Estate taxes can be complex, but effective planning can lessen their financial impact. Florida does not impose a state estate tax, simplifying the process compared to many other states. Still, federal estate taxes may apply if your estate exceeds certain thresholds, so thoughtful preparation remains essential.
Understand federal estate tax exemptions
The federal government sets an exemption limit, under which your estate owes no federal estate tax. In 2025, this exemption is $12.92 million per individual. Estates valued above this amount face taxes on the excess, reducing the inheritance passed to your beneficiaries.
Use trusts to reduce your taxable estate
Trusts are valuable tools to lower your estate’s taxable value. A revocable living trust allows you to manage your assets during your lifetime and ensures a smooth transfer after your death. Irrevocable trusts remove assets from your estate altogether, which can decrease tax liability and provide creditor protection.
Give gifts during your lifetime
Gifting assets while alive can decrease your estate’s taxable value. The IRS permits gifts up to $17,000 per recipient annually without tax implications in 2025. This strategy reduces your taxable estate and offers support to your loved ones.
Plan for liquidity to cover taxes
Estate taxes must be paid promptly. It’s important to have sufficient cash or liquid assets available to avoid forcing heirs to quickly sell property under pressure. Liquid assets can include savings, investments, or life insurance proceeds earmarked for tax payments.
Stay informed on tax law changes
Tax laws often change. Regularly reviewing your estate plan allows you to adjust your strategies accordingly, helping to preserve your estate’s value and compliance.
By applying these approaches, you can better manage federal estate tax exposure in Florida and ensure your assets transfer smoothly to your heirs.
