Estate planning experts in South Florida will often espouse the benefits of trying to protect as much of your estate assets as possible from unnecessary expenses. However, one expense that you may have already accepted as being unable to avoid is tax. Such is the thought process of many of those that have come to us here at The Law Office of Jeffrey M. Janeiro, P.L. seeking estate planning assistance. Like them, you will be pleased to learn that there is indeed a way to minimize the impact that taxes have on your estate (if not avoid them altogether).
The first thing to understand is that you only need concern yourself with federal estate taxes; the state of Florida does not assess an estate tax on its citizens. The federal government has established an estate tax threshold (which, according to information shared by the Internal Revenue Service, is $11.58 million for 2020). If the total taxable value of your estate is under that amount, it is exempt from tax. However, there is another tax benefit to you that may allow you to preserve that exemption amount to protect even more assets for your beneficiaries.
The unlimited marital deduction allows you to pass an unlimited financial gift on to your spouse without it being subject to tax. Thus, if you pass all of your assets on to them, you preserve the entirety of your estate tax exemption. Your spouse can then file an estate tax return the same year you pass away electing portability. That allows them to combine your unused exemption amount with theirs, protecting up to $23.16 million.
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