taxes at a State Level?

    Florida doesn’t impose inheritance taxes on its residents. But at a federal level, your estate is likely to be impacted.

    Federal taxes are usually applied when you transfer assets to your beneficiaries or heirs. These federal taxes include ‘gift taxes’, ‘estate taxes’ and ‘generation-skipping transfer taxes’.

    Estate Taxes

    Federal estate taxes are applied to a decedent’s assets after their death. As of 2021, this usually only applies to assets over $11.7 million with a tax rate of 18-40%.

    With the legal counsel of a transfer tax planning attorney, you may be able to reduce or avoid federal estate taxes. These methods include:

    • Gifting assets.
    • Leaving assets to qualifying charities.
    • Shielding your assets in a Trust.

    Gift Taxes

    Gift taxes are federal taxes for transfers of assets or money that asked for nothing in return.

    If you exceed your annual or lifetime gift taxes, you may have to pay 18%-40% of your gift. There are, however, exceptions that may be applicable with the help of a transfer tax planning attorney.

    Annual Gift Taxes

    As of 2021, the maximum allowable annual gift-tax exclusion is $15,000 per donor per recipient. That allows you to give an individual $15,000 in assets a year, free from any federal gift taxes. And as it’s ‘per recipient’, you can give $15,000 to your son, your cousin, your friend and more all in the same year, without a gift tax.

    If your gift exceeded $15,000, you will need to report it on a gift tax return (IRS Form 709).

    Lifetime Gift Taxes

    As of 2021, you also get an $11.7 million lifetime gift tax exemption. Some describe it as the ‘overflow’ allowance.

    For example, if you give your best friend $50,000 in a year then you’ll go over your $15,000 annual gift tax exemption.

    Sadly, that will force you to file a gift tax return. But thankfully, you probably won’t have to pay a gift tax – because the extra $35,000 will count against your lifetime exclusion.

    Generation-Skipping Transfers

    The generation-skipping transfer tax (GSSTT) is imposed on top of gift or estate taxes if a transfer is made to ‘skip a person’ in the family line.

    Skipped people are considered two or more generations below the person who donated the gift.

    Trusts and Tax Planning

    The Benefits of Gifting

    Gifting your assets while you’re alive could save your heirs from paying considerable estate taxes. For example, if you were to gift assets and money to your children now, while you’re alive they can potentially avoid paying any gift or estate taxes.

    However, if you wait and then pass away in 10 years, a large amount of those assets could be taxed. By 2025, the gift tax exemption is also likely to have reverted to a lower figure – which could result in your heirs paying painful tax fees for assets they could have got for ‘free’ while you were alive.

    Naturally, these are big decisions and what’s right for one family might not be suitable for another. That’s why it’s advised that you receive expert guidance from a transfer tax planning attorney who will review your estate and goals.

    Ensuring Your Gifts are Used Properly

    When gifting assets, many people are concerned that they’re giving them away too soon and that their children or grandchild won’t be ready to handle the responsibility.

    One way to solve this is to place the assets in an irrevocable trust, with the child as a beneficiary.

    This way, you can set rules in the Trust and ensure your child only gets access to funds when it’s deemed appropriate.

    Trusts are a fundamental part of estate planning and can be extremely beneficial in various ways, including distribution, asset protection, protection from creditors, and tax minimization.

    If you wish to learn more about setting up a trust, you should contact a transfer tax planning attorney who will advise you on what is best for your family and if required. They will also assist in setting up a trust and completing trust documents that must be crafted meticulously.

    Surviving Spouses

    In Florida, surviving spouses can transfer any portion of their deceased spouse’s estate tax exemption to themselves. This can allow more money to pass tax-free to their heirs.

    This feature is called ‘portability’ and must be filed for by personal representatives or Trustees within nine months of the spouse’s death. In some cases, a six-month extension may be applicable.

    Portability can be beneficial if the survivor is considerably younger than the deceased to avoid the growing prospect of future estate tax.

    If there has recently been a death in your family, you can receive expert guidance and assistance to minimize estate tax with the help of a transfer tax planning attorney.

    The Importance of Tax Planning

    As you can see, federal estate tax rates can be high if you have a significant estate. Thankfully, several legal tax shelters and estate planning tools, such as irrevocable trusts, can be utilized to minimize or avoid federal taxes.

    But, there’s more to be aware of. Estate planning can also cause tax implications on:

    • Capital gains
    • Distribution of IRA accounts
    • Social security income
    • Generation-skipping transfers
    • Interest-earning accounts
    • Investment income
    • And more

    Contact a Florida Transfer Tax Planning Attorney

    If you want to minimize the taxes you or your family could face for transferring your wealth, you should contact a Florida transfer tax planning attorney.

    Doing so will allow you to make an informed decision about how you share your assets and how to minimize estate taxes legally.

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    Battaglia, Ross, Dicus & McQuaid, P.A. is a U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced attorneys, they give you the best chance of getting the resolution you hope for.

    Schedule a free consultation today to get started or to get any questions answered.

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