Understanding Florida Probate Tax and Fees
Updated: Aug 30
The first thing that may cross your mind after you are named as the executor of an estate is the Florida probate tax and fees that the decedent’s estate may have to pay. You also have to think about the fees you will need to pay a probate attorney and other costs.
Below is a quick run-down of the taxes and fees you may have to pay.
Note: Though there is a statute in regards to Florida Probate Fees, Elder Law conducts free consultations and will quote you fairly despite statute limitations. We believe freedom to contract always comes first.
Florida probate attorney fees
Your lawyer will be helping you in the administration of the decedent’s estate and the litigation process involved in proving the Will. Remember that both your lawyer and the lawyers of the beneficiaries and litigants will also have to be paid.
When the compensable value of an estate is more than $40,000, a formal administration of the estate must take place. Compensable value is the value of the estate, excluding the homestead property of the estate and certain personal property. The following are estimates of attorney fees based on estate compensable value:
Estates that are $40,000 or less cost $1,500 in fees
Estates between $40,000 and $70,000 cost about $2,250 in fees
Estates between $70,000 and $100,000 cost $3,000 in fees
Estates between $100,000 and $900,000 cost 3% of the estate’s value
Estates between $1 million and $3 million cost 2.5%
Estates between $3 million and $5 million cost 2.5%
Estates between $5 million and $10 million cost 1.5%
Estates with a compensable value of more than $10 million cost 1%
The executor pays the probate lawyer’s fees using money from the decedent’s estate, not from their own pocket. If you don’t want your heirs to pay a lot of money in probate attorney fees, you should talk with an Estate Planning Lawyer about protecting your assets from probate.
Do Heirs Have to Pay Taxes?
In Florida, you do not have to pay a state inheritance tax and income tax on the monies you receive from an estate. Florida does not consider inheritance property as income.
For example, when a family member dies and leaves you a home worth $250,000, the home is not considered as income for tax purposes. In the State of Florida, neither beneficiaries nor heirs named have to pay any income tax on any monies received from an estate.
There is no inheritance tax in Florida because the property that is inherited does not count as income for the federal tax guidelines. Florida does not have a separate “death” or inheritance tax.
However, the federal government does impose an “estate tax” that applies to all residents of all states, but it only applies if the value of the estate exceeds $11.7 million.
Additionally, it would also have to be that any tax incurred would have to be paid from the estate and not the beneficiaries. Due to that high number, only a very few people would have to be concerned about a federal estate tax.
Other Potential Inheritance Tax Concerns
Inheritance tax in Florida can become an issue in a few other situations, such as when withdrawing money from retirement accounts. Whereas the deceased person would have been liable for taxes on withdrawing the funds, likewise beneficiaries would still be liable for those taxes. These accounts do not include Roth IRAs as they are not taxed upon the holder’s death.
If a beneficiary receives compensation from a property before the deceased’s property were to be transferred to the beneficiary upon the death of the owner, income taxes pay will need to be paid.
Any property that you were designated to receive upon the death of the owner, that in-between periods that are in flux due to settlement paperwork, any income received during that period would be taxable.
As well, if you were to sell an inherited asset, taxes on the sale of that asset would likely be subject to federal income tax, especially if the asset had appreciated from the time that it was originally purchased.
How to Protect Assets from Probate
If you protect your assets from probate, your heirs will not have to worry about creditors and taxes. Below are some of the ways you can protect your assets.
Revocable living trust: You can create a revocable living trust and make the trust the owner of your assets. So, when you die, the assets owned by the trust will not have to go through probate.
Beneficiary designation: You can choose beneficiaries for your bank accounts and your investment accounts when you are alive. These accounts will pass to the designated beneficiaries after you die.
Joint ownership or joint tenancy: This involves property that you own jointly with someone else. If you die, the property will be passed to the surviving owner. For example, if you and your spouse own a house jointly, ownership of the house will be passed to your spouse without going through a probate.
Determining Florida probate tax and fees is something Elder Law can help you resolve. It is at times like this that a knowledgeable attorney can be a very valuable resource to help you navigate the probate process.