Moving to Florida to Avoid Estate Tax — Is It Worth It? Domicile Requirements?

My parents (both late 60s) split time between a co-op in Manhattan and a condo in Naples. Combined estate is ~$12M. If they die as New York domiciliaries, the NY estate tax on a $12M estate is roughly $1.1M (the cliff kicks in because they're over 105% of the exemption).

If they establish Florida domicile: $0 state estate tax. Zero.

The savings seem obvious but I've heard horror stories about New York challenging domicile changes. Does anyone have experience with this? What's the checklist to make it bulletproof?

I deal with NY-to-FL domicile changes constantly. New York is indeed the most aggressive state for domicile audits — they have an entire unit dedicated to it.

The full domicile checklist:

• File a Declaration of Domicile with the Florida county clerk
• Florida driver's license (surrender the NY one)
• Register to vote in Florida
• File homestead exemption on the Florida property
• Use the Florida address for: bank accounts, brokerage accounts, credit cards, insurance, passport
• Join social clubs, religious institutions, doctors in Florida
• Spend 183+ days per year in Florida (keep a log)
• File taxes with Florida address

The critical issue: if they keep the Manhattan co-op, NY will argue they still have a "permanent place of abode" there. NY uses a factor test — the apartment alone won't disqualify them, but it's a red flag. Many people sell or gift the NY property to remove the argument entirely.

The Florida estate planning guide covers the domicile requirements and homestead protection in detail.

Florida side: beyond estate tax savings, the homestead exemption is incredibly powerful. Once they establish domicile and file homestead, the Florida property is:

• Protected from virtually all creditor claims (unlimited $ value, up to half-acre urban)
• Property tax capped at 3% annual increases (Save Our Homes)
• Exempt from forced sale in bankruptcy

The homestead also provides descent and devise protections — the surviving spouse gets a life estate regardless of what the will says. This can be a planning opportunity or a trap depending on the situation.

At $12M, the savings from avoiding NY estate tax ($1.1M+) are far larger than the cost of making the move. But it needs to be real. If they keep spending 7 months in Manhattan and only come to Naples for the winter, NY will win the domicile audit.

We moved from Massachusetts to Sarasota 3 years ago specifically to avoid the MA estate tax. Our estate is about $4M — MA would have taxed us ~$182K (they tax from dollar one above $1M). Florida: $0.

Massachusetts was much less aggressive than NY about challenging the move. We sold the MA house, got FL driver's licenses, registered to vote in FL, filed the declaration of domicile. Never heard a peep from MA revenue.

The quality of life improvement was a bonus — no income tax either.

The issue is my parents don't want to sell the co-op. It's been in the family since the 1970s. Can they give it to me or put it in an LLC and still claim Florida domicile?

Gifting the co-op to you would remove it from their estate AND remove the "permanent place of abode" argument. Two birds with one stone. But: co-ops have transfer restrictions, and the gift uses their lifetime exemption ($13.99M each, so plenty of room).

Also, a gift does NOT get a stepped-up basis. You'd inherit their original basis. If they bought it for $50K in the 1970s and it's worth $2M now, you'd face capital gains on $1.95M when you sell. If they held it until death and you inherited, you'd get the step-up and pay $0 capital gains.

This is the classic gift-vs-inherit tension. For estate tax savings, gift now. For income tax savings, inherit later. At $12M, the estate tax cost of keeping the co-op ($200K+ in NY tax on the co-op value) may exceed the capital gains cost of gifting it. Run the numbers both ways.

Similar situation from Connecticut. Our estate is $8M and CT would tax us ~$540K. We moved to Jupiter, FL last year. The CT DRS actually did an audit — they questioned whether our move was genuine because we still owned a vacation home in Litchfield.

We provided: FL driver's licenses, FL voter registration, FL homestead filing, bank statements showing FL address, membership at a FL golf club, medical records from FL doctors, and our daily calendar showing 210+ days in FL. Audit closed, no assessment.

The vacation home in CT wasn't disqualifying because we could show FL was the "center of life." But it was a stressful 8 months waiting for the audit result.

One thing nobody mentions: Florida's elective share law. The surviving spouse is entitled to 30% of the estate regardless of what the will or trust says. If you're in a second marriage and want to leave everything to your kids from the first marriage, Florida law may override your wishes. Plan around it with proper waiver or QTIP trust.

Been a Florida domiciliary for 12 years, originally from Illinois. Not once has IL challenged my domicile. I think the aggressiveness really depends on the state. NY and CT are the notorious ones. MA, IL, and others tend not to pursue domicile audits as aggressively.

My advice: if you're going to make the move, do it properly and completely. Half measures (keeping the old state's license, voting there, etc.) invite scrutiny.

Update: After running the numbers with an estate attorney, the plan is: (1) Parents will establish Florida domicile by January, (2) gift the co-op to me over 2 years using annual exclusion + partial lifetime exemption, (3) set up a revocable trust in Florida with proper homestead provisions.

Projected savings: ~$1.1M in NY estate tax. Even accounting for the lost step-up basis on the co-op (future capital gains ~$380K at 23.8%), net savings is $720K+. No-brainer.

Great outcome. For anyone else considering this move, the Estate & Gift Tax Hub has state-by-state guides for Florida, New York, and Massachusetts with calculators and detailed planning strategies.

Following this thread. We're in Rhode Island with a $3.5M estate. RI exemption is only $1.774M and goes up to 16%. Estimated RI estate tax: ~$130K. Florida looking very attractive right now. Does anyone know if RI challenges domicile changes like NY does?

Rhode Island is generally not aggressive about domicile audits the way NY and CT are. The Rhode Island estate tax guide covers the state-specific rates. With $130K at stake, the move to Florida would pay for itself many times over. Just make sure you follow the full domicile checklist and keep records of your days spent in each state.