Many people in Florida do not need to worry about their survivors paying estate tax after they die because they do not possess property/assets of sufficient value. However, if you are someone whose family members may be subject to an estate tax after you are gone, you need to understand how the Internal Revenue Service classifies your assets.
According to an IRS document, assessments of both your gross estate and your taxable estate will take place following your death. It is important to know what each of these terms means. Your gross estate consists of all assets and properties that you hold at the time of your death, including but not limited to the following:
- Business interests
- Cash and securities
- Real estate
Rather than the price you originally paid to obtain these assets, the IRS will assess their fair market value to determine their worth.
The gross estate is not the figure that the IRS uses to determine if your survivors are liable for estate tax. However, it is necessary to determine gross estate in order to calculate your taxable estate by applying any necessary reductions in value, deductions or exemptions. Deductions can include bequests to qualified charities, estate administration expenses and debts such as mortgages.
As of 2019, the IRS imposes death taxes on estates in excess of $11.4 million. This is an increase from $11.18 million in 2018. The higher threshold will expire in 2025 unless Congress votes to extend it.
The information in this article is not intended as legal advice but provided for educational purposes only.