The Federal government imposes different estate taxes on wealth transfers during a person’s life at the time of their death. The Internal Revenue Code is responsible for governing all gift and estate taxes. Many states impose an estate tax, while Florida is not one of them. At the Law Offices of Gary I. Handin, P.A., we specialize in estate law and can help guide you through the legal process.
What is Estate Law?
The Federal Estate Tax is a part of the Internal Revenue Code. These taxes are imposed when the estate holder dies. A person’s taxable estate includes all the property they owned at the time of their death. This is known as “gross estate,” which subtracts any allowable deductions. The gross estate includes personal property, business interests, real estate, stocks, bonds, and any other wealth. If the estate holder has a surviving spouse, their share of the property is deducted from the gross estate. Other deductions that can be taken include any burial or funeral expenses, debts, and any property that you have asked to be given to a tax-exempt charity.
Estate Tax Exemption
Estates that are worth less than $11.7 million are not liable for any federal estate tax. The Economic Growth and Tax Relief Reconciliation Act of 2001 states that a specific portion of the taxable estate is exempt from estate taxes. The exemption amount for 2021 is $11.7 million. This means that any estate valued at or less won’t be charged any tax. For larger estates, they are at 40 percent.
What is the Federal Gift Tax?
The federal gift tax imposes a tax on any money or property that was transferred from a donor to another person or a non-charitable organization. The federal gift tax exclusion allows a donor to give a specific amount of gifts annually without paying any gift taxes. In 2021, the maximum amount that could be gifted was $15,000. This applies to each person that a gift is made. This means that you can give up to $15,000 a piece to many people without any taxes owed.
What is Estate Planning?
Preparing for your death beforehand allows you to find ways to reduce or avoid any estate taxes imposed on your loved ones. Our estate planning attorney specializes in estate law and can help you decide which tool will work best for your situation. A will is a document that names beneficiaries whom the decedent (you) wants to receive your assets. A personal representative is also named to administer the estate as you have set forth in writing.
Another estate planning tool is a living trust. A living trust helps your family to avoid the time and costs associated with probate court proceedings in the State of Florida after your death. However, Florida does have a simplified probate process for small estates (under $75,000 or if it has been two years since you have died). The type of estate planning tool you choose will depend on the size of your estate respectively. It’s important to understand that even if you choose to have a trust, you should still have a will as a backup plan for any property that doesn’t make it into your trust for some reason.
Be Informed of Estate Law When Drafting Estate Planning Documents in South Florida
When you’re planning for your future, it’s important to understand any taxes that may be imposed on your estate at the time of your death. With the help of our estate law expert at The Law Offices of Gary I. Handin, P.A., he can explain all these taxes and if they would apply to your estate or not. To learn more about our legal services and estate planning, visit Gary I. Handin, P.A.’s Facebook page.