A great many questions will likely surface during the estate planning process; whether or not your estate will be subject to taxes may not be one of them. That is probably because you already assume the answer to that question to inevitably be “yes.”
But is it really? Florida does not impose a state estate tax on its residents, meaning that the only tax liability your estate may face comes from the federal government. With just a little bit of foresight (and the proper planning), you may even be able to limit (or completely avoid) that expense, as well.
Estate tax portability
The federal government understands the decades of hard work that when into accumulating your estate’s assets. Thus it does not want to impose a heavy tax burden on your estate if it is not needed. For this reason, a federal estate tax exemption exists to help limit your tax liability. Per the Internal Revenue Service, that amount for 2020 is $11.58 million. This high amount all but ensures that many estates will not be subject to tax at all.
There is even a method for you to combine your estate tax exemption with your spouse (through a process known as “portability”). Indeed, combining the benefits of both your estate tax exemption and the unlimited marital deduction (by leaving your estate to your spouse and thus preserving your entire exemption amount) can protect up to $23.16 million for your beneficiaries.
Portability does not occur automatically, however. Your spouse must elect it by filing an estate tax return the same year you die electing it. If they do not, your leaving them all your assets could inadvertently push the value of their estate above the threshold amount.