Fortunately, Florida is one of the thirty-eight states that does not have an estate tax, though a person may still be subject to the federal estate tax, which is often to referred to as the “federal death tax.”

Beginning January 1, 2018, the estate and gift tax exemption is $5,600,000 per individual and $11,200,000 per married couple.

Meaning an individual or couple’s estate will have to exceed these figured in order for the federal death tax to come into effect. For people with less than this threshold amount, you will not have to pay this tax.

All About Federal Estate Taxes

Annual Federal Gift Tax Exclusion

Each individual can make an annual $15,000.00 exclusion gift (or up to $30,000.00 as a married couple) to any individual tax free and covers an unlimited number of persons.

The gift may be made directly to the individual, or in the case of minors such as children or grandchildren, to a specially designated annual exclusion trust.

The exclusion does not only cover money, but anything with a market value of $15,000.00 or less such as securities or personal property.

1. Lifetime Gift Tax Exclusion

The lifetime gift tax exclusion is the maximum number of gifts a person can give during their lifetime tax free. Beginning in 2018, the lifetime gift tax exclusion is $11.18 million.

2. Payment of Medical Expenses or to Educational Institutions

An individual can make payments, in addition to annual exclusion gifts, for medical payments and tuition expenses. In order to qualify, the payments must be made directly to a qualified education institution, health insurer (in the form of premiums), or to a medical provider.

The education exception is limited to tuition only, and will not apply to books, school supplies, or college dormitories.

3. 529 Plans

A 529 Plan is a tax-advantaged college savings account. Income in the 529 Plan and distributions from the 529 Plan college expenses such as tuition, books, and room and board are received free of income taxes.

Florida’s 529 Plan is commonly referred to as “Florida Prepaid.” Further information about Florida Prepaid can be obtained here.

4. Generation-Skipping Transfer (GST) Tax Exemption

The GST Tax Exemption is the amount that can be directly given to grandchildren by their grandparents without incurring a federal generation-skipping transfer tax. Prior to the GST Tax, grandparents would transfer money to their grandchildren (hence the generation-skipping) in order to avoid the parents’ generation from being subject to the estate tax.

The IRS imposed the GST tax at the top estate tax rate, currently 40%, in order to prevent this behavior.

However, there is a GST tax exemption of $11.18 million that can be directly transferred to grandchildren or into a GST Tax Exemption Trust without incurring the GST tax.

More Resources For Federal Estate Taxes

The IRS has provided a great resource for frequently asked questions on estate taxes. The US estate tax return form that is filled out when one leaves assets upon their death is IRS form 706. This form must be filed within nine months after the date of death (a six month extension maybe be requested).

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