Florida is known for being lenient when it comes to taxes, so you may think your estate will be in the clear when it comes time to read the will. But that’s not likely the case, as federal regulations could hit you hard if you’re not prepared.
High-value estates can cost over $33,000 in legal and accounting fees to settle. But that’s just a part of the price tag. Taxes could have a substantial impact, and the cost only goes up with the size and complexity of the estate. Proper planning can go a long way to avoiding some of these taxes, but you’ll need to have a solid understanding of the rules.
Some of the many considerations when drafting your estate plan:
- Federal taxes: While there are likely no federal inheritance taxes to wrestle with, your property may be subject to a federal estate tax. Your estate could owe money if it holds a certain value according to the fair market value of all your assets, save for credits and allowable deductions.
- Lifetime gifts: You’re allowed a certain amount for gifts each year, and cumulatively over your lifetime. Going over these limits could affect your estate once your money is going out to beneficiaries. These caps are on the rise, but you’ll still want to make sure you’re aware of any restrictions that could result in a tax.
- Generation-skipping: You can leave an inheritance to anyone you wish, but skipping over your children’s generation to your grandchildren could incur some costs. There could be some instances where you can work around this rule, but generally, gifts and transfers that go beyond the scope of the nearest generation can be taxed.
- Selling inheritance: Property you hand out through your estate may not qualify for income taxes, but any increased value may be ripe for taxation. If the assets gain worth after you pass, then your beneficiary may have to pay tax in accordance with the growth if they sell.
Protect your estate from prying by understanding the laws that concern the process. The state of Florida is likely the least of your concern, so make sure you’re paying attention where it counts.