Attorney
Thoughtful estate tax planning connects what you have built with what you want it to accomplish. The right approach considers family goals, future growth, income taxes, and the control you wish to keep.
Key Takeaways
- The 2026 federal basic estate and gift tax exclusion is $15 million per person, with prior taxable gifts, available spousal exclusion, deductions, and filing requirements affecting the result. Florida currently imposes no estate tax.
- The assets used to fund a gift or trust matter. Appreciated property generally carries its existing tax basis into a lifetime gift, while qualifying inherited property generally receives a basis adjustment at death.
- Advanced planning can address future growth, family governance, creditor concerns, philanthropy, and state taxes as well as the federal estate tax. The structure should serve your goals and work in everyday life.
Clients often begin with a sensible question: How can I pass on more of what I have built? I like to widen the conversation a little. Who should benefit, when should they benefit, and how much flexibility do you want to retain? Once those choices are clear, we can compare the tax consequences of the available paths. Sometimes the answer is a carefully coordinated existing plan. Sometimes a more advanced trust opens useful possibilities.
Begin with the Florida and federal rules
Florida’s estate tax no longer applies to deaths after December 31, 2004, following the federal change that eliminated the credit on which it depended. Federal estate and gift taxes remain relevant, and another state may have a claim based on residence or property located there. Florida residency is therefore a starting point for the analysis, not a complete answer to every tax question.
Understand your available exclusion
The federal gross estate can include investments, real estate, business interests, retirement accounts, and certain life insurance or trust interests. Available deductions may include qualifying debts, administration expenses, charitable transfers, and marital transfers. Lifetime taxable gifts also enter the calculation. For 2026, the basic exclusion is $15 million per person, with inflation adjustments beginning after 2026; the top estate-tax rate is 40 percent. The amount you can pass without federal transfer tax depends on the full calculation, not simply the value listed on a probate inventory.
Married couples should consider portability of the first spouse’s unused exclusion. It generally requires an election on Form 706, even when no estate tax is due. The usual filing deadline is nine months after death, with an available six-month filing extension. Revenue Procedure 2022-32 offers a simplified late-election route within five years for estates that satisfy its conditions, including not otherwise being required to file the return. I coordinate with the return preparer so that the estate plan and the filing decision support each other. For more on the election, see the IRS estate tax questions and portability guidance.
Make lifetime gifts with the whole plan in view
In 2026, qualifying present-interest gifts can use an annual exclusion of $19,000 per recipient. Married donors may be able to combine exclusions, with gift-splitting consent and reporting requirements considered where applicable. Qualifying tuition paid directly to an educational institution and qualifying medical expenses paid directly to the provider have separate exclusions. Marital and charitable deductions also have specific requirements, including special rules for a spouse who is not a U.S. citizen. A larger gift may use remaining lifetime exclusion and require Form 709; gift tax can become payable when the available exclusion is exhausted.
Choose which assets to give
Tax basis is central to that choice. A lifetime gift of appreciated property generally carries the donor’s adjusted basis, while qualifying property acquired from a decedent generally receives a basis based on its estate-tax value, subject to exceptions. Consider a simplified hypothetical: A rental property has an adjusted basis of $120,000 and a value of $900,000. An outright lifetime gift generally carries that $120,000 basis. If the property instead qualifies for a basis adjustment at death when worth $900,000, the beneficiary’s starting basis generally is $900,000. A later sale’s actual gain also depends on its price, expenses, depreciation, and other adjustments. The example illustrates why purchase price alone is not enough to compare the options.
Cash or higher-basis assets may be useful for some gifts because less built-in gain is transferred. For an estate facing transfer tax, moving an asset’s future growth outside the estate may justify accepting carryover basis. Some plans use substitution or other carefully designed powers to preserve flexibility. We compare the likely taxes, access to funds, time horizon, and family objectives before choosing what to fund into a trust.
Coordinate retirement accounts with the estate plan
Traditional retirement accounts generally do not receive the same basis adjustment as ordinary inherited investments; taxable withdrawals are usually income to the recipient. The account may also be included in the owner’s federal gross estate. Many designated beneficiaries must empty an inherited account within ten years, and annual withdrawals may be required during that period. Eligible designated beneficiaries, including some spouses, minor children of the owner, and people with qualifying disabilities or chronic illnesses, have different rules. I work with your tax advisers on the beneficiary plan and any conversion analysis, and prepare appropriate trust provisions when a trust should receive the account.
Include property in other states
A state with an estate or inheritance tax may tax real property located there even when the owner lives in Florida. The applicable thresholds and ownership rules differ. A revocable trust may help with administration without eliminating that tax, and an entity should not be assumed to eliminate it either. I coordinate the property and tax review with appropriate counsel and advisers so that the plan accounts for every relevant jurisdiction.
Plan for a spouse and the next generation
Portability addresses unused federal exclusion; it does not decide who ultimately receives the property. A bypass trust may support a surviving spouse while preserving the first spouse’s chosen beneficiaries and keeping qualifying trust value outside the survivor’s estate. A QTIP trust can qualify for the marital deduction with the required election while directing the remainder to selected beneficiaries, generally with estate inclusion at the survivor’s death. Each choice has consequences for control, administration, income-tax reporting, and basis. Family relationships and the survivor’s needs belong beside the tax projections in that decision.
Give advanced planning a clear purpose
Irrevocable life insurance trusts, spousal lifetime access trusts, grantor retained annuity trusts, and other arrangements serve different purposes. Depending on the design, they may address future appreciation, liquidity, family support, or management as well as transfer taxes. They also require attention to retained rights, funding, income taxes, and administration. The pages on advanced estate planning techniques and irrevocable life insurance trusts explain those choices in more detail.
Bring the advisers and the documents together
My role is to understand the family, design the legal plan, and help carry it into practice. Your CPA, financial adviser, valuation professionals, and other appropriate counsel contribute their own work to the same goal. We consider the projected taxes, who will file returns, how assets will be transferred, and what the trustee or successor will need to do. You should understand the reason for each part of the plan and feel comfortable asking the next question.
If you would like to know whether any of this applies to you, contact my office to arrange a consultation. We can meet in Palm Harbor, in Tampa or St. Petersburg by appointment, or by Zoom or teleconference.