J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

Careful estate planning considers both near and distant future

Much of estate planning involves executing a will or a trust to help take care of one's family after one dies, but what if the family needs help now? Many Florida residents struggle with formulating an estate plan that allows them to help family members today.

One aspect of such planning that Florida residents sometimes neglect is gift tax. Current federal law allows individuals to give a child up to $14,000 in cash without incurring gift taxes. This means that if a mother gives her son $20,000 to help him make a down payment on a house, there is no gift tax on the first $14,000, but there will be tax on the remaining $6,000.

When the cash is used to pay school tuition or medical expenses, there is no $14,000 limit. However, the money must go directly to the school or medical institution to avoid the tax penalty. Parents may also give their children stocks or other investments, but they may have to pay taxes on the amount these investments have increased since the parent bought them.

These are just some of the considerations that come up with estate administration when one is trying to plan for their own remaining years on Earth and for their family's needs after they are gone. To avoid probate issues, a well-crafted estate plan takes many of these things into account, and it may need to be updated as circumstances change.

Florida residents who are thinking about beginning an estate plan, or who are thinking about changing one they already have, may be mostly concerned with preserving their legacy after they are gone. However, an estate plan must work in the here-and-now as well.

Source: Forbes, "Best Ways To Give Your Heirs Money While You're Alive," Lynn Ballou, June 18, 2013