Now that the American Taxpayer Relief Act has been passed, the federal estate tax exemption is set at $5 million per person, indexed for inflation. The index for 2013 is at $5.25 million. If a person dies and their estate is valued over this indexed amount, then the must pay a 40% tax to the federal government.
Just because the federal government has increased the estate tax exemption does not mean the states have to. The exemption rates and tax percentages vary from state to state.
Fortunately, Florida does not have a state estate tax, but Forbes says that could change. The pre-2001 state estate tax credit allowed states to share in the federal estate tax revenue, but this is no longer the case. “For states that were hoping for a return to that revenue sharing, it’s possible that they will consider adding stand-alone taxes,” James Walschlager, a research analyst, told Forbes.
Figuring out the complicated mess of estate taxes is only the tip of the iceberg when it comes to estate planning. Wills and trusts, or lack thereof, probate, power of attorney, estate executors, and the actual inheritance are all things to consider. If you have questions about estate planning for you or a loved one, contact Boyer Law Firm today.