As you prepare the details of your estate, you realize the importance of needing to minimize the liabilities left behind for your beneficiaries in Palm Beach to deal with. Thus, you make plans to settle your debts and even structure your estate plan to minimize probate and administration costs. Yet something like estate taxes may seem unavoidable.
At least, that is the opinion of many of those that have come to us here at The Law Office of Nicole C. Morris, P.A. Yet that may not be the case. Understanding the nuances of federal estate tax law can help you to minimize (or even avoid) a heavy tax liability.
Understanding the federal estate tax exemption
You may notice there was no mention made of state estate taxes. That is because Florida does not levy an estate tax on its citizens. Therefore, the only potential tax liability you need to plan for is at the federal level.
The federal government sets an estate tax threshold annually. Any estates whose total taxable value falls below that amount will not be subject to taxes. Per the Internal Revenue Service, the threshold amount for 2020 is $11.58 million.
Estate tax portability
You may even be able to extend that threshold amount by combining your exemption with your spouse’s through a process known as estate tax portability. You can take the utmost advantage of it by planning to leave your spouse your assets upon your death (this allows you to pass those assets on tax-free due to the unlimited marital deduction). Doing this preserves your entire estate tax exemption amount. Your spouse can then claim that amount (and combine it with their own) by electing portability through an estate tax return filed the same year you pass away.
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