You work throughout your life to accumulate assets to (hopefully) pass on to your beneficiaries in Florida. Putting plans in place to avoid probate or settle liabilities prior to your death help to ensure the preservation of as many of those assets as possible. Yet there likely is no way for you to avoid estate taxes.
At least, that is what many may tell you. Yet that may not be the case. Florida does not impose an estate tax on local residents, which means that the only potential tax liability facing your estate comes from the federal level. With the right estate plan in place, you may be able to avoid that expense as well.
Will you owe estate taxes at all?
The first important point to consider in this regard is that your estate may not be subject to federal taxes at all. The federal government offers an estate tax exemption, which (according to information shared by the Internal Revenue Service) is $11.7 million for 2021. Thus, if the total taxable value of your estate falls below that level, it will not be subject to tax.
Keep in mind, however, that this refers to your individual estate. You and your spouse’s combined estates may exceed that amount. By working together, however, you both can collectively extend your exemptions.
Estate tax portability
You can do this thanks to estate tax portability. This allows you and your spouse to share your exemptions. To take full advantage of this, you must plan on leaving your entire estate to your spouse. This allows that amount to pass tax-free thanks to the unlimited marital deduction. Your spouse then claims your unused exemption (through filing an estate tax return), effectively extending their exemption to $23.4 million.