After someone dies, their assets may be subject to estate taxes, depending on their worth and where they lived. Most estates are too small to incur a federal estate tax. As of 2021, if an estate is worth more than $11.7 million, a federal estate tax will be applied, which is a threshold very few have to worry about. Moreover, in Florida, beneficiaries and heirs do not have to pay an income tax on the money they receive from an estate since inherited property does not count as income.
More About Estate Taxes
When it comes to estate taxes, individual beneficiaries and heirs are typically not responsible for them. Instead, that responsibility falls upon the successor trustee or executor.
That said, there are some situations in which beneficiaries in Florida have to pay taxes on inheritances:
- Income taxes may be levied when assets from retirement accounts are withdrawn after the holder’s death. Talk to an attorney before taking money out of these types of accounts.
- If you receive property from the estate that generates income, you may be taxed on the income you receive before the property is transferred.
- Although an inheritance is not taxable income, if it creates income before it is distributed, the income would be taxed to the beneficiary.
- If you sell inherited property you received from a trust or an estate, the funds you receive could be subject to federal income tax if the asset appreciated in value in the aftermath of your loved one’s passing.
- If the deceased person is not a United States citizen, or a beneficiary is not a United States citizen, there could be some complications when it comes to taxes.
Lastly, do not confuse estate taxes with probate. The probate process is used to settle a deceased person’s estate, including any remaining bills.
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At Dorcey Law Firm, our experienced legal team can assist you with your estate planning needs. We have the experience and insight you need to smoothly navigate your case and ensure your interests are protected.
Reach out to our law firm today at (239) 309-2870 to request a free initial consultation with one of our knowledgeable estate planning attorneys to get started on your case and learn more about what we can do for you.