The current news on estate and gift taxes is favorable. The State of Florida recently eliminated the Florida Estate Tax and effective January 1, 2009, there will be an exemption of $3,500,000.00 of assets subject to U.S. Estate Taxes. Additionally, assets passing to a surviving spouse that qualify for the marital deduction are not subject to estate taxes. For those having assets subject to U.S. Estate Taxes in excess of $3,500,000.00, you should seek advice on ways of eliminating or minimizing estate taxes.
Many clients fail to realize the comprehensive application of Estate Taxes. In addition to assets owned solely in your name, assets passing at time of death subject to Estate Taxes also include assets held in a Living Trust, Transfer on Death Accounts, assets held in joint ownership with rights of survivorship, and life insurance in which any incidents of ownership are owned. Even assets over which you exercise control or enjoyment of, but of which you have no legal ownership, may also be included in your estate for estate tax purposes. If you have assets subject to U.S. Estate Taxes in excess of $3,500,000.00, a U.S. Estate Tax Return and any taxes payable with the return must be filed with the Internal Revenue Service within 9 months of date of death.
There is currently an exemption of $1,000,000.00 for gifts made during your lifetime. When this exemption is used, however, it reduces the $3,500,000.00 to the extent that the gifting was exercised during your lifetime. In addition to the $1,000,000.00 gift tax exemption, gifts of up to $12,000.00 may be made annually to any number of persons without the filing of a gift tax return or reducing your $1,000,000.00 exemption. In addition to the $12,000.00 annual exclusion, an unlimited gift tax exclusion is allowed for amounts paid on behalf of a donee directly to an educational organization for tuition. Also amounts paid directly to health care providers for medical services on behalf of a donee also qualify for the unlimited gift tax exclusion. For U.S. citizens, an unlimited marital deduction is allowed for gifts to a spouse.
For those persons wishing to gift a charity, there are estate planning opportunities that provide financial and tax benefits to you and/or your family while also providing a gift to a charitable organization.
Planning to minimize or avoid Estate Taxes requires an evaluation of the Estate Taxes that may be due by your estate and your estate planning objectives for your beneficiaries. As a former attorney with the Estate and Gift Tax Division of the Internal Revenue Service and as a Florida Bar Board Certified Wills, Trusts & Estates Attorney, Wayne R. Coulter is uniquely qualified to provide comprehensive estate planning advice. There is no charge for the initial consultation to discuss your estate planning objectives.