It should be noted that this article on estate taxes in Florida should be read with the Federal Estate Tax article.
This will give you a better understanding of the entire estate tax umbrella. In Florida, we do not have to State estate or inheritance taxes. Usually these taxes are for people who either own property in the state where they died (estate taxes) or inherit property from a resident of a specific state which imposes a tax for doing so (inheritance tax).
It should be noted that if you live in Florida but inherit property from someone else whose property is in another state, you could be subjected to that state’s inheritance tax.
If you die in Florida with less than the exemption amount, you will not owe any federal estate tax. The heirs and beneficiaries inherit the property free of tax.
Gift Giving: Can dramatically decrease your taxable estate.
What to do if your Florida estate is $5,490,000 Million or more?
You should seek advice with an attorney on how to minimize your estate taxes.
Some accounts such as IRA, 401, 403, Keogh plans are tax-deferred meaning that you do not pay taxes on the money until you pull it out of the account. Depending on how the account was set up and rules that govern it, it might make more sense for you to pull the money out over a longer period of time or in increments. If you inherit such a plan, you should talk to an administrator to see what exactly the rules and consequences are of the account.
Income received by the estate:
If income is being received by the estate this will probably be taxed. An example is if the estate owns rental property. When someone pays rent, the money will go into the estate. This is income and thus it will be taxed accordingly.
Taxes for selling a property that you received from the estate:
If you receive property or stocks from an estate and decide to sell it, you might have to pay income taxes. The general rule is that the inherited property is treated on a ‘step up’ basis meaning you do not have to pay taxes on the difference between the price paid for the asset of the deceased and what you sold it for. An example would be if your dad bought a stock for $5 in 1990 but was worth $12 when he died in 2010 and you sold it in 2011 for $15. You would only have to pay taxes on the difference of the $5, he bought it for, and $15, that you bought it for, which would be $10 total. This same principle applies to real estate and other sorts of investments. Additionally, depending on how long you hold the assets for, you may be able to only pay taxes at the “capital gains” rate.
If you move to Florida from another state, you should have all bank accounts, investment accounts, and any other assets moved to florida and titled appropriately to avoid any claims from your previous state.
You should roll over or move any retirement accounts such as Keogh plans, 401, 403, or IRA’s if possible as well.
If you are interested in this, you should talk to an investment professional such a financial advisor about how to transfer this over.
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