Estate Tax in Stuart Probate Cases

Florida probate tax and other important estate planning and probate questions are answered by Stuart and Palm City Estate Planning and Probate Lawyer, John Mangan.

Frequently referred to as Florida probate tax, the estate tax is a tax on your right to transfer property upon your death. It consists of an accounting of everything you own or have certain interests in as of the date of death (Refer to Form 706).

How to calculate the estate taxable value

The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your “Gross Estate.” The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. Estates valued above a certain dollar amount are subject to federal estate tax.  A failure to pay this tax may lead to charges of tax evasion or fraud.

As a result, it is essential to understand the role of estate taxes in Stuart probate cases. This knowledge may help family members gain an understanding of their expected inheritance as well as assist personal representatives in fulfilling their legal obligations. To learn more, reach out to an experienced probate lawyer.

The Federal Estate Tax

Since there is no Florida probate tax, federal estate taxes are the only estate taxes that a decedent’s estate will have to pay if the decedent was a Florida resident, the decedent did not own property in a state (or country) that does impose an estate tax, and the size of the estate falls within the federal estate tax exemption.

According to the IRS, estates can claim up to an $12,920,000 exemption for the value of the decedent’s estate and any taxable lifetime gifts, for decedents dying in 2023. If the estate involves a married couple, that value can double to $25,840,000 if a timely portability election is filed. This value is tied to inflation and is expected to increase through 2025, after which the estate tax exemption amount is set to decrease substantially (the exact number will be tied to inflation and is therefore not determined, but it is expected to be approximately $6,500,000 – $7,000,000 per estate).

It is the responsibility of the estate’s personal representative to pay any estate tax liability during the administration of the probate estate. As a result, the matter of estate taxes in Stuart probate cases is an essential one.

The Role of Estate Tax in Stuart Probate

The probate process follows a strict timeline. Once a court opens an estate for probate and certifies a personal representative, also known as an executor, to act, that person has a legal requirement to perform duties required by law, e.g. satisfying valid creditor claims, and to ultimately distribute the estate according to the decedent’s will, if any, otherwise according to state statute.

Although there is no Florida probate tax, an important part of settling an estate is covering all tax requirements and debts. Because federal estate tax is only applicable if an estate exceeds a certain value, a prime duty of a personal representative is to measure the value of the estate. This involves placing a fair market value on personal property, real estate, businesses, stocks, bonds or other financial instruments, and cash in bank accounts. If the value of an estate exceeds a pre-set amount (typically $12,920,000 in 2023), that personal representative is then also required to make any outstanding estate tax payments out of the assets of the estate.

Federal law requires the estate tax return Form 706, along with any payment owed, to be filed within nine months of the date of death, although an automatic 6-month extension is available if requested. This timeline can create pressure for the personal representative of an estate to quickly open the probate estate, to make a timely and accurate accounting of the estate’s value, and to arrange for any necessary liquidation of the estate’s assets if necessary to pay an outstanding estate tax liability. A failure to make an outstanding estate tax payment could lead to a personal representative facing a civil contempt order from the court or even federal charges of tax evasion. Because of the potential consequences of ignoring fiduciary duties, speaking to a lawyer with knowledge of estate tax in Stuart probate cases may prove helpful.

Contact an Experienced Legal Professional for Help Determining Your Obligation

In addition to the federal laws that only affect estates worth in excess of $12,920,000 for 2023, the State of Florida does not impose any estate or inheritance tax on the decedent’s family. Even so, for estates that do face the prospect of having to pay the federal estate tax, proper planning and execution of this legal requirement are essential.

An attorney can help you to determine if a Stuart estate will be subject to the federal estate tax. If so, they can also offer guidance in determining an estate’s value, making arrangements to provide the necessary payments, and helping the personal representative meet fiduciary duties under the law. Contact a lawyer today to see how one can help when dealing with the possibility of the federal estate tax in Stuart probate cases.