2024 Estate Tax Exemptions in Florida
The estate tax is a tax imposed on the transfer of property from a deceased person to their heirs. Only the largest estates end up paying the estate tax, as there is a substantial exemption that allows a certain amount of assets to be passed tax-free. For 2024, the federal estate tax exemption is $13.61 million per individual. States can also impose their own estate or inheritance taxes with varying exemptions and rates. Florida is one of the most tax-friendly states regarding estate taxes due to its lack of a state-level estate tax or inheritance tax.
This article will provide an overview of the 2024 federal estate tax exemption and how it applies to Florida residents.
Stokes McMillan Antúnez Martinez-Lejarza P.A. is a full-service Florida trusts and estates law firm providing services including, but not limited to, probate, estate planning, trust & estate administration, and trust and estate litigation. If you have any questions or wish to hire our firm, please contact us.
Federal Estate Tax Exemption
The federal government imposes a tax on estates valued over a certain amount upon the death of an individual. This is known as the federal estate tax. For 2024, every individual has a federal estate tax exemption of $13.61 million. This means that the first $13.61 million of an estate can be passed to heirs completely tax-free when someone passes away. The exemption is also portable between spouses. If someone doesn’t use their total exemption amount, the remaining balance can be passed to the surviving spouse. A married couple can shield $27.22 million from federal estate taxes using their combined exemption.
The estate tax only comes into play for the wealthiest families. Over 99.9% of estates do not owe any federal estate tax. For those super-wealthy families that owe estate taxes, the top marginal estate tax rate is currently 40%. In other words, any assets over $13.61 million per person or $27.22 million per married couple are taxed at 40% when left to non-charitable beneficiaries.
The current estate tax exemption rates are scheduled to sunset in 2025. As of January 1, 2026, the estate tax exemption will revert to is prior levels. For 2026, the estate tax exemption is estimated to be around $7 million (this includes the adjustment for inflation). However, this is speculative and ultimately will be dependent on how and if Congress acts.
Florida’s Approach to Estate Taxes
While the federal government imposes estate taxes on large estates, inheritance taxes, and state-level estate taxes are imposed at the state level. Florida imposes neither an estate tax nor an inheritance tax. This makes Florida a very estate tax-friendly location for residents to establish their domiciles and intend to remain for the long term.
With no state estate tax and a generous federal estate tax exemption, most Florida residents do not have to worry about taxes eroding their legacy. Unless one owns over $13.61 million in countable assets, he or she can rest assured knowing their heirs and beneficiaries will receive tax-free assets upon their passing.
Even large estates may escape estate taxes if proper planning techniques are implemented, such as using trusts and gifting strategies. Working with a qualified Miami estate planning lawyer can help protect estates from taxation and unnecessary expenses.
What Assets Are Subject to Estate Taxes?
While federal estate tax exemptions may be high, the taxable estate includes more than just one’s bank accounts and investment portfolios. The gross estate encompasses all assets owned or controlled by an individual. This includes:
- Cash/Bank Accounts/Money Market Funds
- Stocks/Bonds/Mutual Funds
- Retirement Accounts (401ks, IRAs, Pensions)
- Real Estate
- Life Insurance Policies with Cash Value
- Trusts in which the deceased held control
- Transferrable Company Interests
- Personal Property (vehicles, jewelry, art, etc.)
Life insurance payouts to named non-spouse beneficiaries also count towards the estate value, despite not being controlled by the decedent at the time of death. However, proper use of an Irrevocable Lifetime Insurance Trust may prevent such an asset as being included in the decendet’s estate.
Married couples get to double the exemption, so their combined estates must exceed about $27 million before federal estate taxes come into play. However, when the first spouse dies, the used exemption gets locked in place. So if the Wife dies with a $7 million estate, using up $7 million of her exemption, the Husband only adds $6 million to his exemption for a total of $19 million.
Steps to Take to Avoid Unnecessary Estate Taxes
A Miami estate planning lawyer can advise Florida residents on steps to limit estate taxes and preserve wealth for heirs, such as:
- Use annual gift tax exclusions: A certain amount can be gifted yearly without counting against lifetime exemption. For 2024, $18,000 can be gifted per recipient. A married couple can jointly gift $36,000. This allows assets to be passed tax-free before death.
- Make gifts that qualify for medical/education exemptions: Paying tuition or medical bills for another does not count against gift exemption. This can reduce the size of one’s estate.
- Consider Qualified Personal Residence Trusts (QPRTs): Transferring residences into properly structured trusts can reduce estates and provide tax savings.
- Purchase life insurance held outside one’s taxable estate: This can provide liquidity when heirs inherit other illiquid assets that would need to be sold to pay estate taxes.
- Consider advanced charitable giving techniques: such as Charitable Remainder Trusts, which provide income for life while reducing taxable estates.
- Portability election: Ensure proper estate administration following the first spouse’s death to elect portability and secure any unused exemption for the survivor’s benefit. Failing to file an estate tax return after the first death can waste the deceased spouse’s exemption.
These are but a few planning ideas that may prove helpful. The laws are complicated, so working with a knowledgeable Miami estate planning attorney can help ensure an optimal result.
Frequently Asked Questions
- How many Americans pay estate taxes?
Based on historical data, only around 0.1% of deaths in the U.S. result in federal estate tax liability each year. For 2023, only around 1,900 estate tax returns were expected to be filed with tax due. So out of the roughly 3 million Americans anticipated to die that year, less than 0.1% owed estate taxes. The exemption protects most families from taxation. Even billionaires can completely escape estate taxes with sound planning.
- Can I take steps now to reduce my future estate tax liability?
Yes. Steps like making annual exclusion gifts, paying others’ medical and tuition bills, establishing irrevocable trusts, gifting interests in businesses/investments, and purchasing life insurance with proper ownership can all reduce estate tax exposure in the future. Working with an experienced Miami estate planning lawyer allows for creating customized plans to reduce taxation liability through gifting and trust strategies.
- Do life insurance death benefits get taxed for estate tax purposes?
Yes. The key determining factor as to whether life insurance death benefits get included in your taxable estate is who controls/owns the policy at your death. Life insurance owned by the insured at death or by a trust over which the insured holds powers is included. But death benefits paid to named individual beneficiaries are income tax-free. Only if estates become beneficiaries do death benefits factor into estate tax liability. Proper structuring of policies can avoid estate inclusion.
- Can estate taxes be avoided?
Yes, estate taxes can potentially be avoided entirely through advanced planning strategies such as irrevocable trusts, family limited partnerships, qualified personal residence trusts, gifting discounted business interests, and charitable trusts. Estate freezing techniques can limit exposure by removing future appreciation from estates. While not everyone will entirely eliminate estate taxes, proper planning can substantially reduce liability exposure.
- Why should I hire a Miami estate planning lawyer?
Navigating the complex maze of estate, gift, and generation-skipping tax rules is no simple task. Tax codes span hundreds of pages and require nuanced understanding. Furthermore, the government keeps changing laws. Relying on outdated self-help materials or advice from unqualified advisors is hazardous. You need a highly knowledgeable legal professional in your corner. A Miami estate planning lawyer stays current on the latest developments in the law, understands convoluted terminology, and provides reliable guidance. With so much at stake, experienced counsel proves invaluable.
More Florida Estate Planning Guidance
Estate taxes are but one consideration in crafting an effective estate plan. Probate avoidance, asset protection, wealth preservation, and succession planning also require attention. No substitute exists for tailored legal advice from a qualified Miami estate planning lawyer. To discuss your situation in a free consultation, contact us online or call (305) 379-4008 to schedule an appointment.
Stokes McMillan Antúnez Martinez-Lejarza P.A. is a full-service Florida trusts and estates law firm providing services including, but not limited to, probate, estate planning, trust and estate administration, and trust and estate litigation. If you have any questions or wish to hire our firm, please contact us.
DISCLAIMER
This article was partly generated by the use of artificial intelligence or AI, and is provided as general information for educational purposes only. This article is not intended to provide specific legal advice, and should not be relied upon as a substitute for competent advice from a licensed attorney. To speak with one of our attorneys all you have to do is click here. If you’re interested in more in-depth ruminations on this area of the law written 100% by a live human being, visit the Florida Probate & Trust Litigation Blog by going to the home page for firm partner Juan Antunez.