Estate tax and gifting strategies for Florida residents center on one fortunate fact: Florida imposes no state estate tax and no state gift tax, so the only transfer tax most families face is the federal estate and gift tax, which in 2026 carries a $15 million per-person lifetime exemption. Gifting strategies use the annual exclusion ($19,000 per recipient in 2026) and the lifetime exemption to move wealth out of a taxable estate during life. For blended families and second marriages here in Palm Beach County, the harder problem is rarely the tax bill itself — it is making sure the people you love are actually provided for after you are gone.
I have sat across the conference table from a lot of second-marriage couples in West Palm Beach. Almost none of them walked in worried about the federal estate tax. What kept them up at night was a quieter fear: that one branch of the family would be accidentally disinherited, or that the surviving spouse and the children from a prior marriage would end up fighting over the house on Flagler Drive. The tax planning and the family planning are two sides of the same instrument. Done right, they reinforce each other. Done carelessly, an aggressive gifting plan can leave a surviving spouse exposed or hand an unintended windfall to the wrong set of kids.
Florida Has No Estate Tax — But Federal Rules Still Apply
Florida repealed its estate tax years ago, and the Florida Constitution (Article VII, Section 5) effectively prohibits the state from levying one beyond what federal law allows as a credit — a credit that no longer exists. The practical result: there is no Florida estate tax return, no Florida inheritance tax, and no Florida gift tax. This is a genuine planning advantage and one of the reasons retirees relocate here from high-tax states like New York and New Jersey.
The federal estate and gift tax is a different animal. For 2026, the lifetime exemption is $15 million per person, or $30 million for a married couple. That figure was made permanent and indexed for inflation by the One Big Beautiful Bill Act signed in July 2025, which removed the “sunset” that had been scheduled to cut the exemption roughly in half at the end of 2025. Above the exemption, the top federal rate is 40%.
Because $15 million shelters the overwhelming majority of Florida estates, most of my clients will never owe a dime of federal estate tax. That does not make gifting irrelevant. Gifting is still a powerful tool for asset protection, for helping family during your lifetime, for shifting appreciation off your balance sheet, and — critically for blended families — for treating children evenly and transparently while you are alive to explain your reasoning.
The Annual Exclusion: The Workhorse of Gifting Strategy
The federal annual gift tax exclusion lets you give up to $19,000 (2026 figure) to any number of recipients each year without filing a gift tax return and without touching your lifetime exemption. There is no limit on the number of recipients.
For a married couple, “gift splitting” doubles that to $38,000 per recipient. A husband and wife can together give $38,000 to each of their children, each grandchild, and any other individual, every single year. Spread across a large blended family, the numbers add up quickly.
- Annual exclusion gifts — up to $19,000 per recipient ($38,000 per couple) with no return required.
- Direct tuition payments — paid straight to the school or university, unlimited and exclusion-free under IRC Section 2503(e).
- Direct medical payments — paid straight to the provider, also unlimited and exclusion-free.
- 529 plan superfunding — front-load up to five years of annual exclusion gifts into a college savings plan in a single year.
Those tuition and medical exclusions are underused. If you are paying a grandchild’s private-school tuition or a stepchild’s surgery, paying the institution directly keeps it entirely outside the gift tax system — on top of your annual exclusion. In a blended family, this can be a discreet way to support stepchildren without creating friction over the “main” inheritance.
Lifetime Gifting: Using the $15 Million Exemption While It Is Generous
Gifts above the annual exclusion are not automatically taxed. They simply draw down your lifetime exemption and require a federal gift tax return (Form 709) to track the usage. With a $15 million exemption, a Florida resident can make very large lifetime gifts before any tax is actually due.
The strategic appeal of lifetime gifting is removing future appreciation from your estate. If you give a $2 million parcel today and it grows to $4 million, that $2 million of growth happens in your child’s hands, not yours — outside your taxable estate. For families holding Florida real estate, closely held businesses, or concentrated stock, this matters even when the current exemption feels comfortable.
One caution I give every client: gifting away an appreciated asset means giving away its cost basis too. The recipient takes your basis (carryover basis) instead of the stepped-up basis they would receive if they inherited it at your death. For low-basis Florida real estate or long-held securities, that lost step-up can cost more in capital gains tax than the estate tax you were trying to avoid. The right answer depends on your numbers, not on a rule of thumb.
Why Blended Families Need More Than a Simple “I Love You” Will
Here is the trap I see most often in second marriages. Spouses leave everything to each other outright, assuming the survivor will “do the right thing” and pass assets to both sets of children. But once the first spouse dies, the survivor owns everything free and clear — and is free to rewrite the estate plan, remarry, or spend it all. The deceased spouse’s children can be quietly and completely cut out, with no legal recourse.
Florida law adds its own wrinkles. The surviving spouse has an elective share equal to 30% of the elective estate under Florida Statutes Chapter 732, which a spouse can claim even if the will says otherwise. Florida’s homestead rules (Article X, Section 4 of the Florida Constitution) sharply restrict how you can devise your primary residence if you are survived by a spouse or minor child — you cannot simply leave the homestead to your kids and bypass your spouse. These protections are powerful and they are not optional. A gifting and estate plan that ignores them will collide with Florida law at the worst possible moment.
For blended families, the better-built tools usually include:
- A marital trust or QTIP trust — provides income and security for the surviving spouse for life, then directs the remaining principal to your children. You decide the ultimate beneficiaries; the survivor cannot redirect them.
- A lifetime QTIP or credit shelter structure — uses a deceased spouse’s exemption efficiently while still protecting the survivor.
- Lifetime gifts to your own children — made now, with your hand on the wheel, so each child is treated as you intend rather than at a stepparent’s later discretion.
- A clear, written prenuptial or postnuptial agreement — coordinated with the estate plan so the elective share and homestead rules do not derail your intentions.
I often pair these with annual exclusion gifting so that, year by year, each child and stepchild sees tangible, even-handed treatment. Transparency during life prevents litigation after death. Probate fights in blended families are rarely about money alone — they are about who felt forgotten.
Trust-Based Strategies Worth Knowing
Beyond the basic marital trust, several specialized trusts serve Florida families with larger estates or particular protection goals. Irrevocable life insurance trusts (ILITs) keep policy proceeds outside the taxable estate. Spousal lifetime access trusts (SLATs) let one spouse use exemption while preserving indirect access through the other. For income or asset-protection planning, particularly where a beneficiary relies on needs-based benefits, a pooled income trust can preserve eligibility while still using assets for the beneficiary’s care — a structure our colleagues handle frequently in New York, and one whose mechanics are worth understanding even for Florida families with out-of-state ties.
Real estate deserves its own conversation. Transferring a home while retaining the right to live in it — through a retained life estate — can move the property toward the next generation while keeping the parent in place for life. In Florida, this has to be reconciled with our homestead protections and with the survivorship rights of a spouse, so the strategy that works cleanly in New York may need adjustment here. The principle travels; the execution is local.
A Practical Sequence for Palm Beach Residents
When a second-marriage couple comes in, I generally work through gifting and tax strategy in this order:
- Map the family first, the assets second. Who are the children, the stepchildren, the prior spouses, and what was promised to whom?
- Confirm whether the federal exemption is even in play. For most, $30 million per couple ends the estate-tax conversation — and shifts focus to fairness and basis.
- Layer in annual exclusion and direct-payment gifts to support family now without using exemption.
- Reconcile every plan with Florida’s elective share and homestead rules before, not after, drafting.
- Use trusts to lock in your chosen beneficiaries so no later remarriage or change of heart can override them.
Estate and gift tax law is federal, but the way it lands on a Florida family is shaped by our state’s homestead and spousal-protection rules. That is exactly why a generic, out-of-state plan so often fails here. If you want help building a strategy that fits your blended family and your Florida property, our firm’s Florida estate planning team can walk you through it. You can also review our overview of Florida wills and what to expect from Florida probate, or simply contact our Palm Beach office to start the conversation.
The goal is not just a smaller tax bill. It is a plan that holds together — legally and emotionally — when your family needs it most.
Frequently Asked Questions
Does Florida have an estate tax or inheritance tax in 2026?
No. Florida has no state estate tax, no inheritance tax, and no gift tax. The Florida Constitution (Article VII, Section 5) prevents the state from imposing an estate tax beyond a now-defunct federal credit. The only transfer tax most Florida families face is the federal estate and gift tax, which carries a $15 million per-person exemption in 2026.
How much can I give away tax-free in 2026?
You can give up to $19,000 per recipient in 2026 under the annual gift tax exclusion, with no limit on the number of recipients and no gift tax return required. Married couples can split gifts and give $38,000 per recipient. On top of that, tuition and medical expenses paid directly to the institution or provider are unlimited and exclusion-free. Larger gifts simply draw down your $15 million lifetime exemption.
Why is gifting risky for blended families and second marriages?
Leaving everything outright to a new spouse can unintentionally disinherit your own children, because the survivor can later rewrite the plan or remarry. Florida’s elective share (30% of the elective estate under Chapter 732) and homestead rules also constrain how you can transfer property. A QTIP or marital trust lets you provide for your spouse while guaranteeing that your children remain the ultimate beneficiaries.
Should I gift appreciated property during my lifetime?
Not always. Lifetime gifts remove future appreciation from your estate, but the recipient takes your original cost basis (carryover basis) rather than the stepped-up basis they would receive if they inherited the asset at your death. For low-basis Florida real estate or long-held stock, the lost step-up can cost more in capital gains tax than any estate tax saved. The answer depends on your specific numbers.
Do I need to file a gift tax return for annual exclusion gifts?
No. Gifts at or below the $19,000 annual exclusion per recipient generally require no IRS Form 709. You only need to file a gift tax return when a gift to one person exceeds the annual exclusion, when you elect gift-splitting with a spouse, or when you use part of your lifetime exemption. Even then, filing tracks exemption usage rather than triggering an actual tax in most cases.
For more on our Florida practice, see our overview of estate planning in Palm Beach. Morgan Legal Group's affiliated New York office also handles Medicaid asset protection trusts.