One of the main advantages of planning your estate is the peace of mind that you are doing everything necessary to care for your loved ones upon your death. However, when your estate is subjected to taxes, it can reduce the inheritance your heirs receive. If you’re ready to start planning your estate, you may wonder how to keep your estate taxes low. The following blog explores how you can minimize their impact with the assistance of a Pasco County, FL estate planning lawyer.
What Are Estate Taxes and Does Florida Impose Any?
Estate taxes are the right of the government, at a state and federal level, to take a portion of assets from your estate if it is worth a certain amount. Generally, this is a tax on the rights of a citizen to transfer property from their estate to beneficiaries upon their death. These are often also called a “death tax,” as they are only imposed upon the passing of an estate’s owner.
Florida is one of many states that do not impose their own estate taxes upon someone’s passing. Similarly, there is no inheritance tax. This means your beneficiaries will not be taxed on the assets they inherit from your estate.
While Florida may not impose taxes, you can still expect them from the federal government. As of the 2023 tax year, estates worth over $12.92 million are subjected to taxation. However, only funds over that $12.92 million mark are subject to tax. For married couples, the exemption is $25.84 million, or roughly double the individual exemption.
How Can I Reduce My Federal Taxes?
If your estate is over the federal exemption limit, there are things you can do to minimize the impact of estate taxes.
One of the most popular options is to leave your entire estate to your spouse via marital transfer. This means your spouse can assume the entirety of your assets without facing any tax expenses. However, it’s essential to note that this only delays the taxes. Your estate will be taxed upon the passing of your spouse.
For some, you may find that your life insurance policy places you over the exemption limit. To avoid this, you may consider creating an irrevocable life insurance trust. If you remain over the limit regardless, placing assets in this trust can help prevent the funds inside from being taxed upon your passing.
Unfortunately, you may discover that planning an estate can be complex and confusing. It’s in your best interest to secure legal guidance to help guide you through these legal matters. At the Law Offices of Matthew J. Jowanna, our dedicated law firm has the experience necessary to help you navigate these complex issues. Contact us today to learn how we can help you prepare for the future.
