What You Need to Know About Estate Tax in Florida
Florida is an attractive state to live in for several reasons. It is only one of seven states that does not have an income tax. Also, Florida does not require inheritance and estate taxes. The Sunshine State is so popular that over 300,000 people move to Orlando every year. Every day, 906 new residents come to Orlando, representing a 1.53 percent compound growth rate over six years. Orlando is just one of the popular cities in Florida. Pensacola, Miami, Saint Petersburg, and the Florida Keys are also popular destinations for new Florida residents. If you’re a resident of Florida, you may still need to pay estate taxes in a few different situations.
You May End Up Paying Inheritance Tax Even Though Florida Doesn’t Require It
Estate tax is a tax levied on the estate of a person who owned property upon his or her death. Florida doesn’t collect inheritance tax. If someone dies in Florida, Florida will not levy a tax on their estate. Nonetheless, Florida residents may still have to pay inheritance tax when they inherit property from someone else. If the person giving them the property lived in one of the six states that do levy an inheritance tax, that state would collect an estate tax.
For example, if you are a resident of Florida and you inherit property from a New Jersey resident, you will likely receive a tax bill from New Jersey. One exception to this rule is if you’re married to the person who is deceased. In that case, you probably won’t have to pay inheritance tax. Also, if the inheritance is small, some states make exceptions.
Florida Does Not Have an Estate Tax, But The Federal Government Does
Fifteen states levy an estate tax. Florida does not collect an estate tax. However, federal IRS laws require an estate tax. If you’ve inherited property from someone, you won’t have to pay the federal estate tax, however. The deceased’s estate must pay the estate tax before any property is distributed to the beneficiaries. In other words, the estate must pay the estate tax before it can distribute the assets to the beneficiaries according to the deceased’s will, trust agreement, or the state’s intestate laws.
If you’re putting together your Florida estate plan, it’s wise to consider whether you’ll need to pay a federal estate tax. As a result of recent tax law changes, only those who die in 2019 with estates equal to or greater than $11.4 million must pay the federal estate tax. If you’re a Florida resident and the total value of your estate is less than $11.4 million, you will pay neither state nor federal estate taxes. However, if the current federal tax laws remain in place, the exemption amount will be decreased by 50% in 2026. Florida’s freedom from state estate tax and its lack of a state income tax are incentives for people to continue to move here.
We Are Here to Help
Perhaps you would like to put together a comprehensive estate plan or update your plan. If so, the skillful St. Petersburg estate planning attorneys at Legacy Protection Lawyers, LLP are ready to help you. Contact our law firm today to set up your initial consultation.
Resource:
investopedia.com/articles/personal-finance/120715/estate-taxes-who-pays-what-and-how-much.asp
orlandoweekly.com/Blogs/archives/2019/07/26/more-than-300000-new-residents-are-moving-to-florida-every-year
