What to Know About Estate Taxes and Your Florida Estate Plan
The government levies estate taxes on property you transfer to someone else upon your death. However, these taxes do not apply to every transfer. For your estate to be taxed, your assets must meet a certain value threshold. Although most estates may not be subject to estate taxes, it’s crucial to know what they are and their potential impact on your beneficiaries and heirs. If you have questions about the estate tax and your Florida estate plan, contact the experienced West Palm Beach estate planning attorneys at the Law Offices of Larry E. Bray, P.A. today to schedule an initial consultation.
How Estate Taxes Work
The estate tax will be calculated on the total value of everything you owned at the time of your passing. If your estate exceeds the current exemption amount at the time of your death, then your estate executor will be required to file a tax return for the estate. The IRS value is almost always assessed at the time of your death. In most cases, deductions help reduce the total, making your estate fall below the federal threshold, and therefore, estate taxes won’t apply. However, the executor will still need to file a tax return.
What Assets Are Included in the Total?
To better understand how estate taxes are calculated, it’s essential to know what assets are included in the total. Some of the most common assets will be:
- Cash and bank accounts,
- Real estate, Insurance policy benefits,
- Stocks and other investments,
- Business interests,
- Securities, and
Some of the most common deductions that can help reduce your taxable gross estate value include:
- Expenses of estate administration,
- Property passed to your surviving spouse, and
- Any assets you transfer to a qualified charity.
Forgetting to add some assets can create a situation where your estate could be liable for estate tax. High benefit insurance policies are some of the most commonly missed assets. To ensure you don’t leave your loved ones on the hook for estate taxes, work with an experienced estate planning attorney in Florida.
Are Estate Taxes and Inheritance Taxes the Same Thing?
Understandably, some people are confused by estate tax and inheritance tax. Inheritance taxes are the responsibility of the heir or beneficiary when you pass away. The person who inherited the asset will be the one responsible for paying inheritance tax. Estate taxes are paid out of your estate.
Methods to Reduce the Risk of Estate Tax
There are multiple methods to reduce the risk of estate taxes. You could donate assets to charity through a trust, set up an irrevocable life insurance trust, or gift assets while you’re alive. Discussing these options with an experienced attorney is crucial. There may be other options that would work best for your estate and your goals.
Contact a Florida Estate Planning Attorney
While federal tax is an integral part of the country’s revenue stream, there is no reason to needlessly pay high estate taxes when proper estate planning would eliminate this expense. To learn more about how we can help, contact the Law Offices of Larry E. Bray, P.A. today to schedule an initial consultation.