Estate Tax Law

Estate tax, death tax and inheritance taxes all mean the same thing: taxes due at your death. The annual gift tax exclusion provides that no tax is paid on gifts of less than $15,000 a year. In addition to this $15,000 a year amount you can give away "for free," you also have a unified credit/applicable credit amount. The unified credit/applicable credit amount is applied against the gift tax that is otherwise payable. See IRC Section 2505(A). This unified credit/applicable credit amount is available for use during your lifetime or at your death. This means that you can give away $11,580,000 while you're living or give away $11,580,000 upon your death or any combination thereof. However, if a single person dies with an estate valued at more than $11,580,000, then the estate taxes will be due on all amounts in excess of $11,580,000. The amounts are subject to change and are current for the year 2020.

Estate taxes are due and payable upon the death of the decedent. The check must be sent to the IRS within 9 months. (There are exceptions for family farms and businesses.) Once a determination is made as to the value of the decedent's gross estate it is then reduced by all allowable deductions and increased by the decedent's adjusted taxable gifts. The gross estate consists of all the decedent's property, both real and personal, wherever situated, nationally or internationally. Once the value of the taxable estate, less deductions, has been determined, the net amount will be used to figure out how much, if any, inheritance tax is due to the IRS. Depending upon the state in which you live, this amount will also be used to determine how much state inheritance tax is due. Under Florida law, for all practical purposes, there is no state inheritance tax due on most estates. In other states, however, state death taxes are a major consideration and expense.

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