The old adage says that we can only be certain of two things; death and taxes. When it comes to estate planning, the two tend to go together.
As you make plans for what will happen with your estate after you pass away, you know that taxes will be a significant factor. During probate, taxes will be one of the first expenses that your estate may need to pay.
Here’s what you should know about the taxes you can expect your estate to cover.
Unfortunately, even after passing away, you could still owe federal income taxes. The person or entity handling the administration of your estate will need to file a final tax return for you and make arrangements to pay any valid taxes owed.
Before your beneficiaries can inherit your home and other properties, your estate will need to pay any outstanding property taxes. During the probate process, your estate’s personal representative will need to determine what taxes are due and arrange payment. After the taxes are paid, the person inheriting the property will be responsible for future property taxes.
While Florida does not impose any inheritance or estate taxes at the present time, federal requirements could impact your estate. Depending on the size and value of your estate, there could be additional taxes that need to be paid.
Creating a plan
Understanding your estate’s tax obligations is crucial as you decide how to proceed with your estate plan. Rather than expecting your beneficiaries to receive only what remains after taxes, you may want to discuss setting money aside to settle your tax obligations with a professional, if possible, so your beneficiaries can better enjoy what you intended to give them.