At the Law Offices of Frye & Vazquez, PL, in Florida, we know how hard you work throughout your life to accumulate wealth. We also know how hard you work to protect this family wealth so that you can pass it on to your heirs. The last thing you want is for your estate to have to pay a huge estate tax and your heirs to each have to pay an inheritance tax.
As SmartAsset.com explains, Florida is a very tax-friendly state. Not only do we have no state income tax, we also have no state estate tax, inheritance tax or gift tax. Florida abolished its estate tax, a/k/a the dreaded "death tax," in 2004.
Federal estate tax
Be aware that just because Florida will not levy an estate tax against your estate does not necessarily mean that your estate will not have to pay the federal estate tax. Per the Tax Cuts and Jobs Act passed by Congress late last year, your estate is exempt from federal estate taxes if it is worth $11.18 million or less. If it is worth more than that, however, it must pay this tax, which ranges from a marginal rate of 18 percent to the top rate of 40 percent.
Your taxable estate represents your estate's total value minus the $11.18 million exemption. Consequently, if your estate's total value, for instance, is $11.5 million, your taxable estate is $320,000. Your estate pays $70,800 on the first $250,000 plus a marginal rate of 34 percent on the remaining $70,000, for a grand total of $94,600 in federal estate taxes.
The above figures assume that you are not married when you die. The federal estate tax exemption is $22.36 million for the estates of married spouses. Therefore, you and your spouse could pass a combined estate of $22.36 million to your heirs tax free if your wills and other estate documents contain the proper wording to avail yourselves of this portability aspect.
As stated, Florida has no inheritance tax. Nevertheless, your heirs who live in states other than Florida when you die may have to pay their state's inheritance tax.
For more information, please visit this page on our website.