One of the most common reasons for planning an estate used to be to limit tax liability. However, this has changed ever since the modifications to the estate tax laws which set the tax exemption level at $5.25 million per person in Florida and across the nation. This has kept most people from ever having to worry about estate taxes, but instead has shifted the focus of estate planning toward the portability election.

Along with keeping the exemption level for one person at $5.25 million and $10.5 million for married couples, lawmakers have also made the portability election option permanent. This is the ability of a person to gain a deceased spouse’s exclusion amount which has not been used. Congress made these changes as a part of the Taxpayer Relief Act of 2012.

Under the new law, if a husband dies with only $3 million in assets, that $3 million will count toward his allotted exemption. This leaves $2.25 million in exclusion which he can then pass on to his surviving wife. She will then be allotted $7.5 million worth of exclusions which she can use for gifts during her lifetime or for transferring assets after her death. However, the executor needs to make sure to timely elect the portability election after the spouse dies.

With this new option, many people looking into estate planning may believe that creating a trust is no longer needed in Florida or in any other state. However, every situation is different and this may not be the case for everybody. Some may prefer leavings assets in a trust because they do not believe their intended heirs can properly manage the assets. Knowledge of applicable estate planning laws and how they apply to specific situations is essential in making the right decisions regarding all aspects of planning an estate.