Estate Tax Vs. Inheritance Tax
The last thing that you are likely to be thinking about when a loved one passes away is what the tax implications will be. However, we would hate for taxes to be an additional source of stress during this time. Taxation can be a complicated matter, particularly when you are dealing with different state and federal requirements, and it can be stressful trying to figure out what taxes are owed and by whom. Luckily, once you understand the basics it’s really not as overwhelming as it seems. If you have the benefit of living or inheriting from a Florida estate, this will also help, as Florida is one of the best states for estate and inheritance taxes. We’ll go into more detail about what to expect when it comes to estate and inheritance taxes in Florida below.
What is the Difference Between Estate Tax and Inheritance Tax?
Estate tax is the amount of tax taken out of the decedent’s estate before the remaining assets can be distributed to beneficiaries. In good news, Florida does not have a state-imposed estate tax, so no money will come out of the estate for Florida estate taxes. There is a federal estate tax, however, it only applies to high-asset estates. Currently (for the 2022 year) the federal estate tax only applies to estates valued at $12.06 million or more. If you are the testator to a high-value estate, it is critical that you work with an experienced estate attorney to ensure that you have planned appropriately for tax purposes. Proper planning can allow a married couple to double this exemption and keep the majority of their assets exempt from federal estate tax. Considering that the federal estate tax can be up to 40%, this is absolutely essential to plan for. On the other hand, inheritance tax is a tax paid by the beneficiary. There is no federal tax on inheritance. This means that a beneficiary does not have to include an inheritance as taxable income. Some states have inheritance taxes, but Florida does not. This means that the only tax you likely have to worry about if you are handling an estate in Florida is the federal estate tax, and that is only of concern if the value of the estate is at least $12.06 million. Hopefully this can bring you some peace of mind, or give you some direction when it comes to how to proceed or plan your estate. If you have questions about your specific estate or inheritance, it is always best to consult directly with an estate attorney who can have full knowledge of your individual circumstances.
Contact the Law Offices of Larry E. Bray to Schedule a Consultation
Estate planning can be a highly complicated process that can evolve over years, and it can certainly feel daunting to start. If you require legal assistance with a matter related to estate planning, probate, or inheritance, the Law Offices of Larry E. Bray are ready to help. Contact West Palm Beach estate planning lawyer Larry E. Bray today to schedule a consultation.
