Are Florida’s Estate-Related Tax Policies Too Good to Be True?
The sunny weather is not the only reason that so many retirees choose Florida as their permanent home. Yes, the weather is warm year-round in Florida, but that is also true in every other state below a certain latitude. There is a reason that they call it the Sun Belt. Even though the gators in South Carolina are becoming increasingly bitey as developers build more and more 55+ communities on their habitat, no other state comes close to Florida in terms of alligator population, and alligators are only one of Florida’s frightening wildlife species. Likewise, hurricanes are possible throughout the Sun Belt, but Florida is all coastline, and it is in the path of hurricanes that make landfall from the Atlantic as well as the ones that approach from the Gulf of Mexico. It isn’t because of the prices that retirees choose Florida. One can argue that nowhere is affordable anymore, but urban areas in Florida have always been pricey. When it comes to tax policies, though, Florida is unbeatable if your goal is to pass property to your heirs inexpensively after you die. To find out more about the taxes and other obligations for which your estate will be responsible, contact a Dade City estate planning lawyer.
Florida Has No Estate Tax and No Inheritance Tax
Florida is a tax haven if you’re dead. In some states, the estate of a deceased person must pay a percentage of the estate’s net value in estate taxes before the estate settles. The states that have estate taxes only assess them on the estates of wealthy people, so in practice, no one except multimillionaires pays estate taxes. The rate of estate tax increases with the value of the estate. Likewise, in some states, the heirs pay taxes on their inheritance when the value of the inherited property is above a certain amount.
In this regard, Floridians and their heirs get a sweet deal. Not only does Florida not impose estate taxes on the estate, it also does not charge the heirs an inheritance tax. Even better, inherited property does not count as taxable income, so heirs do not have to pay income taxes on money they inherit.
The Cost of Probate Can Still Be Burdensome
Even without estate taxes or inheritance taxes, probate comes with enough expenses that no one rejoices at being designated as the personal representative of a family member’s estate. The estate must file a final tax return on behalf of the decedent, and depending on the decedent’s financial circumstances in his or her final year of life, the estate may owe income taxes. Likewise, the estate must settle the decedent’s debts if creditors seek repayment during the first few months that the estate is open. The estate might even have to sell some of its assets to settle the debts.
Contact a Florida Estate Planning Attorney About Estate Planning for the Tax Averse
An estate planning attorney can help you pay as little to the IRS as possible during probate. Contact The Law Office of Laurie R. Chane in Dade City, Florida to discuss your case.
Source:
floridarevenue.com/taxes/taxesfees/Pages/estate_tax.aspx
