Florida has a reputation for being a tax-friendly state. There is no state income tax and Floridian’s Social Security, retirement accounts and pension plan income are all free from taxes. Florida does not have a State estate or inheritance tax. These are two different types of taxes often called death taxes because they are paid after someone dies. Heirs and beneficiaries in Florida do not pay income tax on the money they inherit from an estate, called an estate tax, because inherited property does not count as income for income tax purposes. Someone who does not live in Florida but inherits property from a resident of Florida does not have to pay a Florida inheritance tax.
However, if you live in Florida and you inherit property from someone who lives in a state that does have an estate or inheritance tax, you will have to pay that tax. Currently, only 6 states have an inheritance tax and each state establishes its own tax rate. If you were married to the person who died you most likely will not have to pay an inheritance tax. Some states also have an inheritance tax exemption for small estates.
Federal Estate Tax
Florida residents are subject to federal estate taxes. If the assets in a Floridian’s estate exceed the federal estate tax $11.58 million exemption, an estate is taxed at up to 40%. The beneficiaries do not pay the federal estate tax, that is paid by the estate before funds are distributed to the deceased’s heirs.
Florida Estate Planning
After someone’s death, their estate goes the Probate process. During Probate, courts identify and verify a deceased individual’s assets. If the decedent had a Will, the property is distributed per that Will upon validation by a judge. Without a valid Will, the judge must determine how to distribute the property under relevant Florida law. This process can be long, arduous and costly.
Florida’s tax-friendly laws help to preserve your assets but even tax-friendly laws require a review of your unique circumstances and recommendations by a professional on how to limit tax liabilities and protect your loved ones. A good Estate Plan conveys your wishes on how your assets should be handled after you’re gone, but the benefits of an Estate Plan go far beyond the distribution of holdings. It can also keep your estate out of Probate while protecting your children’s inheritance from divorces, lawsuits and creditors.
Your Estate Planning Attorney should educate you and then help you and your loved ones understand how to navigate these difficult questions. It’s important that the Attorney you choose does not make these matters more difficult for you and helps you create a complete plan you’re comfortable with and have confidence in.
For a complimentary, no-risk consultation, call the Siegel Law Group office at 561-955-8515 or 855-FLA-ESTATE.
Remember: The only Estate Plan that matters is the one you have in place when you need it.