J. Kelly Kennedy, Attorney/CPA, PLLC

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What should you know about estate planning in the new year?

An important issue for Florida residents to remember when crafting strategies for their estate plan is that a new year may bring new changes to the law. Mistakes can be made when failing to adequately prepare and adjust estate planning documents to adhere to these changes. Knowing what to look for and being cognizant of what is different is important.

There are tax implications when gifts are given. There are tax laws that allow a certain amount to be excluded on an annual basis. In 2017, that amount is $14,000. This is unchanged from what it has been in the past. For those who would like to dole out their assets by giving gifts, that $14,000 can be given to as many people as the person wants. Gifts to spouses are generally unlimited and tax will not be a problem. If the gift is for medical expenses or education, this is not taxable if it is paid directly to the institution.

When giving a gift larger than the limit to avoid taxes, the tax does not have to be paid immediately. The reason for this is the tax laws combine the gift tax and estate tax. This changes annually based on inflation. For 2017, it is $5.49 million. While the majority will not have to worry about so high an amount, it is wise to remember that the value of the person's entire portfolio will be calculated. With the gift and estate tax, it can range from 24 percent to 40 percent. In reality, the way it is structured means that it will generally be 40 percent. Couples have the right to double the exclusion amount for their lifetimes.

A spouse can use the lifetime exclusion and not be concerned about taxes. This is called portability. In 2017, couples can transfer up to $11 million to heirs through portability with no estate tax. It is also important to remember that state laws change along with federal laws, so this should also be factored in. Those who are preparing their estate plan to preserve assets and who are concerned about tax implications will likely want to get more estate planning information.

Source: The Motley Fool, "Estate Planning in 2017: Here's What You Need to Know," Dan Caplinger, Jan. 22, 2017

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