You may assume that the only escape from taxes is death, but for some residents of Florida and elsewhere, this is not always the case. People above a certain wealth bracket may have their estates taxed upon their death. It is important for you to understand if you are subject to the federal estate tax and if so, how it affects the inheritance you leave to your loved ones.
According to Forbes, this one-time tax is also called the death tax, for obvious reasons. As of 2019, only estates worth more than $11.4 million are subject to the federal estate tax. However, in 2026, this drops back to $5 million. If your property and assets are worth more than $11.4 million now or $5 million after January 2026, your estate may be taxed between 18% and 40% of the overage of the exemption amount, due nine months after the date of your death.
Each asset you own is included in calculating your potential estate tax, including jewelry, artwork, furniture, real estate, stocks, bonds and bank accounts. You may avoid your loved ones having to pay the tax by gifting a large sum of your estate while you are alive. There are also numerous deductions available that can reduce this burden.
It is also reassuring to learn that Florida has no additional state estate tax, which many other states have. However, if you own property in another state, it may be subject to that state’s estate tax. This can be a complex area of law; therefore, this information should not replace the advice of a lawyer.