There are many issues and regulations you must keep in mind when dealing with your estate plan in Florida. You want to ensure that the steps you implement happen according to your will. Moreover, there are several tax-related obstacles you need to consider when discussing your estate plan.
Not fixing family limited partnerships
Family limited partnerships, or FLPs, hold a family’s business assets or investments for several reasons. The most important reason is valuation discounts for estate and gift tax purposes. Another reason would be to keep control of the family investment. An FLP also helps to provide asset protection.
Failing to swap out
Most irrevocable trusts feature swap powers. Such trusts help to eliminate assets from your estate to reduce estate taxes. Most irrevocable trusts are in place for income tax purposes for individuals to characterize them as “grantor” trusts. It means that one reports on the income tax returns of the person who created the trust, typically known as “settlor.” Therefore, it is the settlor, and not the trust, who pays income tax. This is an important issue to consider when defining your estate plan.
Tax insurance covers certain losses like additional gift taxes. The taxes are payable from a position that does not qualify for its intended treatment while maintaining the course of settlement.
No selection of trust situs
Trust situs means the state where your trust is. It entails a different party administering your trust and the state law governing the trust. For example, if your state has heavy tax laws, you may avoid them by setting up your trust in another state. The other state should have favorable income tax laws.
Estate planning can be complex and confusing, so hiring an attorney may help give you a peace of mind. Moreover, it could save you from the harsh taxes on your estate. Tax laws differ across states, which is why it may be beneficial to have an estate planning lawyer help you plan your estate.