Florida Estate Planning Lawyer Blog
With the current estate tax exception of $5.43 Million for an individual and $10.86 Milliion for a married couple, some estate planners have begun to question whether gifting provisions in a Durable Power of Attorney pose more risk than reward. While it is true, that these provisions can be abused by individuals, there are several situations when estate taxes is not the primary concern and removing gifting provisions could pose a substantial risk to the individuals.
In Florida, individuals must initial next to any gifting provision for them to be valid under current law. Generally there are those provisions which permit the amount under the annual gift tax exemption (currently $14,000 a year per person) and those which permit larger gifting. While many estate planners may not see a need for these anymore, elder law attorneys use them all the time to protect the assets from loss due to the need for nursing home coverage for the individual or their spouse. So while it may be true that less than 0.2% (2 in 1000) people are actually subject to estate taxes, many more will need long term care. Without these important gifting provisions, individuals could end up being bankrupt or leaving little or no money for their surviving spouse to live on.
In addition, there is no guarantee that the estate tax exemption will continue to increase or remain the same. Congress could change the numbers in the future and without gifting provisions, your family may not be able to decrease the amount of your estate that would be subject to estate taxes.
For those clients who are subject to estate tax or who live in a jurisdiction where the state may charge an estate tax, gifting can significantly reduce the amount of estate tax that would otherwise have to be paid.
These gifting provisions are important when an individual or family has not planned to protect their assets from loss due to the need for long term care. Many estate planning and elder law attorneys recommend that families should begin protecting assets by age 60 so that if care is needed later, the assets can be exempt from those used to disqualify one for coverage. Today there are modern trusts where the individual does not lose control and has the flexibility to change beneficiaries, in much the same way as a with a revocable trust. If you have a traditional estate plan that does not exempt assets from claims that may be made by the government or other creditors, or you would like to review your durable power of attorney to see if it complies with the current law and permits the right type of gifting for your family, contact a Jacksonville Florida estate planning lawyer to discuss your objectives.