When a person in Clearwater sits down to prepare a will, they typically do so already resigned to the fact that at least some of their assets will have to go towards paying liabilities. Even when one does all that they can to eliminate their debts before their deaths, many believe their beneficiaries will have to deal with certain expenses. 

Estate taxes typically rank among these assumed expenses. Yet avenues are in place to help limit one’s estate tax liability (or even avoid it altogether). 

The federal estate tax threshold 

The first of these is the federal estate tax exemption. Forbes Magazine reports that for 2020, that amount is $11.58 million. What this means is that those estates whose total taxable value falls below that amount will not be subject to any federal tax at all. Those that exceed the amount will see the amount above the threshold taxed. Currently, the federal estate tax rate ranges between 18%-40% (depending on the amount by which an estate’s value exceeds the threshold). 

Estate tax portability 

There is a way, however, for one to effectively double that threshold amount. To do so, they must tax advantage of two tax benefits: the unlimited marital deduction and estate tax portability. The unlimited marital deduction allows one to leave an unlimited amount to their spouse free of taxes. One who does this preserves their entire estate tax exemption. Portability then allows their surviving spouse to combine that unused exemption amount with their own. To do this, the Internal Revenue Service states that they simply need to file an estate tax return within nine months of their spouse’s death electing portability. 

The state of Florida does not impose a local estate tax on its residents.