What Happens if I Do Not Pay Federal Estate Taxes in Florida?
Federal estate taxes can be extremely disappointing for ultra-high-net-worth families in Florida. If you face handing over a substantial amount of your fortune to the Internal Revenue Service, you might wonder what will happen if you simply do not pay the required sums. This is something you may wish to discuss with an experienced estate planning lawyer in Boca Raton.
How Does the Personal Representative Pay Estate Tax in Florida?
First, it is worth noting that current estate tax exemption levels are quite high, and federal estate tax is only something that wealthy families in Florida need to worry about. The “personal representative” (also known as an executor) is responsible for paying the estate tax within nine months of the death. Since the unpaid tax is a form of debt, the personal representative must pay the estate tax before distributing the remaining assets to the beneficiaries.
The personal representative does this by filing IRS Form 706. The personal representative must also calculate the specific amount of estate tax owing. This can be challenging for many personal representatives, and these individuals often seek help from probate lawyers or accountants when addressing estate tax.
What if the Personal Representative Simply Does Not Pay?
As the Florida Bar notes, a personal representative who fails to pay federal estate taxes may be held personally liable for the unpaid taxes by the IRS. If authorities have reason to believe that the personal representative intentionally refused to pay the taxes, they may also face criminal charges. Since unpaid taxes accumulate interest, this situation may worsen with time.
When facing this issue, the probate court might also remove the personal representative and appoint someone else in their place. This may ensure the taxes are paid, even if the personal representative intended to evade these taxes. The failure to pay estate taxes is a breach of fiduciary duty, and it may be grounds for the removal of the personal representative.
There Are Ways to Mitigate Federal Estate Tax
If an estate planner approaches federal estate taxes in the appropriate way, their family may never have to bear this burden. Options include generation-skipping trusts (GSTs), dynasty trusts, and various other trust-related strategies. Although it might not be possible to completely eliminate the impact of federal estate taxes on your family, you can at least mitigate this issue and protect their financial best interests to the fullest extent possible.
Can a Boca Raton Estate Planning Attorney Help Me?
If you fail to pay estate tax, you face serious financial consequences. Although it might seem tempting to dodge this financial burden, it makes more sense to discuss potential estate planning strategies with a lawyer. An estate planning attorney in Boca Raton may be particularly helpful if you still have time to create a trust before passing your wealth on to the next generation. Contact 411 Probate today for further guidance.
Source:
floridabar.org/public/consumer/pamphlet026/