We spend our lives working hard to accumulate assets we can pass down to our children and families after we die.
Part of that hard work needs to include estate planning to ensure the property and assets we leave behind make it to our loved ones as intended.
If you are planning your estate, or if you have been named the personal representative of an estate in Florida, it is important to consider the taxes that may be levied against the estate.
What is an Estate Tax?
Estate taxes are those levied by the government on the estate of a deceased person.
Typically, estate taxes are only applied to estates that are worth a certain amount, which varies depending on the location of the estate.
Estate tax is different from inheritance tax, which is levied on the money inherited by the beneficiary of an estate.
Florida Estate and Inheritance Tax
Luckily, residents of Florida do not need to worry about estate tax or inheritance tax being levied on assets they leave behind or inherit.
By law, Florida has no estate tax or inheritance tax.
However, some estates may still be subject to Federal Estate Tax depending on the size of the estate in question.
Federal Estate Tax
Estates differ greatly in size. As a result, some are subject to federal taxes and some are not.
In 2019, only estates in excess of $11.4 million dollars are subject to Federal Estate Tax.
Estate taxes can vary depending on a variety of factors including the total value of an estate, the use of the unlimited marital deduction and the amount of taxable financial gifts the decedent made during their lifetime.
Although many estates are not subject to Federal Estate Tax, understanding the criteria for how taxes are applied to an estate can help you plan for your future.
The value of a decedent’s estate and all financial gifts made during their lifetime may be subject to federal gift and estate tax, which taxes the transfer of wealth from one person to another at the time of the decedent’s death.
Although there are exemptions that can be made to minimize the amount of taxes owed on the transfer of assets, during estate planning it is best to assume that all gifts are subject to this tax.
In 2018, the Tax Cuts and Jobs Act (TCJA) raised the lifetime exemption limit for individuals from $5 million under the American Taxpayer Relief Act (ATRA) to $11.18 million (adjusted for inflation) until 2025.
The tax liability must be paid before any assets are transferred to the named beneficiaries or legal heirs of the estate.
Planning Your Estate
If you have been appointed the personal representative of an estate in Florida, or are currently planning your own estate, the estate planning attorneys at the Law Offices of Hoyt & Bryan are prepared to help you navigate the complexities of estate planning, including federal tax considerations.
Call 407-977-8080 or contact us online to discuss your concerns and get started with a personalized estate plan today.