You may be uncertain what to do when you are notified that you will receive an inheritance. The probate process can be complex and confusing, especially if this is your first time going through it. The Florida probate lawyers of Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can help guide you through the probate process every step of the way. We are here to handle probate court proceedings while you focus on your family’s emotional needs during this difficult time.
Here are three steps you should take as you prepare to receive your inheritance.
Understand that you likely will not receive your inheritance right away.
Many assume they will receive an inheritance immediately and may even make financial decisions based on that fact. However, that is not always the case. Realistically, receiving your inheritance could take months or even up to a year, especially if the deceased person’s estate must go through probate. Plus, before probate even can begin, the decedent’s heirs must locate the will, if one exists, retain a probate lawyer, make funeral arrangements, and take care of other necessary issues.
Probate is a multi-step process that can take six months to a year, on average. It could take even longer if there are disputes between family members or other complications or an estate tax return is filed. The court must approve the appointment of a personal representative for the estate, often specified in a will, if one exists. The personal representative must inventory assets and notify potential creditors of the estate. Creditors have a period to file claims with the estate; the personal representative can allow or object to those claims. Finally, the personal representative must pay all valid c expenses of the estate and distribute the remaining assets to the heirs, either according to the will or Florida law, if there is no will.
Determine whether you owe any taxes on your inheritance.
Before you are tempted to start spending an inheritance you have yet to receive, you should determine whether you will owe any taxes. Florida has no inheritance or estate tax, so you will not owe the state any taxes on money or assets you inherit.
However, your inheritance is still subject to federal estate taxes. Most estates are currently under the federal exemption limit of $12,920,000 for 2023, but that amount is subject to change in the future.
You also generally do not have to pay income taxes on your inheritance. One exception relates to inherited traditional IRAs or 401(k) plans, which are funded with pre-tax dollars. Distributions from those plans are taxable, so if you withdraw funds from plans that you inherit, you will have to pay income tax on those withdrawals. While Florida has no state income tax, you still are subject to federal income tax laws.
Consider making or updating your own estate plan.
When you receive an inheritance, you must consider how to use it to benefit yourself and your family. You can use the money to pay down existing debt, such as mortgages or vehicle debts. Many people invest the money for their future by placing it into retirement funds, purchasing life insurance policies, or establishing college funds for their children. Working with a financial planner can help you achieve your goals, both currently and for the future.
You also should strongly consider creating or updating your own estate plan. By engaging in the estate planning process, you can protect your inheritance for future generations. For example, you may want to establish a revocable living trust to hold your assets to avoid probate.
Call Us Today for Assistance with Your Probate Needs
At Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A., our Florida probate attorneys offer the full range of estate, probate, and related services when your loved one passes away. We are here to help your family navigate the complex legal problems that often arise after losing a family member in the most efficient manner possible. Call us at (954) 966-2112 or learn more about our legal services online. Set up a time to talk to us about your legal needs today.