Many people retire to Florida because it has the reputation of being a tax friendly state.
For example, there are no state income taxes in Florida, which means pensions and retirement plans are free from taxes.
There is also no estate tax in Florida, so you will not have to worry about having the government levy taxes on your estate after you are deceased.
However, while there are no estate taxes in Florida, depending on the value of your estate, you may have to pay federal estate taxes before assets can be distributed to your loved ones.
Who must pay federal estate taxes?
If your estate is valued at over $11.4 million in 2019, you may owe federal estate taxes.
Such taxes can be expensive.
The historic rates fall between 35-55%. They also must be paid in cash, and often within a short period of time after you die; generally, no more than nine (9) months.
Because of such high rates and the way this tax must be paid, families may have to liquidate estate assets in order to pay the tax.
Tips to reducing your federal estate taxes
Fortunately, if you plan wisely you can drastically reduce or even eliminate your exposure to estate taxes.
Here are some tips to help reduce your federal estate taxes:
- Married couples. If a married couple follows the right legal steps, they can receive an exemption from estate taxes upwards of $22.8 million dollars (in 2019).
- Gifting assets. By removing assets from your taxable estate, you limit what will be taxed. This can be done by gifting assets to loved ones. In Florida, there is no gift tax. However, you may be liable to pay a federal gift tax if your gift exceeds a certain amount.
- Life insurance. A life insurance policy can help you pay any remaining taxes after you are deceased. Life insurance policies are not subject to income tax but may be included in your gross estate for federal estate tax purposes.An irrevocable life insurance trust can remove the value of a life policy from your taxable estate.
- Charity. Gifts to charities can reduce the amount of your estate and therefore, reduce your exposure to estate taxes. There may also be the additional benefit of an income tax dedication.
If you are looking for ways to reduce your exposure to estate taxes in Florida, it is in your best interest to contact an experienced estate planning attorney.
Contact the law Offices of Hoyt & Bryan
If you wish to learn more about ways to reduce your exposure to estate taxes in Florida, contact The Law Offices of Hoyt & Bryan online or call us at (407) 977-8080.
We are Central Florida’s leading estate planning and elder law firm. In addition, we are the only Florida law firm with two attorneys board certified in both Wills, Trusts and Estates and Elder Law.
We have years of experience helping people plan for their future and that of their loved ones.