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What is the estate or inheritance tax?

When planning an estate or inheriting assets there are many legal issues with which an individual must contend. Those who are in the midst of estate planning may be concerned about drafting an enforceable will that will leave property according to their wishes while those who inherit property may be concerned about tax implications. In fact, the estate tax can take a huge chunk out of one's estate. Therefore, it is important to know how the estate tax works so that Floridians can properly plan for it.

The estate tax is levied at both the state and the federal level, and is imposed on the deceased's entire estate. This means any and all property owned by an individual upon his or her death is subject to the inheritance tax. However, the federal government exemption is currently about $5 million, meaning that anything under that amount will not be subjected to the federal estate tax. An individual can also utilize the marital deduction, whereby an estate can pass tax free to one's spouse.

Individuals should be aware, though, that there may also be an estate tax at the state level. The good news is that Florida does not. Therefore, when an individual passes away, so long as his or her estate does not exceed the federal exemption level, no estate taxes will be imposed.

While the estate tax certainly threatens to take a bite out of an individual's assets, there are ways to plan around it. However, it must be done properly to ensure a deceased individual's family members inherit all that they are intended to inherit. By speaking with an experienced estate planning attorney, Floridians may be able to create a plan that fulfills their wishes while protecting their wealth for their loved ones.

Source: FindLaw, "Estate and Gift Tax: An Overview," accessed on Aug. 18, 2014

Source: FindLaw, "Estate and Gift Tax: An Overview," accessed on Aug. 18, 2014

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