Estate Tax Planning in Florida After the $15 Million Exclusion

For most of the last decade, the conversation about federal estate tax has been dominated by an expiration date. The exclusion had been temporarily doubled, it was scheduled to fall by roughly half at the end of 2025, and a great deal of planning was organized around using the larger figure before it disappeared.

That question has been settled, and the number is now larger than most people expected. Which has produced a predictable response: a lot of families have concluded that estate tax planning is something that happens to other people. We covered the $15 million exemption is here as breaking news when the figure was announced; this post goes deeper into what to actually do about it.

For most households that conclusion is correct. For a meaningful number of Central Florida families — business owners, physicians and practice groups, families holding real estate bought decades ago in Winter Park or College Park or along the coast — it is not. The exclusion is a threshold, not a shield, and the assets that push a family over it are usually the ones that are hardest to pay tax on.

Working from current numbers matters here, because a striking amount of published material on this subject is out of date. The basic federal estate and gift tax exclusion for 2026 is $15,000,000 per person, up from $13,990,000 for decedents who died in 2025 — figures from the IRS's own inflation-adjustment guidance for tax year 2026. The annual gift tax exclusion is $19,000 per donee, or $194,000 for gifts to a spouse who is not a United States citizen. The generation-skipping transfer tax exemption is tied to the basic exclusion amount, and the top federal estate and gift tax rate remains 40 percent.

A married couple with properly coordinated planning is therefore working against roughly $30 million of combined exclusion. That is a large number. It is not an infinite one, and — this is the part that gets lost — it is measured against the value of the estate on the date of death, not the value today.

Florida imposes no separate state estate or inheritance tax. The Florida Constitution prohibits one except to the extent of the federal credit for state death taxes, and Florida's estate tax statute is keyed to that credit. Because federal law replaced the credit with a deduction, the Florida tax collects nothing.

This is a genuine advantage, and it is one reason so many people establish Florida residency. But three qualifications matter. First, it does nothing about the federal estate tax, which is the one with the 40% rate. Second, a Florida resident who owns real property in a state that does impose an estate tax may still face that state's tax on that property — a common issue for families who kept a house up north. Third, establishing Florida domicile is a factual question that other states litigate, and a family that keeps a New York apartment, a New York driver's license, and a New York doctor may find that its Florida residency is challenged after death, when the person who could best explain it is unavailable to testify.

An estate of $9 million today, growing at 6% annually, passes $15 million in roughly nine years. Growing at 8%, it takes under seven. The relevant question is never "am I over the line now" — it is "where will this be when it is measured, and what will the line be then."

This is also why the most valuable planning is done early. The structures that work best move future appreciation outside the taxable estate. Once appreciation has already happened, the options narrow and get more expensive.

Federal estate tax is due nine months after death. An estate holding a $12 million operating business, a $4 million building, and $300,000 in cash does not have a tax problem so much as a liquidity problem. The tax is owed in dollars the estate does not have.

The traditional answers — a sale under time pressure, a loan against the business, an installment election where the estate qualifies — all impose costs the family did not choose. A closely held Central Florida business sold on a nine-month clock does not sell for what it is worth. Business succession planning and estate tax planning are, for these families, the same conversation. Planning for liquidity is frequently more valuable than planning to reduce the tax itself.

It has been $600,000, $1 million, $3.5 million, $5 million, $11.18 million, and now $15 million, all within the professional lifetime of practitioners still working. Nothing in the structure of the law makes the current figure permanent. Planning that only works if the exclusion never falls is a bet, and it is a bet the client is making without necessarily being told they are making it.

Under section 1014 of the Internal Revenue Code, property acquired from a decedent generally takes a basis equal to its fair market value at death. For a Winter Park house bought in 1978 for $70,000 and worth $1.4 million today, that adjustment eliminates a very large capital gain — inheriting a house instead of receiving it during life is often the better outcome for exactly this reason.

Property given away during life does not get that adjustment; the donee generally takes the donor's basis. So for families comfortably under the exclusion, the historically standard advice — give assets away to reduce the estate — can now cost the next generation more in capital gains tax than it saves in estate tax. The analysis has genuinely inverted for a large middle band of families, and it is asset-by-asset rather than global. Appreciated real estate and low-basis stock usually want to be held until death. Cash and high-basis assets are the better candidates for lifetime gifts.

The generation-skipping transfer tax is not the estate tax and is not covered by having paid it. It applies to transfers that skip a generation — typically to grandchildren — and it has its own exemption, tied to the basic exclusion amount, which must be affirmatively allocated. Allocation errors are among the most expensive mistakes in this field, and they are usually discovered decades later when the trust distributes.

When the first spouse dies, any unused portion of that spouse's exclusion can be transferred to the survivor — the deceased spousal unused exclusion, or DSUE. It roughly doubles what the survivor can shelter. It is not automatic.

Portability requires an election on a timely filed federal estate tax return, Form 706. The return is due nine months after death, with an automatic six-month extension available. Estates that have no independent obligation to file — which is most estates, given the size of the exclusion — nonetheless must file to make the election, and this is precisely where it is missed. The family assumes that because no tax is owed, no return is needed.

There is relief. Under Rev. Proc. 2022-32, an estate that had no filing requirement and failed to file for portability may generally use a simplified method to make a late election, up to the fifth anniversary of the decedent's death. That relief is genuinely useful and it is finite. Five years passes quietly.

For a surviving spouse whose own estate may approach the exclusion, the value of a properly made portability election is the decision surviving spouses do not know they have to make, and it is worth raising in the first months after a death, not the fifth year.

None of what follows is a recommendation for any particular family. These are the tools; which one fits depends on the assets, the family, and objectives that no article can know. Most of these operate alongside, not instead of, the family's core revocable living trust and pour-over will — and, as with any trust, properly funding it matters more than the document itself.

The traditional two-trust structure divides assets at the first death between a credit shelter trust — which uses the first spouse's exclusion and keeps subsequent growth out of the survivor's estate — and a marital trust that qualifies for the marital deduction. A qualified terminable interest property trust, the QTIP under section 2056(b)(7), lets the first spouse provide income to the survivor for life while controlling who ultimately receives the principal.

That control is the point in second marriages and blended families, where the surviving spouse's needs and the children's inheritance are in tension. The QTIP is one of the few structures that genuinely serves both.

Life insurance proceeds are income-tax-free but are included in the taxable estate if the decedent held incidents of ownership in the policy. An irrevocable life insurance trust owns the policy instead, keeping the proceeds outside the estate while producing liquidity exactly when the estate needs it — which addresses the illiquidity problem above rather than the valuation problem.

A GRAT, operating under section 2702, transfers an asset into a trust in exchange for a fixed annuity back to the grantor for a term. If the asset outperforms the statutory assumed rate of return, the excess passes to the remainder beneficiaries with little or no gift tax cost. If it does not, the assets return to the grantor and the family has lost only the cost of setting it up.

GRATs suit assets expected to appreciate sharply — a business approaching a sale, a concentrated equity position — and they carry a mortality risk: the grantor must survive the term for the technique to work.

Florida's rule against perpetuities permits trusts of very long duration, which makes it a favorable jurisdiction for multi-generational planning. A properly structured and properly GST-exempt trust can hold assets for descendants across generations without a transfer tax at each death, and the trust administration obligations that follow apply for decades. The drafting and the exemption allocation both have to be right, and the consequences of getting them wrong are borne by people not yet born.

The simplest technique remains among the most effective. A married couple may give $19,000 per donee per year — $38,000 combined — to any number of donees without using any exclusion at all. Across four children and eight grandchildren, that is $456,000 a year moved out of the estate, permanently, with no return required.

Where a family transfers interests in a closely held entity rather than cash, valuation discounts for lack of control and lack of marketability may apply. That is a fact-specific determination requiring a qualified appraisal, and it is an area of active IRS scrutiny.

A rough screen: add the equity in every property you own, the realistic value of any business interest, retirement account balances, the face amount of every life insurance policy you own, and everything else. If the total is above roughly $8 million for an individual or $16 million for a couple — or if it is meaningfully below that but growing quickly, or concentrated in a business you intend to hold — the analysis is worth doing.

If the number is well under those figures, the honest answer is that transfer tax is probably not your issue, and your planning attention belongs elsewhere: basis, probate avoidance, incapacity documents, and making sure the plan you have actually matches the assets you own. A good estate lawyer will tell you that rather than selling you a structure you do not need.

Does Florida have an estate tax or inheritance tax? No. Florida imposes neither. The Florida Constitution prohibits an estate tax except to the extent of a federal credit that no longer exists in usable form, so the Florida estate tax statute collects nothing. Federal estate tax still applies to Florida residents.

What is the estate tax exclusion for 2026? $15,000,000 per person, up from $13,990,000 for decedents who died in 2025, per the IRS's inflation adjustments for tax year 2026.

How much can I give someone in 2026 without filing a gift tax return? $19,000 per recipient. Gifts to a spouse who is not a United States citizen have a separate, larger annual exclusion of $194,000 for 2026. Gifts above the annual exclusion generally require a Form 709 but usually do not produce tax — they draw against the lifetime exclusion instead.

My spouse died three years ago and we did not file an estate tax return. Is portability lost? Possibly not. Where the estate had no independent filing requirement, Rev. Proc. 2022-32 provides a simplified method to make a late portability election, generally available until the fifth anniversary of the death. This is worth reviewing promptly, because the window is real and it closes.

Is it better to give assets away now or leave them at death? It depends on the asset. Property left at death generally receives a basis adjustment to date-of-death value under section 1014; property given during life generally does not. For appreciated real estate or low-basis stock, holding until death often produces the better overall result. For cash, high-basis assets, or assets expected to appreciate sharply, lifetime transfer is often better. It is an asset-by-asset question, not a philosophy.

Yergey & Yergey, P.A. has advised Central Florida families on our estate planning practice, including estate and transfer tax planning, for three generations, from our office in Orlando. We work with business owners, professionals, and families holding long-appreciated real estate throughout Orange, Seminole, Osceola, Lake, Brevard, and Volusia Counties — and we will tell you plainly if your estate does not need this kind of planning.

Request a consultation to review your estate and your current documents.