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No State Estate Tax in Florida, but There Maybe in Your State!


No State Estate Tax in Florida, But There Maybe in Your State!

Worried about having to pay the estate tax? Unless you have a multi-million dollar estate, chances are good that you won’t have to pay estate tax to the federal government. In addition to the $5.45 million lifetime exclusion ($5.49 million in 2017), there’s a generous annual exemption for gifts. It’s more likely that what you need to plan for is your state’s estate tax.

Motley Fool’s article, “Will I Have to Pay Estate Tax?” explains that initially, the U.S. federal estate tax structure looks rather complicated. There are twelve estate tax brackets, with taxes ranging from 18% for estates valued at less than $10,000 up to 40% for estates valued at $1 million or more. However, these brackets aren't used in practice, in part because there’s a lifetime exemption amount of $5.45 million in 2016. You can give or leave this amount to heirs before the estate tax applies. This includes money, investments, and property, such as houses and vehicles. This also includes taxable gifts that you give while you're still alive. For married couples, the exemption is doubled to $10.9 million ($10.98 million in 2017).

That’s why most estates aren't taxed. They're just worth less than the exemption amount.

The interesting thing about the exemption is that it’s set up as a tax credit, rather than just a reduction in the taxable value of the estate. Therefore, on an estate tax return (IRS Form 706), you actually will calculate the tax on the entire estate value—but you get a credit for the tax (up to the tax on a $5.45 million estate in 2016), which is a maximum of $2,125,800. Therefore, since any taxable portion of an estate is above $5.45 million, it's in the highest estate tax bracket of 40%. As a result, the other 11 estate tax brackets are almost meaningless.

In addition to the lifetime exemption, there’s an annual gift-tax exclusion of $14,000 per person. Any gifts of this amount or less won’t be counted toward your lifetime exemption amount. You can give a $14,000 gift each year to as many people as you want!

As a result, the $5.45 million in gifted or passed-down property is tax-free. However, if you use the gift exclusion correctly over several years, you could give away millions of dollars' worth of additional property or money.

Your conversation with an estate planning attorney should include a discussion of your state’s estate tax. As of this writing (2016), fourteen states and Washington D.C. have their own estate taxes, and a key point: not all of the lifetime exemption amounts are the same as the federal levels. If you live in Oregon or Massachusetts, your exemption is just $1 million. An experienced estate planning attorney will be able to help you make a plan that works for your state.

Do you now live in Miami-Dade, Broward, or Palm Beach counties in Florida? Laws are constantly changing-- has your estate plan been reviewed in the last 2-3 years? Have you recently moved down to Sunny Florida? Call me (954-888-1747) right away for peace of mind. I can help!

  • My practice is exclusively estate planning and probate,
  • I have prepared numerous estate plans in 16 years of practice,
  • I have administered estates and trusts through Probate all over Florida,
  • I am a Certified Financial Planner Professional™, and
  • I am here for YOU today and there for your FAMILY tomorrow.

Reference: Motley Fool (November 15, 2016) “Will I Have to Pay Estate Tax?”

Why would we recommend D.T.F.? Several Reasons: Your ability to explain complex estate problems, clearly and patiently; your total lack of arrogance and pretense; a strong feeling that you are motivated by what you perceive is best for your client, rather than what would generate the largest legal fees; finally, and importantly, you are a lovely guy. A.C.

Two words cannot sum up the entire process of creating my “trust.” I enjoyed your attention to detail, your patience of explaining terms and conditions until I understood, also giving me copies to read and understand. Thank you for your suggestions on what was best for “me” but still allowing me to make my choice. Most of all, thank you for thinking of “me.” Wells Fargo said “you were the best” I cannot deny that. Again thank you very much for everything. Anna is an asset or a compliment to the firm. She is warm and very caring. It was great doing business. Thank you.