People create estate plans by planning for the future. Who do I bequeath an important family heirloom? How about my investment property? What about my pets? These and many more issues are important to many of us.
Another important aspect, however, involves estate taxes. Many individuals who substantial assets contemplate estate taxes.
Unfortunately, tax laws and rules are complex-and always changing.
Below are a few present-day tax rules to think about as you make or alter your plans:
1. Federal tax exemptions
In 2018, the Internal Revenue Service announced updates to estate and gift tax exemptions. Beginning in January of this year, individuals are allowed to exempt $11.4 million of their inheritance, up from $11.13 from the year before. Any amounts over the new threshold, however, means a steep 40 percent tax on remaining assets you pass on in your estate.
2. Additional tax burdens
Although you may avoid federal tax assessments on your estate, taxes on, for instance, vehicles, may still be required during the probate process upon their transfer.
3. Florida estate taxes
Warm weather and sunshine aren't the only reasons the state of Florida is a popular destination for retirees. Florida is one of 33 states with no estate or inheritance taxes. If you are a resident of Florida, you pay zero taxes on assets you bequeath in your estate.