Florida Estate Planning Overview
Florida is the most popular domicile destination for high-net-worth individuals seeking to minimize state-level estate, income, and transfer taxes. With no state estate tax, no inheritance tax, no gift tax, and no state income tax, Florida eliminates the state-level tax burden that costs residents of New York, Massachusetts, Connecticut, and other taxing states hundreds of thousands to millions of dollars.
I work with clients relocating to Florida from high-tax states, establishing Florida domicile, structuring homestead protections, utilizing community property trusts for stepped-up basis, and setting up dynasty trusts for multi-generational wealth transfer. Florida's legal framework offers powerful tools — but homestead descent restrictions, the elective share, and documentary stamp tax create traps for the unwary.
Key advantage: Florida enacted the Community Property Trust Act effective July 1, 2021 (F.S. 736.1501). This allows married couples to obtain a full stepped-up basis on BOTH halves of trust property at the first death — a benefit previously available only in community property states like California and Texas.
Florida Documentary Stamp Tax Calculator
Estimate Florida documentary stamp tax on real property transfers.
Florida Estate Planning Deep Dive
Why Florida Has No Estate Tax
Article VII, Section 5 of the Florida Constitution provides that no tax upon estates or inheritances or upon the income of natural persons who are residents shall be levied by the State. Florida historically collected a "pick-up tax" equal to the federal credit for state death taxes under pre-2002 law, but when EGTRRA eliminated that credit, Florida's estate tax effectively dropped to zero.
What Florida Doesn't Tax
- No estate tax: No tax on the transfer of wealth at death
- No inheritance tax: No tax on beneficiaries receiving assets
- No gift tax: No state-level tax on lifetime gifts
- No income tax: No tax on wages, capital gains, interest, dividends, or trust income
- No intangible property tax: Repealed in 2007
Comparison: Florida vs. High-Tax States
| Feature | Florida | New York | Massachusetts | Connecticut |
|---|---|---|---|---|
| Estate Tax | None | 3.06%–16% | 0.8%–16% | 7.2%–12% |
| Exemption | N/A | $6.94M (cliff) | $1M | $13.61M |
| Gift Tax | None | None (but clawback) | None | Yes (12%) |
| Income Tax | 0% | Up to 10.9% | 5% + 4% surtax | Up to 6.99% |
| Capital Gains | 0% | Up to 10.9% | 5% + 4% surtax | Up to 6.99% |
Florida Homestead: Constitutional Creditor Protection
Under Article X, Section 4 of the Florida Constitution, homestead property is exempt from forced sale to satisfy most creditors' claims. This protection is unlimited in value — a $50 million mansion receives the same protection as a starter home. Limits:
- Inside a municipality: up to one-half acre
- Outside a municipality: up to 160 acres
- Exceptions: mortgage liens, property taxes, mechanic's liens, HOA/condo assessments
Homestead Descent and Distribution Restrictions
This is the major trap. If the decedent is survived by a spouse or minor child:
- The homestead cannot be devised by will to anyone other than the surviving spouse
- The surviving spouse may take: (a) a life estate with remainder to descendants, or (b) an undivided one-half interest as tenant in common with the descendants
- These restrictions can only be waived by the surviving spouse via a valid prenuptial or postnuptial agreement
Planning trap: Many clients attempt to leave homestead to a trust or to specific children, not realizing the constitutional restrictions override the will or trust. If there is a surviving spouse, the homestead must go to the spouse (unless waived). Failure to plan for this creates expensive probate litigation.
Homestead Property Tax Exemption
Separately from creditor protection, Florida offers a property tax exemption of up to $50,000 on homestead property. The Save Our Homes amendment caps annual assessment increases at 3% or CPI, whichever is less. This cap resets on sale, so long-term homeowners pay significantly less than new buyers.
Florida Community Property Trust Act (F.S. 736.1501)
Effective July 1, 2021, Florida allows married couples to create a community property trust. This is a game-changing tool for estate planning.
How It Works
- Both spouses transfer assets into a trust that declares them community property
- The trust must be express, signed by both spouses, and contain language classifying the assets as community property
- At the first death, BOTH halves of the community property receive a stepped-up basis to FMV — not just the decedent's half
Example: A couple bought stock for $100,000 that's now worth $1,000,000. In a regular joint account, only the decedent's half gets stepped up (basis: $550,000). In a community property trust, both halves get stepped up (basis: $1,000,000). The survivor sells and owes $0 in capital gains instead of ~$67,500 (federal at 15%).
When to Use
- Highly appreciated assets (stocks, real estate, business interests)
- Couples who moved to Florida from a non-community-property state
- Estates where capital gains tax savings exceed any estate tax concerns
Florida Dynasty Trusts (360-Year Duration)
Under F.S. 689.225, Florida allows trusts to last up to 360 years. While not perpetual like Delaware (unlimited) or South Dakota (unlimited), 360 years provides multi-generational wealth transfer for approximately 12-15 generations.
Key Advantages
- No state income tax on trust income: Florida trusts pay no state income tax, even on accumulated income. This makes Florida trusts superior to trusts in states like California (13.3% trust income tax) or New York (10.9%).
- GST tax allocation: Allocating the GST exemption to a dynasty trust means the trust assets — and all future growth — pass to descendants free of estate tax, gift tax, and GST tax for 360 years.
- Asset protection: A properly structured dynasty trust protects assets from beneficiaries' creditors, divorcing spouses, and lawsuits.
Florida vs. Delaware Dynasty Trusts
| Feature | Florida | Delaware |
|---|---|---|
| Duration | 360 years | Perpetual |
| State Income Tax | 0% | 0% (no residents/beneficiaries) |
| Asset Protection | Spendthrift only | DAPT + Spendthrift |
| Trust Modification | Nonjudicial modification (F.S. 736.04113) | Decanting + Nonjudicial |
| Directed Trusts | Yes (F.S. 736.0703) | Yes (12 Del. C. 3313A) |
Establishing Florida Domicile
For individuals relocating from high-tax states, establishing Florida domicile is the single most impactful estate planning step. The checklist:
- File a Declaration of Domicile with the county clerk (F.S. 222.17) within 30 days
- Obtain a Florida driver's license and surrender the former state license
- Register to vote in Florida
- File homestead exemption application by March 1 of the following year
- Update estate planning documents to reference Florida law
- Move valuable personal property to Florida (art, jewelry, collectibles)
- Use Florida address for tax returns, financial accounts, insurance policies
- Maintain time records showing 183+ days in Florida
Domicile audit risk: New York, Massachusetts, Connecticut, New Jersey, and other high-tax states aggressively audit domicile changes. NY uses the "five primary factors" test: home, active business involvement, time spent, near and dear items, and family connections. Keep meticulous records for at least 3 years after the move.
Elective Share (F.S. 732.2065)
Florida's surviving spouse may elect to take 30% of the elective estate regardless of the will. The elective estate includes revocable trust property, joint accounts, and certain transfers within one year. This right can only be waived via prenuptial or postnuptial agreement. Second-marriage couples with children from prior marriages need careful planning.
Documentary Stamp Tax (F.S. 201.02)
Florida imposes a documentary stamp tax on instruments transferring real property:
- Statewide rate: $0.70 per $100 of consideration (0.70%)
- Miami-Dade County: $0.60 per $100 plus a surtax of $0.45 per $100 on certain transactions
- Tax is rounded up to the next highest $100 increment
Exemptions
- Transfers at death pursuant to a will or trust
- Transfers between spouses (including pursuant to divorce)
- Transfers by court order
- Gifts with no consideration (but the tax applies to gifts if the property has a mortgage, based on the mortgage amount)
Intangible Tax on Mortgages
Florida also imposes an intangible tax of $0.002 per $1.00 (0.20%) on new mortgages and mortgage renewals. This applies to the initial mortgage amount and is typically paid at closing.
Frequently Asked Questions — Florida Estate Planning
No. Florida's Constitution prohibits any state estate or inheritance tax beyond the federal credit for state death taxes, which was eliminated in 2005.
No. There is no tax on beneficiaries who receive assets from a decedent's estate, regardless of size or relationship.
No. Federal gift tax rules still apply, but Florida imposes no state-level gift tax.
Under Article X, Section 4, homestead property is exempt from forced sale by creditors regardless of value. Limits: half an acre inside a municipality, 160 acres outside. Exceptions: mortgages, property taxes, mechanic's liens.
If survived by a spouse or minor child, homestead cannot be devised to anyone other than the surviving spouse. The spouse may take a life estate or 50% tenancy in common with descendants. Waivable only by prenuptial/postnuptial agreement.
$0.70 per $100 of consideration on real property transfers (0.70%). Miami-Dade has different rates. Transfers at death via will or trust are generally exempt.
Yes. Florida allows trusts to last up to 360 years under F.S. 689.225. Combined with no state income tax on trust income, Florida dynasty trusts are highly effective for multi-generational wealth transfer.
Under F.S. 736.1501 (effective 2021), married couples can create a trust treating assets as community property. At the first death, BOTH halves receive a full stepped-up basis, potentially saving substantial capital gains tax.
No. Florida has no state personal income tax, no capital gains tax, and no state income tax on trusts.
File a Declaration of Domicile, get a FL driver's license, register to vote, file homestead exemption, update estate documents, move personal property, maintain 183+ day records.
Potentially. NY, MA, CT, NJ aggressively audit domicile changes. Keep meticulous records showing your genuine Florida domicile for at least 3 years.
Florida is an equitable distribution state, but the 2021 Community Property Trust Act allows couples to elect community property treatment for trust assets, obtaining full stepped-up basis at the first death.
The surviving spouse may elect 30% of the elective estate regardless of the will. This includes revocable trust property and certain transfers. Waivable only by prenuptial/postnuptial agreement.
A constitutional amendment capping annual homestead assessment increases at 3% or CPI, whichever is less. The cap resets on sale, creating significant tax savings for long-term owners.
No estate tax, no income tax, unlimited homestead protection, community property trusts, 360-year dynasty trusts, Save Our Homes cap, and favorable trust administration laws. Moving from NY or MA can save millions.
While Florida has no state estate tax, federal estate tax still applies. After sunset (~$7M exemption), more estates face federal tax. Pre-sunset gifting locks in the current $13.61M exemption.
No DAPT statute, but homestead protection, tenancy by the entirety, and retirement/life insurance exemptions provide substantial asset protection without needing a DAPT.
Reduces assessed value by up to $50,000 for property tax purposes. The first $25K applies to all taxes; the second $25K applies between $50K-$75K assessed value and excludes school district taxes.
Repealed in 2007. There is no longer any Florida tax on stocks, bonds, mutual funds, or other intangible assets.
Probate is required for assets titled solely in the decedent's name. Florida allows summary administration for estates under $75,000 or where the decedent died more than 2 years ago. A revocable living trust avoids probate for trust assets.
Related Resources
Discuss Your Florida Estate Plan
I help clients with Florida domicile establishment, homestead planning, community property trusts, dynasty trusts, and multi-state tax optimization.