Do I Owe Taxes on Inheritance?

“Nothing is certain but death and taxes,” so they say. But if you live in Florida, it’s unlikely you’ll end up paying death taxes. Florida does not impose an estate or inheritance tax. Florida’s constitution actually prohibits the state from collecting an estate tax (or income taxes, for that matter). However, federal estate taxes – and, depending on the estate’s property and connections, another state’s transfer tax – may apply.

Under 26 U.S.C. § 2010(c)(3)(C), the basic exclusion amount for decedents dying in 2026 is $15 million ($30 million for couples). That means you may now leave or give away up to $15 million without owing any federal estate tax.

“The estate tax will apply to fewer people now,” says estate planning and probate shareholder Mary Karr at Gunster in Miami. But some Floridians will still have to pay up. After all, the Forbes billionaire list includes many Floridians, mostly in South Florida.

“Still, there are not many couples in Central Florida that are worth more than $30 million,” notes estate planning and probate attorney Mary Merrell Bailey, managing partner of Your Caring Law Firm in Winter Park.

Do You Have To Pay Estate Taxes if You Only Live in Florida Part Time?

Things can be trickier for those who live in Florida part time. For anyone living part of the time in one of the states with an estate and/or inheritance tax, it may have to be proven they were really a Florida resident to avoid paying the taxes. 

There can be a fight between the heirs and the other state. For example, New York, which has an estate tax, may argue that the deceased person was a resident of that state, says Frank T. Adams, estate planning and probate shareholder with Dunwody White & Landon in Coral Gables. Authorities look at factors such as where you got your driver’s license, where you received mail, or where you went to the doctor.

Adams adds, “If they own real property in those other states, they still may owe taxes. If I own real estate in New York and I’ve never lived in New York, I can still owe New York taxes.”

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Keeping Estate Plans Updated with Changing Laws

Despite the larger federal exemption for estate taxes, “Many traditional estate tax planning techniques still apply. They just apply to a smaller number of people,” Karr says. Estate planning strategies can also differ for a 50-year-old with more ability to earn money than an 80-year-old. 

Wealthy Floridians must regularly tweak their estate plans as federal tax laws evolve. “Whenever exemptions shift, we might have to do a lot of work to existing estate plans,” Bailey says.

Lifetime Gifting

Under current gift limits, you can give a family member $19,000 each year.

Say an older couple has six married children and 17 grandchildren (29 people total). They can each give $19,000 tax-free to every family member, or $1,102,000 overall. They can also pay private school or college tuition, as well as their own medical bills and health insurance premiums, Adams says. He adds that a couple or individual “has to be comfortable that they won’t outspend or outlive their money.” 

Grantor-Retained Annuity Trust (GRAT)

A person who creates this type of trust can transfer assets into the GRAT for a certain period of time and receive annual annuity payments. When the GRAT ends, if the original assets have outperformed the payments, the remainder passes to the beneficiaries.

Credit Shelter Trust

This type of trust is not funded until a person dies. Assets placed in these trusts at death can go to the surviving spouse and descendants. They are not subject to the estate tax, and their appreciation also may not be subject to estate taxation.

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