For Floridians, estate planning is a critical part of being prepared for the future. This benefits the person who takes out the will, trust or other estate planning device as it details what they want to happen with their property. It is also a positive for their loved ones and heirs. Many people are unaware of how important it is to have an estate plan. Even those who already have one are sometimes unfamiliar with ways to mitigate such worrisome issues as the estate tax. Knowing understated and perfectly legal techniques that can shield loved ones from being forced to pay exorbitant taxes on what they are inheriting is a useful idea.
The 529 college savings plan can help with wealth transfer and limited taxes
With new presidential administrations, changes may be made to how estate taxes are collected and the laws that dictate it. This is frequently due to differing political parties, agendas and philosophies. The current exemption for which people will not pay taxes on what they have inherited is $11.7 million per person. The new presidential administration has discussed lowering that, but has not moved forward with it yet. Regardless, the current estate tax will end after 2025 and the limit will be reduced to $5.49 million.
Still, it is useful to have strategies ready just in case. One is the 529 college savings plan. Experts tout its benefits for transferring wealth. With 529, money can be invested and there can be gains without taxes if it is for educational expenses. That not only includes college, but trade schools as well. In addition, tuition for students from elementary school to high school can be paid for with it up to $10,000 annually. Even if there is no child who requires these funds, the beneficiary can be changed to another person like a brother or sister and even a nephew or niece.
Tax increases are a concern for everyone – not just those who are categorized as well-off. If a person wants to use the 529 to avoid gift taxes, that too is possible with the exception allowing a $15,000 contribution to the plan to be front-loaded for five years by putting in $75,000 immediately. That can be doubled when a spouse gives the same gift. This can be done for more than one person, thereby warding off the gift tax. If the person donating the money needs it back, that too is possible.
Professional estate planning assistance can help with viable solutions
A comprehensive estate plan includes wills, trusts and powers of attorney. But it also involves finding ways to save as much on taxes as possible and shielding loved ones and associates from major expenses in the future. For advice on all areas of crafting an estate plan to achieve goals, consulting with those experienced in these matters is a wise first step.