Florida is viewed favorably for not imposing state estate taxes on its residents. This is in stark contrast to other states that enforce estate taxes that can be as much as 18 percent. However, you may still have to worry if you are a high-net-worth individual with assets totaling more than $13.61 million as of 2024. This is because federal estate taxes may apply at a rate of anywhere between 18 to 40 percent. Follow along to find out ways to minimize your estate taxes and how a proficient Broward County estate tax planning lawyer at The Probate Lawyers can help you take the proper measures.
What are methods to minimize my estate taxes?
The three most popular methods used to minimize or eliminate federal estate taxes are an irrevocable tax trust, a lifetime charitable transfer, or a private annuity.
With an irrevocable tax trust, you may forfeit your ownership rights over the assets you transfer to the trust. Since you no longer legally own these assets, they may no longer count towards the total net worth of your estate.
Then, with a lifetime charitable transfer, you may donate your assets directly to your favorite nonprofit or charitable organization. This way, you may reap reductions to your due income taxes and, again, minimize the total net worth of your estate.
Lastly, with a private annuity, you may sell your assets directly to your beneficiaries in exchange for promised, annual payments. These assets, which you may have intended to pass down to your beneficiaries anyway, may be off your hands prematurely and, again, lessen the total net worth of your estate.
What happens if I do not take the measures to reduce this tax?
Put simply, if you do not take the proper measures to reduce the federal tax on your estate, your beneficiaries may left with a greater tax liability on the assets they inherit. They may not have the experience, skillset, or resources to understand how to handle these tax filings, either. This is especially true if they have never been high-net-worth individuals themselves.
Ultimately, the outcome may be that they do not receive the level of financial support that you intended for them when you are no longer around to support them yourself. In other words, all the hard work you did during your lifetime to leave behind a legacy for your beneficiaries may fall short in their heavily taxed inheritances.
While your general intentions for your beneficiaries may be pure, you must be deeply purposeful with the efforts made in your estate plan. In conclusion, what you need the most is likely strong legal representation from a talented Broward County estate lawyer. Someone at The Probate Lawyers is eagerly waiting for you to reach out.
