Fort Lauderdale Estate Tax Planning Lawyer Serving the Tri-County Area

Florida doesn’t have an estate tax – but the federal government does

There are a lot of benefits to living in Florida – the weather, beaches, and culture, just to name a few. But at The Levy Firm PLLC, our estate planning legal team is most focused on Florida’s beneficial tax laws.

Florida is one of the most tax-friendly states in the U.S., but if you live or own property here, it is still important to have an estate plan established to protect your assets from federal tax assessments and avoid probate. We can help. The Levy Firm PLLC is a boutique Fort Lauderdale law firm specializing in customized estate plans. Contact us for a free consultation.

Federal estate taxes in South Florida

The federal estate tax is charged on assets and property transferred upon death. The IRS evaluates the deceased's assets, debts, and interests, deducting certain exemptions and allowances before taxing the remaining value. Estates below a certain threshold are exempt from federal estate tax requirements. Depending on your circumstances, your estate may be required to pay federal estate or “death” taxes. This may include:

• Estate Tax. This is a charge for the transfer of property upon death. Assets are assessed at their current fair market value in a full accounting of the deceased’s holdings, interests, assets, and debts. Tax deductions, nontaxable property, and other allowances are removed from the gross value and the IRS taxes whatever is left at a rate of about 18 percent to 40 percent depending on estate size. Not every estate is subject to the federal estate tax, however. For example, estates valued below the filing threshold are not required to submit a federal estate tax return (Form 706).
• Gift Tax. Many people leave gifts for their loved ones in their will or trust, but if the gift is too big, the taxes could burden the beneficiary. The federal gift tax applies to all types of gifted property including money. To avoid the gift tax, you need to be under the annual gift tax exemption. Individuals who receive one gift or multiple gifts less than the exemption – about $17,000 a year – will likely avoid the gift tax.
• Capital Gains Tax. This tax is levied on the profit realized from the sale of an asset that has increased in value over time. It is calculated by taking the difference between the sale price of the asset and its original purchase price. At The Levy Firm PLLC, we know that proper asset valuation and stepped-up basis planning can reduce capital gains tax risk in Florida.

If estate taxes are not paid, the government can put a lien on estate property. While transactions are still possible, estate tax liens significantly restrict a beneficiary’s right to sell or rent the property. A strategic estate plan that utilizes trusts and exemptions can help minimize exposure to the federal estate tax. The Levy Firm PLLC can help you create a comprehensive gifting strategy that leverages annual exclusions and lifetime exemptions to mitigate taxes. Call Geoff for more information on how to get your plan started.

Estate and other ‘death’ tax exemptions

Protecting your estate from federal taxes often involves a legal plan to transfer qualifying assets into exempt structures and investments. The federal estate tax laws in the United States provide exemptions for certain assets. Property that is usually not subject to estate taxes include:

• Assets passing to a surviving spouse (unlimited marriage deduction)
• Qualifying charitable donations
• Gift(s) valued below the federal annual gift exclusion
• Trust assets, with some exceptions
• Retirement accounts like 401(k)s and IRAs, if properly designated
• Life insurance proceeds, if paid to a named beneficiary
• Small business property, under certain conditions
• Protected homestead property

Laws can change. Assets that were tax-exempt one year could be taxed mercilessly the next. For the full protection of your assets, it’s important to keep your estate plan current. The Levy Firm PLLC stays informed about changes in tax laws and can work with you to draft and update tax strategies tailored to your circumstances.

Estate tax planning FAQ

If there are no estate taxes in Florida, why do I need an estate tax plan?

Florida is considered one of the most tax-friendly states in the U.S. because in Florida there is no:

• Estate Tax
• Inheritance Tax
• Gift Tax
• Income Tax
• Capital Gains Tax

However, while there are no state estate taxes, there are federal estate taxes in Florida. If you live in Florida or own property out of state, you may be subject to taxes by the state where you and/or the property reside in addition to federal estate taxes.

Do beneficiaries pay taxes on their inheritance in Florida?

It depends on the assets in question, but beneficiaries in Florida generally do not have to pay state inheritance taxes. Florida does not have a state-level inheritance tax, and the state does not impose an income tax on individuals. However, it's important to note that federal estate taxes may apply in certain cases, depending on the size and nature of the estate. Additionally, if beneficiaries receive income from inherited assets, such as interest, dividends, or rental income, they may be subject to federal income taxes. In some cases, taxes are not imposed immediately but a beneficiary must pay them if they make a withdrawal or sell the assets.

How much can I be charged in estate taxes?

There are limits to how much you can be taxed upon passing. If you reside in Florida, your federal estate tax liability depends on the total value of your estate at the time of your death. Although the threshold for the federal estate tax exemption could change at any time, generally, estates valued below $12 million for individuals or $24 million for married couples are not subject to federal estate taxes. If your estate is worth more than that, you may be taxed.

How do I get around paying federal estate taxes in Florida?

To minimize federal estate taxes in Florida, several strategies can be employed. One common method is to utilize the federal estate tax exemption, which allows individuals to pass a certain amount of assets tax-free upon death. Additionally, establishing trusts, such as irrevocable trusts or charitable remainder trusts, can help reduce the taxable value of the estate.

Plan now to protect your loved ones and legacy

Our South Florida boutique estate planning law firm has the time and resources to take a holistic approach to estate tax planning. Fort Lauderdale estate tax planning attorney Geoff Levy is knowledgeable about both federal and state tax laws and how to adopt strategies to changing regulations. If you have assets you want to protect from federal estate taxes, contact Geoff for a free consultation. He can answer your questions and help you decide how you want to move forward.