As a Florida adult plans for the future, he or she may consider who to name as heirs and beneficiaries of his or her estate. These estate plans may also include documents regarding disability planning, health care wishes and more. Of course, it is important not to just make these decisions, but to consider how estate planning decisions could come with certain tax implications. This is particularly prudent in light of recent changes to tax laws.
Certain estate planning decisions can come with specific types of tax consequences. Under the SECURE Act passed in 2019, changes were made to the extended tax-deferred benefits when the IRA was inherited by a non-spouse. Now, those who inherit an IRA have to withdraw the funds within 10 years. This means they will have to pay the applicable taxes on the money at the same time.
Other potential changes include an increase in capital gains taxes that could impact those who inherit stocks. Fortunately, there are specific steps one can take that will allow him or her to mitigate some taxes. This includes taking advantage of gift tax exclusions and converting IRAs to Roth IRAs. Universal life insurance plans may help loved ones cover other tax obligations they may incur after inheriting assets or money.
Planning with a purpose
Effective long-term planning means thinking about the possible implications of every estate planning choice. It is prudent to be purposeful and thoughtful with every decision. Florida adults may find it helpful to work with an experienced attorney as they create a plan to care for their loved ones and beneficiaries well into the future.