How Hiring a Lawyer Can Help You Lower Your Estate Taxes
Unlike many states, Florida does not have an estate tax or an income tax, both of which make it an incredibly popular place to take up residence, particularly by the ultra wealthy. However, while Florida does not have an estate tax, there is a federal estate tax that currently applies to estates valued at $11.4 million or more. It’s important to note that the threshold is currently set to be reduced by 50% in 2026, so if your estate is over $5.7 million, it’s also likely necessary to plan for the federal estate tax.
If you are a Florida resident with an estate that meets or exceeds that threshold, it is important to plan for the estate tax. In fact, legally, in order for the bequeathed assets to be released to the beneficiaries, the estate taxes on the assets must have been paid by the estate. The individual receiving the assets does not have the option to pay the tax, so it’s critical that your estate planning involves ensuring that sufficient assets are set aside for meeting the necessary federal estate tax so that your assets can be distributed as planned.
Mitigating Estate Tax in Florida
While the estate tax is federal, there is a great deal that an attorney can do to help you mitigate the taxes owed and ensure that your assets are able to be distributed as intended. Working with an experienced attorney, such as Larry E. Bray, can ensure that the bulk of your assets are left to your loved ones, and not the IRS. It is important to understand, however, that there are completely legal ways to reduce your estate tax liability. A lawyer can help determine which means suit your unique situation, however, we’ll review a few general options below. If you have questions about your specific situation, feel free to schedule a consultation with Larry E. Bray, P.A., today.
Alternative Valuation Date
One legal way to minimize estate tax liability is to choose an alternative valuation date. When a U.S. citizen dies, the IRS assesses the value of their estate. Generally, the IRS uses the date of death as the date of valuation for the decedent’s estate. However, the tax code permits the use of an alternative valuation date. An attorney will be able to determine the most advantageous date of valuation and submit it as an alternative one to be used by the IRS. This is particularly advantageous in a declining market, where the decedent’s home may be significantly less valuable 6 months after their death than it was on the day of.
Another popular option to help mitigate estate taxes, is to work with an attorney to develop an irrevocable trust. This trust can contain any assets intended for family and friends. By transferring the assets into an irrevocable trust you can actually avoid taxation on those assets at the time of death. This can massively decrease your taxable assets and the financial burden on your estate.
Schedule a Consultation
If you are interested in reducing your federally taxable estate and ensuring that your family is provided for exactly the way you want, the West Palm Beach estate planning attorneys at the Law Offices of Larry E. Bray can help. Schedule a free consultation today to find out how.