Are there any special rules or regulations regarding inheritance tax in my state?

There are no estate taxes in Florida, so no state estate or estate taxes are due on inherited properties in Florida. Inherited properties in Florida are still subject to federal estate tax laws, but most properties are below the federal exemption limit, 6 days ago. Wealth tax is a tax on your right to transfer assets in the event of your death. It consists of an accounting of everything you own or in what you have certain interests on the date of your death (see form 706/PDF).

The fair market value of these items is used, not necessarily what you paid for them or what their value was when you bought them. The total of all of these items is your gross assets. Inclusive property can consist of cash and securities, real estate, insurance, trusts, annuities, business interests, and other assets. Affordable tax laws in the Sunshine State help preserve assets; but even “favorable” tax laws require professional interpretation.

The state of Florida does not have an estate tax or an estate tax. However, some properties may have to pay a federal estate tax. There are exemptions before the 40% rate takes effect and a lawyer can advise you on how to configure your wealth to minimize taxes. States with estate taxes offer different exemptions depending on the size of the estate and the family relationship of the heir to the deceased.

It's interesting because the state government doesn't actually impose any inheritance or inheritance taxes. An estate tax itself is applied before your assets are distributed, while an inheritance tax can be imposed on the beneficiaries of the bequest. Most states divide beneficiaries into different classes, based on their family relationship with the deceased (immediate, linear, unrelated), and establish exemptions and tax rates based on those categories. Like the federal estate tax, all states that tax estates offer an exemption that excludes most properties from taxes.

The distinction between an estate tax and an inheritance tax with identical rates and exemptions might not make any difference for a sole heir. If the estate is not required to file Form 706 or Form 706-NA from the Internal Revenue Service (IRS), the personal representative may have to file the affidavit of not owing Florida estate taxes (Florida Form DR-31) to release the Florida estate tax lien. Florida forms DR-312 and DR-313 are admissible as proof that there is no liability for Florida wealth tax and will eliminate the Department's estate tax lien. If the estate is required to file Form 706 or Form 706-NA from the IRS, the personal representative may have to file the affidavit that Florida wealth tax is not due when a federal return (Florida Form DR-31) is required to release the Florida estate tax lien.

Trusts are complicated animals and must be carefully and meticulously established and drafted to comply with state tax laws. If Florida estate tax is due, download the Florida estate tax filing requirements document for more information. All state and district estate tax exemptions represent less than half of those in the federal evaluation. For the assets of individuals who died on or before December 31, 2004 and who must file a federal estate tax return (federal form 706 or 706-NA), the personal representative must file a Florida estate tax return (Florida Form F-70).

Only properties or properties located in one of the six states that impose inheritance taxes may be subject to them. If you live in a state with an estate tax, you're more likely to have problems than paying federal estate tax.

Glenna Penrod
Glenna Penrod

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