No one likes to think about their own passing, but planning for it can save your loved ones significant stress and financial strain.
By understanding the tax laws in Florida and implementing a thoughtful estate plan, you can reduce the tax burden your loved ones might face when you die.
Using the Florida homestead exemption
One benefit available to Florida residents is the homestead exemption. If you own a home and claim it as your primary residence, up to $50,000 of its value may be exempt from property taxes. Further, the “Save Our Homes” provision in Florida law caps the annual increase in the assessed value of a homesteaded property at 3% or the rate of inflation, whichever is lower.
In addition, Florida law provides unlimited protection from creditors for the homestead property. After you pass away, creditors cannot force your heirs to sell the homestead to pay your debts, protecting your loved ones from added financial strain.
Giving gifts during your lifetime
Another approach to reducing the future tax burden on your loved ones is giving gifts during your lifetime. The Internal Revenue Service allows you to give up to $15,000 per person per year without incurring any gift tax. Over time, these gifts can reduce the size of your estate and thus, the potential estate tax burden your heirs might face.
Planning for the inevitable is a gift you give to your loved ones. Not only can you designate who receives your assets, but you can also do it in a way that helps cut their tax burden.