Jan 14, 2022
What are the Florida Will Witness Requirements?
The rules for being a witness to a will in Florida are not very complex, and the requirements have been eased due to the the COVID-19 pandemic.
While many people confuse inheritance taxes and estate taxes, they’re actually two slightly different things. An inheritance tax is a tax that beneficiaries who receive an inheritance have to pay, based on how large that inheritance is. Since there is no federal inheritance tax in the United States, this tax is determined by individual states. Only six states have an inheritance tax law on the books: Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. This means that New York residents are not liable for an inheritance tax.
We regularly share relevant information about wills and estates.
An estate tax, on the other hand, is a tax determined by the total value of the estate itself, not what is bequeathed to beneficiaries. Instead, the tax is paid by the estate itself before the estate is settled and inheritances are distributed to heirs.
Unlike an inheritance tax, New York does have an estate tax. There is a minimum amount that the estate can be valued at that won’t be taxed—once the estate’s value goes above that amount, the entire estate is subject to the tax.
The minimum amount that an estate can be valued at without being subjected to an estate tax in New York is $5.93 million (at which point an estate executor must also file a state estate tax return). Once your estate goes over that value, the estate tax will apply to the entire estate. So let’s say that an estate is valued at $8 million, which is $2.07 million above the limit. Instead of only paying estate tax on $2.07 million (as would be the case in other states), the tax applies to the entire $8 million.
If your estate qualifies for an estate tax, the actual rate will depend on the size of your estate. You can find the 2021 rates here, but the range is between 3.06% and 16%.
As you can imagine, if you suspect that your estate’s value is above $5.93 million, you may want to take some steps now to ensure that your beneficiaries’ inheritance isn’t eaten away by massive estate tax payments. Curious to learn more about how you can reduce the size of your estate right now? Get in touch with us today for a free consultation.