Wealth inequality has been rising rapidly in the United States over the last several years. This topic has also been a large part of the debate between lawmakers in Florida and other states on how to solve this problem. One solution — which lawmakers have devised has to do with changes to the estate tax planning laws — are designed to allow families who are not wealthy to reduce their tax burden.
One of the main changes to estate planning laws, aimed at helping everyday people who are not particularly wealthy, relates to the exemptions for the estate tax. Portability allows spouses to pass on their unused estate tax exemption to their surviving spouses, which allows the surviving spouses to add the remaining exemption amount to their own estate tax exemption. Lawmakers had introduced this law on an interim basis in 2011, but they have now made portability permanent with the American Taxpayer Relief Act of 2012.
The exemption amount will be continually adjusted in order to reflect monetary inflation. At the moment, the exemption amount is $5.38 million for an individual and $10.68 million for a couple. This is the total value of assets that a person may leave behind to heirs without having to pay the estate tax. This exemption amount is expected to reach around $6.58 million in ten years and $8.95 million in 20 years.
On the other hand, the portability option does not go into effect automatically in Florida or in any other state. One must elect the portability option when filing an estate tax return with the Internal Revenue Service. However, there are certain deadlines that must be met and should be taken into account when doing estate tax planning.