Understanding estate taxes and planning around them can be a real headache. Whether you’re looking to keep your family secure or handle a large estate, getting it right is crucial.
Every year, families get caught in hard spots. They feel they’ve protected their money and property well, but they face surprise taxes and legal troubles when it’s time to sort out what they leave behind. Without advice, you may risk financial loss, and the peace of mind that comes from knowing your loved ones are taken care of.
This article will cover all the essentials about estate taxes and planning for your estate in Florida. It will also explain why bringing on a lawyer who specializes in estate taxes might be a wise decision for your estate administration.
Feeling lost and uncertain about tax matters? Don’t worry; you have options. Call our law firm to schedule a consultation with William Roof today.
What is Estate Tax?
Estate tax is a tax on the money and property, often called the “estate,” that you leave behind to your family members and loved ones when you pass away. It’s like the government’s way of getting a slice of the pie after you’re gone. But don’t worry, there are circumstances that lessen this tax liability or sometimes even eliminate it altogether.
How Estate Tax Works
Federal estate tax is a tax based on how much your property is worth. But it’s not for everyone. Generally, only large estates get hit with this tax — those with a value over $12.92 million or more. There are also methods to lower the tax amount. The person in charge of sorting out your property, often known as the “executor,” will work out if this tax is needed and how much it’ll be. Without proper planning, your family could end up with less than you want to leave them. That’s where an estate planning attorney can assist you.
Estate Tax and Inheritance Tax: What’s the Difference?
Both estate tax and inheritance tax have to do with what happens to your stuff after you die, but they’re not the same thing.
- Estate Tax: This is a federal tax on the deceased person’s estate before it gets passed on to family or friends.
- Inheritance Tax: This is a State tax that the people who get the money or property have to pay. Florida doesn’t have State inheritance taxes.
What is Tax Exclusion?
Tax exclusion helps you keep some of your money safe from taxes. If you give gifts to your family now, that money may not be taxed after you pass away. Understanding tax exclusion can help your family save money, so it’s good to talk with a lawyer who knows about estate taxes.
Tips for Effective Estate Planning
Planning for what happens to your stuff after you’re gone is not something many of us want to think about. But smart planning now can save your family lots of trouble later. Here are some simple things you can do:
Create a Will or Trust
- Why It Matters: A will is a set of instructions for who gets what after you’re gone. A trust is similar but gives you more control and some tax benefits.
- How We Help: We guide you through the legal considerations to ensure your will or trust stands up in court.
Gift Assets Before Death
- Why Do It: Giving away some of your money or property while you’re still alive, you can seriously cut down on estate taxes later. However, this can also make you liable for a “gift tax” in some situations.
- Our Role: We can help you figure out the best things to give away and when to do it to save the most on taxes.
Set Up Joint Accounts
- The Benefit: With a joint account, when one person dies, the other gets everything in the account without it having to go through probate (the legal process of distributing your belongings after you die).
- Our Expertise: We’ll help you decide if a joint account fits into your estate planning task list and how to set it up properly.
Invest in Tax-Free Bonds
- Tax Advantages: Some bonds are not subject to federal taxes, which can be a good way to save money in the long run.
- How We Assist: We can work with you to determine which tax-free bonds fit best with your financial goals and estate plans.