Florida’s lack of a state estate tax makes it a haven for retirees and high-net-worth individuals in Miami, Coral Gables, and Key Biscayne. However, many Floridians, especially snowbirds, own assets in states like New York or Connecticut, where 2025 death tax changes could significantly impact estate planning. With the federal Tax Cuts and Jobs Act (TCJA) exemption set to drop to approximately $7 million in 2025, multi-state assets require careful planning to minimize taxes and avoid probate complications. For Miami residents with vacation homes or investments out of state, understanding these changes is critical to protecting your legacy.
This article explores 2025 state death tax changes, their impact on Florida residents with multi-state assets, and practical strategies to optimize your estate plan. Whether you own a condo in Brickell or a second home in the Hamptons, these insights will help you navigate the evolving tax landscape.
Understanding State Death Taxes and Florida’s Advantage
Unlike Florida, which has no state estate or inheritance tax, several states impose death taxes that affect estates with assets located within their borders. In 2025, states like New York and Connecticut are updating their tax regimes, impacting Floridians with multi-state holdings:
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New York: The 2025 estate tax exemption is projected at $7.1 million, with rates up to 16% on estates above this threshold. Recent reforms tighten rules on out-of-state owners, increasing tax exposure for Florida snowbirds.
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Connecticut: The only state with a gift tax, Connecticut’s 2025 estate tax exemption aligns with the federal $7 million, with rates up to 12%. New rules may limit exemptions for non-residents with property.
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Federal Context: The TCJA sunset reduces the federal exemption to ~$7 million, compounding state tax burdens for estates with assets in multiple jurisdictions.
For example, a Key Biscayne resident with a $3 million New York vacation home could face $480,000 in New York estate taxes, plus federal taxes if their total estate exceeds $7 million. Florida’s lack of a state tax offers relief, but multi-state assets demand strategic planning.
Challenges for Florida Residents in 2025
Owning assets in multiple states creates unique estate planning challenges:
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Ancillary Probate: Out-of-state properties require separate probate proceedings, delaying distributions and increasing costs for Miami families.
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State Tax Liabilities: States like New York or Connecticut tax assets like real estate or businesses located within their borders, regardless of your Florida residency.
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Valuation Disputes: Differing state rules for valuing assets (e.g., a Connecticut rental property) can complicate tax filings.
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2025 Reforms: Florida’s probate amendments (HB 923) and FUFIPA updates streamline local processes but don’t address multi-state complexities.
5 Strategies to Plan for Multi-State Assets in 2025
To minimize state death taxes and streamline estate administration, consider these Florida-specific strategies.
1. Use Revocable Living Trusts to Avoid Ancillary Probate
Transfer out-of-state properties to a revocable living trust to bypass ancillary probate in states like New York or Connecticut.
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How It Works: Title assets (e.g., a Hamptons vacation home) to a trust, naming beneficiaries and a successor trustee. Upon death, assets transfer directly, avoiding probate in multiple states.
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Benefit: Saves time and costs for families in Coral Gables, preserving estate value.
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Action Step: Consult a Miami probate attorney to draft a trust compliant with Florida Statute 736.0403 and out-of-state laws.
2. Leverage Florida’s Homestead Protections
Maximize Florida’s homestead exemptions for your primary residence while addressing out-of-state tax exposure.
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How It Works: Ensure your Miami or Key Biscayne home qualifies for homestead protections (e.g., creditor exemptions, tax caps), then use trusts or gifting for out-of-state assets.
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Benefit: Shields your Florida property from taxes and creditors, reducing overall estate tax burden.
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Action Step: Work with a Florida estate planning lawyer to verify homestead status and coordinate multi-state planning.
3. Gift Assets Before the 2025 TCJA Sunset
Use the current $14.18 million federal gift tax exemption (2025 estimate) to transfer out-of-state assets tax-free before the exemption drops.
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How It Works: Gift a Connecticut property or business interest to heirs or an irrevocable trust, reducing your taxable estate and avoiding state death taxes.
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Benefit: Locks in the higher exemption, saving up to $480,000 in New York taxes for a $3 million asset.
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Action Step: Engage a Miami attorney to structure gifts compliant with Florida and out-of-state tax laws.
4. Consider Qualified Personal Residence Trusts (QPRTs)
Use QPRTs to transfer out-of-state vacation homes at a reduced gift tax value, minimizing state tax exposure.
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How It Works: Transfer a New York beach house to a QPRT, retaining the right to use it for a term (e.g., 10 years). After the term, it passes to heirs, potentially avoiding state estate taxes.
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Benefit: Reduces taxable estate size, critical for Sunny Isles Beach residents with multi-state holdings.
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Action Step: Partner with a Florida probate lawyer to draft a QPRT compliant with IRS and state regulations.
5. Coordinate with Multi-State Tax Professionals
Work with tax experts in each state to ensure accurate filings and minimize tax liabilities.
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How It Works: Collaborate with a New York or Connecticut tax advisor to file state returns, while your Miami attorney aligns with Florida’s 2025 probate rules.
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Benefit: Avoids penalties and disputes, streamlining administration for estates in Brickell or Coconut Grove.
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Action Step: Consult a Miami estate planning attorney to coordinate multi-state tax and probate strategies.
Why a Miami Probate Attorney is Essential for Multi-State Planning
Florida’s unique legal landscape—no state estate tax, homestead protections, and 2025 FUFIPA updates—requires local expertise to manage multi-state assets. A Miami probate attorney can:
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Draft trusts to avoid ancillary probate in states like New York or Connecticut.
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Navigate Florida’s 2025 probate reforms (HB 923) for efficient administration.
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Coordinate with out-of-state professionals to minimize tax exposure.
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Resolve disputes among heirs over multi-state assets, common in Palmetto Bay.
For example, a Doral snowbird faced $200,000 in New York estate taxes due to poor planning. A Miami attorney used a trust to eliminate ancillary probate, saving $50,000 in costs.
Protect Your Multi-State Assets in 2025
With state death tax changes and the TCJA sunset looming, Florida residents with multi-state assets must act now to minimize taxes and streamline probate. By using trusts, gifting strategies, and expert coordination, you can protect your legacy across jurisdictions.
Ready to plan for multi-state assets? Contact our experienced Miami probate attorneys for a consultation. We’ll craft a tailored plan to navigate 2025 tax changes. Schedule your appointment today at estateplanningattorney.us/consultation.
