Federal Estate Taxes
Florida does not have an estate tax. However, federal estate taxes may still be due, depending on the value of the gross estate. The gross estate includes trust assets, assets held in the decedent’s name, jointly held property, accounts designating a beneficiary, life insurance, annuities, etc. The estate tax return (IRS form 706) is due 9 months after death.
Our experienced Florida estate planning lawyers will advise you about wealth transfer and tax planning strategies that may minimize or possibly even eliminate your heirs’ federal estate tax burden.
A significant number of Floridians eventually relocate to other states, often because of health issues and/or to be closer to family. If the possibility exists that you may return to or relocate to one of the 21 states that has its own estate tax – New York and New Jersey are among them – it may be appropriate to include tax planning in your estate plan, as a precautionary measure.
Whether it is federal estate taxes or state estate taxes, our estate planning attorneys will help you develop a plan that is up-to-date with current tax laws, takes the best advantage of them, and passes as much tax-free money as possible to your beneficiaries.
Portability: Spouses May Transfer to Themselves Unused Portion of Deceased Spouse’s Exemption
Surviving spouses have the right to transfer to themselves any unused portion of their deceased spouse’s estate tax exemption, thus adding to their own exemption and allowing more money to be passed to heirs tax-free. This feature of the tax code is called “portability. To take advantage of portability, the personal representative (executor) or trustee of the decedent’s estate must file a federal estate tax return (Form 706) and take the portability election. This must be done within nine month of the spouse’s death, although a six-month extension is available.
Portability may be elected even if the deceased spouse’s estate is not taxable at the time of death. Taking advantage of portability is wise when the survivor is significantly younger than the decedent, as there are more years ahead in which the survivor’s estate tax could grow to taxable levels. In addition, tax laws are always changing, and a survivor’s estate that is not taxable today may be taxable in the future. (In 2026, the federal estate tax exemption is scheduled to decrease to $5.6 million, with inflationary adjustments. Compare this to the 2024 exemption of $13.61 million. Effective July 8, 2022, the IRS extended the deadline to file for portability for non-taxable estates from two to five years following the death of the deceased spouse.
Federal Estate & Gift Tax Rates
The new tax law passed in 2017 doubled the lifetime unified estate tax and gift tax exemption. However, the law has a “sunset” provision. Effective January 1, 2026, the exemption will return to its 2017 levels – $5.6 million per individual, and $11.2 million per married couple.
| ESTATE TAX, GIFT TAX, GENERATION SKIPPING TAX Effective Jan. 1, 2024 |
|||
|---|---|---|---|
| Lifetime Exemption | Top Tax Rate | Notes | |
| ESTATE TAX |
Individual: $13.61 M
Married Couple: $27.22 M
|
40% | Portability provision applies: Surviving spouse may use any unused portion of deceased spouse’s estate tax exemption. |
| GIFT TAX |
Individual: $13.61 M
Married Couple: $27.22 M
|
40% | |
| Unified Estate Tax and Gift Tax Exemption: Taxable gifts are deducted from lifetime estate tax exemption. For example, if a person makes taxable gifts totalling $2 million during his lifetime, he will have $10.92 M estate tax exemption left over that may be passed at death ($12.92 M estate tax exemption minus $2 million used gift tax exemption). | |||
| GENERATION SKIPPING TAX |
Individual: $13.61 M Married Couple: $27.22 M |
40% | Applies to gifts made to grandchildren, great-grandchildren and even more distant generations. For tax purposes, the “skip person” may be a real person, but can also be a trust in which all interests are held by skip persons, or a trust in which no person holds an interest and from which no distribution may be made to a non-skip person |
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