Estate Tax and Gifting Strategies for Florida Residents: A West Palm Beach Attorney’s Guide

Florida has no state estate tax, no inheritance tax, and no gift tax — so a Florida resident’s only transfer-tax exposure is the federal estate and gift tax, which in 2025 applies only to estates above a $13.99 million lifetime exemption ($27.98 million for a married couple). Gifting strategies for Florida residents are therefore less about dodging a state levy and more about staying under the federal threshold, using the annual exclusion efficiently, and locking in today’s historically high exemption before it changes. For retirees and seasonal residents in Palm Beach, the planning question is usually “how do I move wealth to my family without creating a tax bill — or a probate headache?”

I’ve spent years counseling West Palm Beach families and snowbirds who split time between Florida and a northern state. The good news comes first: most people will never owe a dollar of estate tax. But “most” isn’t “all,” and the families who do owe tend to be exactly the ones drawn to South Florida — successful retirees with appreciated real estate, brokerage accounts, and a closely held business or two. This guide walks through what actually moves the needle.

Why Florida Is a Tax-Friendly State to Die In

Florida repealed its estate tax years ago. The state once collected a “pick-up” or “sponge” tax that piggybacked on a federal credit, but when Congress phased out that credit, Florida’s tax went with it. Today, Article VII, Section 5 of the Florida Constitution actually prohibits the state from imposing an estate or inheritance tax beyond what the federal credit allowed — which is now nothing.

That means three things for a Palm Beach resident:

• No Florida estate tax at death, regardless of estate size.
• No Florida inheritance tax on the people who receive your assets.
• No Florida gift tax on lifetime transfers.

This is one reason high-net-worth retirees establish Florida domicile in the first place. But domicile has to be real and provable — not just a mailing address. If you’re a snowbird, your former home state may still try to tax your estate or income if it believes you never truly left. More on that below, because it’s where I see the most expensive mistakes.

The Federal Estate and Gift Tax: What Florida Residents Still Face

The federal transfer tax system is unified. Under the Internal Revenue Code, you get one lifetime exemption that covers both gifts you make while alive and the assets you leave at death. For 2025 that unified exemption is $13.99 million per person, indexed annually for inflation. Amounts above it are taxed at a top federal rate of 40%.

A few features matter enormously for planning:

• Portability. A surviving spouse can inherit the deceased spouse’s unused exemption by filing a timely federal estate tax return (Form 706) — even if no tax is owed. Miss that filing and you can forfeit millions in exemption. This is the single most common error I see in DIY estates.
• The unlimited marital deduction. Transfers to a U.S.-citizen spouse pass estate- and gift-tax-free, deferring the question to the second death.
• Step-up in basis. Assets you hold until death generally get a new cost basis equal to their date-of-death value, wiping out unrealized capital gains. Lifetime gifts do not get this step-up — the recipient takes your original basis. This tension between estate-tax savings and income-tax cost is the heart of good gifting strategy.

The 2026 Sunset — and Why It Matters Less Than It Did

For years, planners warned that the elevated exemption from the 2017 Tax Cuts and Jobs Act was scheduled to “sunset” at the end of 2025, roughly halving to around $7 million per person. Legislation in 2025 made the higher exemption permanent and set it near $15 million per person starting in 2026, indexed going forward. That removes the cliff many families were racing to beat — but it doesn’t make planning unnecessary. Exemptions can change with any future Congress, and appreciation can push an estate over the line on its own. Families near or above the threshold should still consider using exemption while it’s available, because gifts that are excluded today are generally not “clawed back” if the law later tightens.

Annual Gifting: The Workhorse Strategy

The simplest and most underused tool is the annual gift tax exclusion. In 2025 you can give up to $19,000 per recipient per year to as many people as you like, with no gift-tax return required and no reduction of your lifetime exemption. A married couple can “split” gifts and give $38,000 per recipient. There’s no limit on the number of recipients.

Consider a Palm Beach couple with three children and seven grandchildren — ten recipients. At $38,000 each, that’s $380,000 moved out of the taxable estate every single year, tax-free, with no return to file. Over a decade, that’s millions, plus all the future growth on those assets, removed from the estate.

Two exclusions beyond the annual amount are worth knowing:

• Direct tuition payments. Under Section 2503(e) of the Internal Revenue Code, tuition you pay directly to a school is unlimited and tax-free — it doesn’t count against the annual exclusion at all. The check must go to the institution, not the student.
• Direct medical payments. The same section exempts payments made directly to a provider for someone’s medical care or health insurance. Pay the hospital or insurer directly, never reimburse the patient.

For grandparents funding education, the 529 plan superfunding rule is a favorite: you can front-load five years of annual exclusions into a 529 account in one year — $95,000 per beneficiary in 2025 ($190,000 for a couple) — and elect to spread it over five years for gift-tax purposes.

Larger Lifetime Gifts: Using Your Exemption Strategically

Gifts above the annual exclusion aren’t taxed — they simply draw down your lifetime exemption and require a Form 709 gift tax return. For families well into eight figures, making large gifts now can be powerful, because you remove not just the gifted asset but all its future appreciation from your taxable estate.

The trade-off, again, is basis. A vacation condo you bought for $300,000 that’s now worth $1.2 million carries $900,000 of built-in gain. Gift it during life and your child inherits your $300,000 basis. Hold it until death and your child gets a stepped-up $1.2 million basis. For families who won’t owe estate tax, holding is almost always better. For families over the exemption, the 40% estate-tax savings usually outweighs the capital-gains cost — but it’s a calculation, not a reflex.

Trusts That Do the Heavy Lifting

Several irrevocable trust structures let you give assets away for estate-tax purposes while keeping some control or benefit:

• Irrevocable Life Insurance Trust (ILIT). Holds a life insurance policy outside your estate so the death benefit isn’t taxed. For a couple over the exemption, this can fund estate taxes or equalize inheritances with dollars the IRS can’t reach.
• Spousal Lifetime Access Trust (SLAT). One spouse gifts to an irrevocable trust benefiting the other, using exemption while keeping indirect access through the beneficiary spouse.
• Grantor Retained Annuity Trust (GRAT). Lets you pass appreciation on volatile or fast-growing assets to heirs with little or no gift-tax cost.
• Qualified Personal Residence Trust (QPRT). Useful for that appreciating Palm Beach home — you transfer the residence at a discounted gift value while retaining the right to live in it for a term of years.

Asset-protection trusts also play a role for retirees worried about long-term-care costs. While Florida has favorable creditor-protection rules and a generous homestead exemption under Article X, Section 4 of the Florida Constitution, families with northern ties sometimes coordinate planning across states. For clients who keep a foothold up north, a properly drafted can shield assets from nursing-home spend-down while preserving eligibility — a structure with no exact Florida twin given our different homestead rules. Disabled beneficiaries or those receiving needs-based benefits may also be served by a , which lets income be sheltered without losing Medicaid.

Snowbirds and Domicile: The Trap That Costs the Most

Here’s the issue I flag for every seasonal client. Several northern states — New York, Connecticut, Massachusetts, Illinois, and others — impose their own estate tax with exemptions far below the federal level, sometimes under $2 million. If your former state still considers you domiciled there, your estate could owe state estate tax that Florida would never have charged.

Florida residency for tax purposes isn’t automatic just because you bought a condo. To establish and defend Florida domicile, you generally want to:

1. File a Declaration of Domicile with the clerk of court under Florida Statute 222.17.
2. Claim the Florida homestead exemption on your residence (which also caps property-tax increases under the Save Our Homes provision).
3. Register to vote, get a Florida driver’s license, and title your vehicles in Florida.
4. Spend more than half the year in Florida and keep records — the 183-day count matters in residency audits.
5. Update your will, trust, and powers of attorney to reflect Florida law and recite Florida domicile.

Getting this right is often worth more than any gifting maneuver, because it can eliminate an entire state’s estate tax. If you’ve recently moved, have your will and trust documents reviewed for Florida compliance — homestead devise restrictions and the elective-share rules here differ meaningfully from other states.

Don’t Forget Probate — Gifting’s Quieter Cousin

Even when no tax is owed, how assets pass still matters. Florida probate, governed by Chapters 731–735 of the Florida Statutes, can be slow and public for assets titled in your name alone. Lifetime gifting, revocable living trusts, and proper beneficiary designations all keep assets out of probate. A revocable trust won’t save estate tax, but for a Palm Beach family it can save months of court process and keep the estate private. If you want to understand how the court process works for assets that do pass through it, our overview of Florida probate walks through the timeline.

For families who want a Florida-licensed attorney to coordinate gifting, trusts, and domicile in one plan, the firm’s handles exactly these situations.

A Practical Roadmap for Palm Beach Retirees

If you take nothing else from this article, take this sequence:

1. Confirm whether you’re even exposed. Tally everything — real estate, retirement accounts, life insurance death benefits, business interests. Life insurance you own is in your taxable estate, which surprises people.
2. Nail down Florida domicile if you’re a snowbird, before anything else.
3. Use the annual exclusion every year if you have heirs and surplus.
4. Weigh basis against exemption before making large lifetime gifts.
5. Layer in trusts only if your estate genuinely approaches the federal threshold.
6. Protect portability by filing Form 706 at the first spouse’s death, even when no tax is due.

Estate and gift tax planning rewards people who act while options are open and the law is favorable. If your number is comfortably under the exemption, focus on probate avoidance, basis step-up, and clean beneficiary designations. If you’re near or above it, the strategies above can save your family seven figures — but they require drafting that holds up under IRS scrutiny. When you’re ready, schedule a consultation and we’ll map it to your specific situation.

This article is general information, not legal or tax advice. Estate-tax figures are indexed annually and the law changes; confirm current numbers and your own exposure with a Florida estate planning attorney before acting.

Frequently Asked Questions

Does Florida have an estate tax or inheritance tax?

No. Florida has no state estate tax, no inheritance tax, and no gift tax. The Florida Constitution (Article VII, Section 5) bars the state from imposing one. The only transfer tax a Florida resident may face is the federal estate and gift tax, which in 2025 applies only to estates above $13.99 million per person.

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

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 no reduction of your lifetime exemption. A married couple can give $38,000 per recipient by splitting gifts. Florida itself imposes no gift tax. Direct payments of someone’s tuition or medical bills are unlimited and tax-free on top of that amount.

I'm a snowbird who still owns a home up north. Could my estate still owe state estate tax?

Yes, potentially. States like New York, Connecticut, and Massachusetts have their own estate taxes with low exemptions, and they tax estates of people they consider domiciled there. To avoid this, formally establish Florida domicile — file a Declaration of Domicile under Florida Statute 222.17, claim homestead, get a Florida license, register to vote here, and spend more than half the year in Florida.

Should I gift appreciated property now or leave it to my heirs at death?

It depends on whether you’ll owe estate tax. Assets held until death generally receive a stepped-up basis, eliminating unrealized capital gains — so if your estate is under the federal exemption, holding is usually better. If your estate exceeds the exemption, gifting can remove future appreciation from your taxable estate and save 40% estate tax, often outweighing the lost step-up. Run the numbers with an attorney before deciding.

Is the federal estate tax exemption still set to drop in 2026?

No. The scheduled 2026 sunset was avoided. 2025 legislation made the elevated exemption permanent and set it near $15 million per person starting in 2026, indexed for inflation. That said, future Congresses can change it, and asset growth can push an estate over the threshold, so families near the line should still plan proactively.