The Miss Universe pageant was especially entertaining this year thanks to Steve Harvey crowning the wrong winner. Miss Colombia enjoyed seeing her dreams come true and the false sense of security that followed for a brief moment before it was literally taken away and given to someone else. Can you imagine how she must have felt? The bad news is there is a chance you may feel something very similar without proper estate planning. If you have a taxable estate, your hard earned wealth may end up in the hands of the government instead of remaining with your loved ones, continuing to support their health and wellbeing as you had hoped.
Taxes aren’t just for the living. Estate tax is a tax on the right to transfer your property after death. This means that all of the property you own will be subject to federal estate tax. Currently, the tax exemption amount is $5.43 million dollars. This means that up to 5.43 million dollars of your estate can pass without being taxed but the remainder is not so fortunate. If you have a taxable estate, there is still hope: you can still save by taking full advantage of the available federal tax exemptions or by creating an estate tax saving trust, such as a Qualified Terminable Interest Trust or a Bypass Trust.
Most Americans are familiar with Federal Tax Law Exemptions such as the personal estate tax exemption, marital deduction and charitable deductions. Taking advantage of these deductions will allow you to leave substantial amounts of property free of estate taxes. Making annual gifts is another way to cut back on estate taxes. Annual gifts of $14,000 per person may be made tax free. Be very careful to not exceed $14,000 because then the gift becomes taxable and the amount of your personal exemption will be reduced. It is best to keep any gifts under this amount to ensure you maximize your personal exemption.
Other then taking advantage of the Federal Estate Tax Exemptions, you can also seek the assistance of a qualified estate planning attorney to create an estate tax saving trust, such as a Qualified Terminable Interest Trust (“Q-TIP Trust”) or a Bypass Trust. The Q-TIP Trust is ideal for any married individual who may wish to retain control over any remaining property once their spouse passes away. This is typically the case with those who are well into their second marriage and both spouses have children from a previous marriage. In this particular situation, your surviving spouse will benefit from what you left behind but whatever remains after their passing will then be left to your children from your prior marriage.
Many times the Q-TIP Trust is utilized in conjunction with a Bypass Trust. A Bypass Trust shelters the property from estate taxes and “bypasses” the property from your spouse to someone else, such as your children. Your spouse continues to benefit from the trust during their lifetime, even though the sole benefit of this trust is for your children.
Don’t continue to be comforted by a false sense of security. Protect your crown! Call the South Florida office of Wild, Felice & Partners, P.A. today for your free consultation. Allow our attorneys to help you plan for your future and provide you with peace of mind. Call (954)944-2855 or visit our website for more information at www.wfplaw.com.
It’s A Wild World. Are You Protected? SM