Tax Law

With our complex U.S. tax code, it is virtually impossible to do any business or real estate transaction without consideration of the tax consequences.

Often there are multiple tax considerations because multiple taxes may apply at the time of transfer. Federal taxes that may come into play are:

• U.S. income tax
• U.S. corporate tax
• U.S. gift tax
• U.S. estate tax
• U.S. generation skipping tax

Florida has a tax friendly environment, because it does not have an income tax or estate tax. The intangibles tax, a tax on investment earnings, was terminated over 10 years ago and is not likely to come back. Rather the primary source of state tax revenue is the Florida sales tax. And, the Florida state tax that needs to be assessed for any real estate transaction are Florida documentary stamps.

Rarick & Bowden Gold, P.A. is experienced in assessing how these various tax codes impact a business transaction or estate planning. Attorney Phil Rarick is an estate planning attorney with over 30 years of experience in estate tax law.

The 2012 American Taxpayer Relief Act (ATRA) has profoundly changed estate tax planning. The new law increases the estate tax exemption to $5.43 million per person and $10.86 million for a married couple in 2015. With the increased exemptions and permanence of portability of the deceased spouse unused exclusion (DSUE), major estate tax planning points are:

• While estate planning may be simpler for Americans with estates well below the $5.43 million threshold, it is far more complicated for estates above the $5.43 million limit
• Applicable exclusion amount of $5.43 million per person:
  • Should be used as little as possible
  • Taxpayers should consider keep as much as possible in order to obtain a “step-up” in basis for their assets in order to minimize capital gains taxes
• Income tax considerations
  • Can now be more important than transfer tax consequences
  • Should be considered in tandem with potential transfer taxes
• Estate Tax Inclusion
  • Can save more in income taxes
  • Should be forced if the income tax savings are greater than the transfer tax cost

• State of Residence
  • Will give rise to very different types of estate planning

Updating credit shelter trusts to maximize step-up in basis and provide broad flexibility in tax planning upon death of the first spouse should now be a priority for most married couples. Widows and widowers who are beneficiaries of a credit shelter trust may need to consider distributing assets out of the trust – assuming the trust allows for this – or decanting the trust to a more flexible trust if it does not.

Our Recommendation: All credit shelter trusts and estate plans prepared prior to 2013 should be reviewed by a Miami attorney.

Contact Us: To schedule a consultation call us at (305) 556-5209 or (954) 360-8242.