Living in Florida is a lifetime dream for many individuals, and it is not hard to find out why. The state offers warm weather year-round, lush natural landscapes, and solid low tax policies for those who want to preserve their estates.
Read on to find out how much you can inherit in Florida without paying taxes.
Florida Inheritance vs. Tax Liabilities – The Fundamentals
As of 2022, the tax system in Florida ranks 4th in the nation on the State Business Tax Climate Index report issued by the Tax Foundation. Florida does not have an individual income tax, inheritance tax, or estate taxes.
When a Florida resident dies, the state will not levy a tax on the decedent’s estate or require heirs and beneficiaries to pay a percentage of the inherited money.
Only six states levy taxes on inheritance money, which are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. If a Florida resident inherits a property or assets located in one of these states, the state will collect an estate tax.
Even though there are a few exceptions applied to smaller estates and marital property, these states will levy a tax on the inherited property and funds.
How Much Can You Inherit Without Paying Taxes in Florida? – Taking a Closer Look
If a Florida resident dies, the state will not levy a tax on the decedent’s estate.
The Internal Revenue Service (IRS) is responsible for collecting an estate tax from the money and assets left by decedents in different states. The estate is responsible for paying any due taxes, creditors’ claims, or administration expenses incurred before the distribution.
Whether the decedent died with a will (testate) or without a will (intestate), the estate must pay any pending taxes before the beneficiaries and heirs can receive their fair share. In most cases, the estate will not be subject to a federal estate tax as well.
As of 2022, the federal estate tax exemption is $12,060,000 for the estate of an individual or $24,120,000 for the estate of a married couple. As it is plain to see, the federal estate tax applies exclusively to wealthy estates, which is not the reality for most Florida residents.
Protecting Your Legacy and Avoiding Taxation – What You Should Consider in a Florida Estate Plan
Considering the state of Florida offers a favorable tax policy, the best approach is to work with an expert attorney to find a solid estate plan to avoid further taxation. While heirs and beneficiaries may not be exposed to an inheritance tax, other taxes may affect inherited property indirectly.
For example, retirement accounts with designated beneficiaries are subject neither to probate nor to an inheritance tax. However, beneficiaries may be subject to taxes when they withdraw the funds upon the account owner’s death.
An inherited property that generates income during probate or trust administration is also subject to income tax. If a trustor dies with a leased property in the name of the trust, the amount of rent paid by tenants is subject to taxes incurred during the settlement process.
Immediately Avoid Costly Mistakes – Consult with Your Florida Probate Lawyer Today
Waste no time with uncertainty. Contact Attorneys Romy B. Jurado and Diana C. Collazos by calling (305) 921-0976 or emailing Romy@juradolawfirm.com for an individual assessment.