You’ve spent your life working hard to build an estate to leave your loved ones. However, estate tax implications are worth worrying about. Does Florida tax estates? How much will the government take when you pass property on to your loved ones? That’s where Florida estate tax planning can be helpful. This post will explore what Florida seniors need to know about estate taxes.
Florida Estate Tax Planning: Reducing Tax Liability on Your Estate
Estate Taxes in Florida
You’ll be relieved to know that Florida does not have an estate tax. The state had an estate tax, which the government repealed in 2004. This is a significant benefit to seniors and their heirs. No matter how large your estate is, the state will not tax the transfer of property and wealth to your heirs, making Florida a particularly advantageous state for seniors.
Federal Estate Taxes
While Florida does not have an estate tax, residents must remember they are still subject to federal taxes. As of 2024, the federal estate tax exemption is $13.61 million. That means that estates under that amount are not subject to taxes. Tax rates range from 18% to 40% for estates exceeding this amount. However, seniors with large estates can leverage various exemptions and tax strategies to reduce liability.
Spouses and Estate Tax
Spouses essentially enjoy an unlimited exemption for inherited assets from their partners. There is also the concept of portability in estate tax. With portability, a surviving spouse can claim the remainder of the federal exemption of their deceased partner. That means the unused portion can apply to the surviving spouse’s estate if the deceased spouse didn’t use their full federal exemption. Depending on the circumstances, this could double the exemption on the surviving spouse’s estate.
Assets in Other States
What if you own assets in other states? While Florida does not charge an estate tax, some states might tax estate assets within their borders. For example, New York state may charge nonresidents estate taxes on assets located within the state. These taxes may impact your estate even if you live in Florida. Seniors with out-of-state assets should consult an estate planning attorney to understand potential tax liabilities. There may also be strategies to mitigate or avoid taxes in other states.
Gifts and Estate Taxes
Gifting assets during your lifetime can reduce the taxable value of your estate. In turn, this could reduce estate taxes for your heirs. However, there are limits to gifting assets. As of 2024, you can gift up to $18,000 during the tax year without incurring taxes. That means strategic gifting can be an effective way to reduce the tax liability on your estate.
Estate Tax and Trusts
Trusts can be valuable tools for estate planning. They are especially effective at helping reduce the taxable value of an estate. Irrevocable trusts remove assets from your taxable estate, potentially lowering the amount subject to federal estate taxes. It could get the estate under the federal exemption amount and eliminate estate taxes. Additionally, trusts can provide control over the distribution of assets.
Do you need help with estate planning in Florida? Click here to contact the Scott Law Offices. We can help seniors develop an estate plan to reduce taxes. Reach out now to learn more about our services.
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