Law Office of Amy B. Van Fossen, P.A. - Elder Law

Call Today for a Consultation

Toll Free: 800-495-9153     Local: 321-426-1848

Striving to Protect the people 
you love, the assets you own,
and the dreams you hold dear

In many cases, estate taxes can be reduced with planning

With proper planning, Florida residents who have sizable assets can lower the effect of estate taxes. The most common strategies include making annual gifts and contributing funds to charities or charitable lead trusts. In some cases, it may be advisable to use an irrevocable trust to lower estate taxes, and insurance policies can also play a role.

Well-structured annual gifting can significantly lower the size of an estate while bypassing taxes. Federal tax rules allow individuals to give away as much as $15,000 worth of assets annually without gift taxes applying. A married couple can make gifts of up to $30,000 without the recipient having to pay gift taxes.

Those who want to give away more than the annual limit might want to establish charitable lead trusts. CLTs are especially beneficial for people who have low-basis, appreciated assets. A CLT pays an annuity annually to the designated charity for a predetermined period of years. Thereafter, or upon the death of the trust maker, the assets remaining in the CLT pass to the named beneficiaries.

Another strategy is to use life insurance, which can be a valuable way to provide liquidity for heirs to pay estate taxes. The proceeds of a policy can be earmarked for the payment of estate taxes; single premium whole life is usually the best kind of insurance for this purpose.

People in Florida who have questions about estate planning might want to speak with a lawyer. An attorney could examine the facts of the situation and develop a comprehensive strategy to meet the client’s goals. In some cases, legal counsel will suggest structuring a plan in a way that makes use of annual gifting to reduce eventual estate tax liability.