Many seniors decide to pack up and move to Florida. Partly, this may be because of the great weather and location; however, the other half of this reasoning has to do with estate planning. Typically, those in retirement decide they also need to start preparing for end-of-life care and their estates following their deaths. Florida is one of the few states that doesn’t impose a state estate tax on inheritances.
However, there is a federal estate tax people still must worry about. Depending on the value of your estate, you may have to pay federal estate taxes before your assets can be distributed to your loved ones, heirs, and beneficiaries. These taxes are also different from probate expenses, which is an additional cost.
Typically, federal estate taxes range from 35% to 55%. Last year, 2016, it settled around 40%. The value of the taxes must be paid in cash out of the value of your estate within 9 months after your death. Few estates have this kind of cash, so many times estate assets must be liquidated. Because you want to preserve as much of your estate as possible for those who will inherit it, it’s best to do all you can to ensure you avoid as much taxation as possible.
If your estate net value is under the exempt amount set by Congress (in 2016, it was $5.45 million per person), you do not have to pay federal estate taxes. If your estate net value is over the exempt amount, you will have to pay a 40% rate on amounts in excess of the exemptions.
There are four ways to reduce the amount of federal estate taxes. The first way is to use both federal tax exemptions through proper estate planning if you are married. The second way is to remove assets from your taxable estate before you die. The third way is to buy life insurance to replace assets given to charity and/ or pay any remaining federal estate taxes. The last is to take advantage of any valuation discounts afforded through the use of limited liability companies, limited partnerships, and other legal entities.
It’s best to discuss these options with a skilled Jacksonville estate planning attorney. The lawyers at Owenby Law, P.A. are dedicated and knowledgeable advocates who are happy to discuss the best strategies for preserving the bulk of your estate for your loved ones after your death. We also offer other estate planning services, such as drafting wills, creating a durable power of attorney, and creating trusts.
Talk to us in a free initial case consultation by calling us at (904) 770-3141 or filling out our online form with your case details. We look forward to working with you.