When families begin thinking about estate planning, one of the first questions that often arises is: Will taxes reduce what I leave behind? This is an important consideration, especially when planning for children, grandchildren, or charitable causes.
The good news for Palm Coast residents is that Florida does not impose an inheritance tax or an estate tax. However, federal estate tax rules apply to everyone across the country. These rules are set to change in the near future, which makes planning today more valuable than ever.
Palm Coast tax planning is about more than just dollars. It’s about peace of mind. With a clear plan in place, you can ensure your legacy is managed according to your wishes, while helping loved ones avoid unnecessary stress.
Does Florida Have an Inheritance or Estate Tax?
Florida is one of the most tax-friendly states when it comes to inheritance and estate matters. Here’s what that means for families:
- No inheritance tax. Heirs do not owe the state tax on money or property they receive.
- No state estate tax. Florida does not add its own estate tax on top of federal requirements.
- No state income tax. This benefit extends beyond estate matters and makes Florida an attractive place to retire.
By contrast, some states impose taxes on heirs or estates at the state level, even on relatively modest inheritances. Florida residents avoid these additional costs.
What About Federal Estate Taxes?
While Florida does not impose its own inheritance or estate taxes, federal estate taxes may apply depending on the size of an estate.
As of 2023, the federal exemption is $12.92 million per person (double for married couples). Estates that exceed this threshold may be subject to federal estate tax.
Scheduled Changes in 2026
Current law provides that these exemption amounts will be reduced starting in 2026. The new exemption will be roughly half of today’s limit, adjusted for inflation.
This means that families who are under the exemption now may find themselves subject to estate taxes in the future, especially as property values and investments grow. Reviewing your estate plan before these changes take effect can make a significant difference.
Palm Coast Tax Planning Strategies
There are many strategies available to reduce or even eliminate future tax exposure. An estate planning attorney can help determine which approaches best align with your goals and family circumstances.
Annual Gifting
You can give a certain amount each year, currently $18,000 per person ($36,000 for married couples), without using any of your lifetime exemption. Over time, this can reduce the size of your taxable estate while allowing you to support loved ones during your lifetime. Read more in our blog, Gifting as a Smart Strategy for St. Augustine High Net Worth Planning
Educational and Medical Expenses
Payments made directly to schools for tuition or directly to healthcare providers for medical costs do not count as taxable gifts. This is a powerful way to support children and grandchildren while reducing your estate.
Trust Planning
- Spousal Lifetime Access Trust (SLAT): Allows a spouse to access trust income during their lifetime, while moving appreciating assets outside of the taxable estate.
- Grantor Retained Annuity Trust (GRAT): Lets you transfer assets and still receive annuity payments for a set period, with remaining growth passing to heirs.
- Intentionally Defective Grantor Trust (IDGT): Keeps future appreciation out of your taxable estate, while you cover the income taxes on trust assets.
These tools may sound technical, but with guidance from a Palm Coast tax planning attorney, they can be designed to fit seamlessly into your overall estate plan.
Why Palm Coast Families Should Plan Ahead
Palm Coast is known for its quality of life. With miles of coastline, a welcoming community, and a relaxed pace, it’s a great place to spend the golden years of your life. However, financial security doesn’t happen automatically.
Proactive Palm Coast tax planning helps ensure your loved ones are cared for and your legacy is preserved.
Planning ahead offers important benefits:
- Prevents unnecessary tax exposure in the future.
- Creates clarity for heirs, reducing stress during an already difficult time.
- Ensures your wishes are honored without confusion or delay.
- Makes use of today’s higher exemptions before the law changes.
No matter the size of your estate, thoughtful planning helps your family focus on what truly matters. Read more in our blog, Planning Ahead in Palm Coast: Estate and Tax Considerations for Every Stage of Life
Key Takeaways
- Florida has no inheritance or estate tax.
- Federal estate taxes may apply depending on estate size.
- Exemption amounts are scheduled to decrease in 2026.
- Annual gifting, direct educational or medical payments, and trusts are common strategies for reducing exposure.
- Palm Coast tax planning today provides peace of mind for you and security for your family.
Work on Your Family’s Tax Planning Today
At E.P.P.G. Law of St. Johns, we believe estate planning is not just about numbers; it’s about people. Families in Palm Coast and St. Augustine deserve a plan that is as unique as they are.
Attorney Heather Maltby, along with our caring team members, will take the time to get to know your family, explain your options in clear language, and craft a plan that reflects your values and priorities. Whether you want to review an existing plan or create one for the first time, we are here to guide you every step of the way.
References: Kiplinger (Oct. 12, 2023). States That Won’t Tax Your Death and CPA Practice Advisor (June 13, 2024). A Crucial Window for Estate Planning: Preparing for 2026 Changes