Gifting Strategies for Estate Planning in Florida

If you’re serious about estate planning strategies in Florida, you might want to consider gifting strategies. These strategies can serve multiple purposes, including tax reductions and positive outcomes for your beneficiaries. Many estate planners in Tampa engage in these gifting strategies before they pass away – allowing them to spread their wealth among family members before their passing. How do you get the most out of your gifting strategies in Tampa?

Gifts Are Tax Exempt 

The most important thing to remember about gifts is that they are tax-exempt. When you provide someone with a gift, this does not count as their “income.” Instead, it falls into a special category and incurs zero tax penalties. Because of this basic fact, many estate planners prefer to give their beneficiaries cash gifts before they pass away.

While Florida has no estate tax, the federal government does. However, the estate tax only applies to relatively high-income individuals. Today, cash gift exemptions are relatively high – especially in terms of lifetime exemptions. You can give someone a one-time gift of close to $14 million without incurring any tax penalties. You can also give someone a cash gift of over $36,000 per year with no tax penalties (for married couples). Note that the donor is the person who pays the “gift tax” in the United States – not the recipient.

That being said, the Tax Cuts and Jobs Act of 2017 is set to expire relatively soon – so estate planners in Tampa may wish to take advantage of these relatively high exemptions while they still can. When the exemption “sunsets,” it will become half its current amount.

Giving the Gift of Education 

Another option is to give the gift of education. This is a popular choice among estate planners who want their beneficiaries to actually benefit from the inheritance – rather than spending it all within a few years. You may decide to establish a trust for this purpose, and the trustee will make sure the funds are only spent on educational needs. Another option is a 529 plan. In the eyes of the IRS, contributions to educational funds are “gifts” in the same way as cash transfers.

Other Forms of Gifting to Consider 

Aside from educational needs, other contributions fall into the general category of “gifts” in Florida. One example is charity, and you may decide to give part of your wealth to a charitable organization. Not only does this help you achieve your ethical and philosophical goals, but it also reduces taxes in many cases. There are also various medical exemptions to consider. If you pay for someone else’s medical costs with your wealth, this is essentially the same as funding someone else’s education.

Find an Experienced Estate Planning Lawyer in Tampa 

If you’ve been searching for an experienced estate planning lawyer in Tampa, look no further than Knudsen Law. While gifting strategies offer excellent opportunities for estate planners, there are many other options to consider. The most effective estate planning strategies are highly personalized to meet the needs of each individual. During a consultation with us, you can discuss your unique priorities and goals in more detail. Reach out today to get started.

Sources: 

forbes.com/sites/truetamplin/2023/11/25/6-effective-gifting-strategies-to-minimize-your-estate-taxes/

irs.gov/businesses/small-businesses-self-employed/gift-tax-for-nonresidents-not-citizens-of-the-united-states