Will My Estate Have to Pay Federal Estate Taxes?

Federal estate tax law and state estate tax law obligations are subject to probate review

Not every state collects estate taxes. However, the federal estate tax potentially applies to everyone, though not everyone will have to pay federal estate taxes. The best time to worry about estate taxes is while you are working on your estate planning. You and your estate planning lawyer may be able to lower or eliminate your estate’s tax bill.

What is the federal estate and gift tax exemption?

The IRS sets a limit below which an estate will not be charged for federal estate taxes – the exemption limit. Due to the 2017 Tax Cuts and Job Act signed by President Trump in December 2017, the federal estate tax exemption rose to $11,180,000 per person. This means that an individual’s estate worth less than $11.18 million will not pay federal estate tax. A married couple can shield double this amount in estate and gift taxes.

Married couples may also benefit from portability, an interesting concept that arrived with the American Taxpayer Relief Act in 2010. If the first spouse’s estate falls below the estate tax exemption limit, the deceased spouse’s unused tax exemption amount may transfer to the surviving spouse. For example, if Tom leaves an estate worth $10 million dollars, his unused exemption of $1.18 million dollars may increase his surviving spouse’s exemption to $12.36 million.

Keep in mind also that non-probate assets may not be included in the final accounting of the estate.


What if my estate may be worth more than the estate tax exemption?

If you think your estate may even approach the current exemption limit, it’s time to discuss estate planning. Strategies for reducing potential estate tax include:

  • Wealth Transfer. Transferring assets to certain types of trusts may reduce the estate below the exemption limit. Examples include Spousal Lifetime Access Trusts, Charitable Remainder Trusts, and Qualified Personal Residence Trusts.
  • Gifting. Another form of wealth transfer, individuals may gift up to $15,000 every year to as many people as they want. Husband and wives can double those gifts. This reduces the value of the estate without affecting the federal exemption limit as long as the gifts do not exceed $15,000.

These are just a few of the options available to you. Discuss your estate tax concerns with your attorney to learn more.

Will Your Estate Pay Federal Estate Taxes?

If your estate exceeds the federal estate tax exemption limit, the answer is yes. However, with careful financial and estate planning, you may be able to reduce or eliminate your estate’s tax bill.

John Mangan is an experienced Florida estate planning attorney who has been board certified in Wills, Trusts & Estates by the Florida Bar. At the Law Offices of John Mangan, P.A., we have assisted many clients in developing comprehensive estate plans that meet their needs. Call us at 772-324-9050 to set up an appointment or use our convenient Contact Form.

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