Estate Tax and Gifting Strategies for Florida Residents

Florida residents pay no state estate tax and no state inheritance tax, but they are still subject to the federal estate tax once their taxable estate exceeds the federal exemption. For high-net-worth families—and for Long Island homeowners who have made the move south—the real planning work is reducing that future federal exposure through lifetime gifting, trusts, and careful titling of real estate. Done well, these strategies move wealth to the next generation while keeping the homestead and other assets out of probate.

I have spent years guiding clients through this on both ends of the I-95 corridor: people who keep a house on Long Island and winter in Florida, and people who have cut their New York ties entirely. The rules differ in ways that surprise even sophisticated owners. Below is how I actually walk clients through estate tax and gifting in Florida, with the statutes and numbers that matter.

Does Florida Have an Estate Tax or Inheritance Tax?

No. Florida repealed its estate tax when the federal “pick-up” credit was phased out, and the Florida Constitution itself prohibits a state inheritance or estate tax. Article VII, Section 5 of the Florida Constitution bars the state from levying a tax “upon estates or inheritances,” except to the extent it could capture a federal credit that no longer exists. Chapter 198 of the Florida Statutes, the old estate tax chapter, is effectively dormant for deaths after the federal credit sunset.

That is a genuine advantage. A New York decedent’s estate can owe New York estate tax once it exceeds roughly $6.94 million (the figure is indexed and changes annually), and New York’s so-called “cliff” can tax the entire estate—not just the excess—when the estate exceeds 105% of the exemption. Florida has nothing comparable. So when a Long Island client establishes true Florida domicile, the planning conversation shifts entirely to the federal system.

The Federal Estate and Gift Tax: One Unified System

Here is the single most misunderstood point I correct in nearly every consultation: the federal estate tax and the federal gift tax are unified. You have one lifetime exemption that covers both gifts you make while alive and the estate you leave at death. In 2025 that unified exemption is $13.99 million per individual, indexed for inflation. The tax rate on amounts above the exemption tops out at 40%.

Two features make this exemption powerful for Florida families:

• Portability. A surviving spouse can inherit the deceased spouse’s unused exemption by filing a federal estate tax return (Form 706) and electing portability. A married couple can effectively shelter close to $28 million combined—but only if that return is filed, even when no tax is due. Missing it is one of the most expensive mistakes I see.
• The 2026 sunset. Under current law, the elevated exemption is scheduled to drop by roughly half after December 31, 2025, reverting to an inflation-adjusted figure closer to $7 million. The IRS has confirmed there is no “clawback”—gifts made under today’s higher exemption stay protected. That makes the next stretch of time a genuine use-it-or-lose-it window for larger families.

If your combined assets—the Florida home, the brokerage accounts, a business interest, and that Long Island house you never sold—are anywhere near $7 million, this sunset is not abstract. It is the reason to plan now rather than later.

Annual Gifting: The Quiet Workhorse

Before any complex trust, start with the federal annual gift tax exclusion. In 2025 you may give up to $19,000 per recipient per year (a married couple can “split gifts” and give $38,000 per recipient) without using any lifetime exemption and without filing a gift tax return. There is no limit on the number of recipients.

A couple with three married children and six grandchildren can move well over $400,000 out of their taxable estate every single year using annual exclusion gifts alone. Compounded over a decade, that is millions removed from federal exposure—quietly, with no return to file. Two additional gifts sit outside the annual limit entirely:

1. Direct tuition payments made to an educational institution.
2. Direct medical payments made to a provider or insurer.

The key word is direct. Pay the university or the hospital straight from your account—never reimburse the family member—and the payment is unlimited and tax-free. I have clients who fund grandchildren’s entire private-school and college careers this way without touching a dollar of exemption.

Gifting Florida Real Estate and the Homestead Trap

This is where Florida planning gets genuinely Florida-specific, and where editorial focus on real estate and homestead owners pays off. The Florida homestead carries three distinct protections that interact in ways that can wreck a careless gifting plan:

• Creditor protection under Article X, Section 4 of the Florida Constitution—your homestead is shielded from most creditors without dollar limit.
• The Save Our Homes assessment cap, which limits annual increases in assessed value to 3% (or CPI, whichever is lower).
• Descent and devise restrictions—if you are survived by a spouse or minor child, you cannot freely give the homestead away, even in your will.

Here is the trap. If you gift your homestead outright to your children during life, you may trigger reassessment and lose the Save Our Homes cap, spiking property taxes. You may also strip away creditor protection and hand the kids a low carryover income-tax basis instead of the full step-up in basis they would receive if they inherited at death. I have watched families save a modest estate tax only to hand the IRS a far larger capital gains bill on sale. For most homeowners, keeping the homestead until death—so heirs get the stepped-up basis—beats lifetime gifting of the house itself.

The better tools for transferring a residence are usually a retained life estate (sometimes structured as a Lady Bird / enhanced life estate deed in Florida) or a qualified personal residence trust (QPRT). A retained life estate lets you keep the right to live in and control the home for life while the remainder passes automatically at death—avoiding probate and, in the enhanced version, preserving the step-up. The mechanics of differ between states, so the deed must be drafted to your state of domicile. Get the wrong form and you defeat both the tax goal and the homestead protection.

Trusts That Reduce the Taxable Estate

For families above—or approaching—the federal exemption, irrevocable trusts do the heavy lifting. A few that come up constantly in Florida practice:

Irrevocable Life Insurance Trust (ILIT)

Life insurance proceeds are income-tax-free, but they are pulled into your taxable estate if you own the policy. An ILIT owns the policy instead, removing the death benefit from your estate while still providing liquidity to pay any federal estate tax or equalize inheritances among children.

Spousal Lifetime Access Trust (SLAT)

A SLAT lets one spouse make a large gift to an irrevocable trust for the benefit of the other spouse, locking in today’s high exemption before the 2026 sunset while keeping indirect access to the funds through the beneficiary spouse. For couples nervous about giving away too much, the SLAT is the most popular sunset-driven strategy I draft.

Grantor Retained Annuity Trust (GRAT)

A GRAT moves the future appreciation of an asset to your heirs at little or no gift-tax cost, which is especially attractive for closely held business interests and concentrated stock positions.

Pooled and Special-Needs Trusts

For clients with a disabled family member, or older clients planning for long-term care, specialized vehicles preserve means-tested benefits while still providing for the beneficiary. A is one such tool, frequently used to protect surplus income without sacrificing Medicaid eligibility. These rules are intensely state-specific, so the trust must match the law of the state where benefits are sought.

Domicile: The Threshold Question for Snowbirds

None of the Florida advantages apply unless you are actually domiciled in Florida. New York is famously aggressive about residency audits, and keeping a Long Island house while claiming Florida domicile invites scrutiny. To establish Florida domicile convincingly, clients should:

• File a Florida Declaration of Domicile under Florida Statute § 222.17.
• Apply for the Florida homestead exemption and surrender the New York residence’s primary-home status.
• Obtain a Florida driver’s license, register to vote in Florida, and register vehicles there.
• Spend more than 183 days in Florida and keep records (the New York “statutory residence” test turns on day-counting).
• Update estate planning documents to Florida form, signed in Florida.

Half-measures are dangerous. I have seen New York successfully claw a “Florida” estate back into the New York estate tax net because the decedent’s will was still a New York will and the family kept treating the Long Island house as home. If you split time, build the domicile file deliberately.

Putting It Together

A workable Florida estate plan for a real-estate-heavy family usually layers several of these moves: annual exclusion gifts running in the background; direct tuition and medical payments for the next generation; a retained life estate or QPRT for the residence; an ILIT for liquidity; and, for larger estates, a SLAT or GRAT to lock in the high exemption before 2026. Above all, married couples should never leave portability on the table.

Every one of these tools has a wrong way to do it that costs more than doing nothing. The homestead rules, the domicile audit risk, and the basis trade-offs all reward planning that is specific to your situation and your state. If you want help mapping which strategies fit your estate, our Florida estate planning team works alongside our New York office for clients with assets in both states. You can also review our overview of wills and trusts or learn how the Florida probate process affects assets that never get planned around. When you’re ready, schedule a consultation and we’ll build the plan to fit your family.

Frequently Asked Questions

Does Florida have an estate tax or inheritance tax?

No. Florida has no state estate tax and no state inheritance tax, and the Florida Constitution (Article VII, Section 5) prohibits one. Florida residents are still subject to the federal estate tax if their taxable estate exceeds the federal exemption, which is $13.99 million per person in 2025 and scheduled to drop by roughly half after 2025.

How much can I gift each year without owing gift tax?

In 2025 you can give up to $19,000 per recipient per year under the federal annual gift tax exclusion with no return required, and a married couple can split gifts to give $38,000 per recipient. Direct payments of tuition to a school or medical bills to a provider are unlimited and don’t count against this exclusion.

Should I gift my Florida homestead to my children during my lifetime?

Usually not outright. Gifting the homestead during life can trigger property-tax reassessment, lose the Save Our Homes cap and creditor protection, and give heirs a low carryover basis instead of a stepped-up basis at death. A retained life estate (enhanced/Lady Bird deed) or a QPRT is typically a better way to transfer a residence.

What is the 2026 estate tax exemption sunset?

Under current law the elevated federal exemption ($13.99M in 2025) is scheduled to drop to an inflation-adjusted figure near $7 million after December 31, 2025. The IRS has confirmed there is no clawback on gifts made under the higher exemption, which makes large gifts and strategies like SLATs time-sensitive for families approaching the threshold.

Can I claim Florida's tax advantages if I still own a home on Long Island?

Only if you establish genuine Florida domicile. New York runs aggressive residency audits, so you should file a Florida Declaration of Domicile (Fla. Stat. § 222.17), claim the Florida homestead exemption, get a Florida license and voter registration, spend more than 183 days in Florida, and execute Florida-form estate documents.