Estate Tax: What Families Should Know

Plenty of Palm Beach families assume that because Florida is famously tax-friendly, estate taxes are someone else’s problem. That assumption is exactly where the trouble starts. Below are the mistakes we see most often when affluent households here misunderstand how estate tax actually works.

Mistake #1: Thinking Florida Charges an Estate Tax

Good news first: Florida has no state estate tax and no inheritance tax. The state constitution and statutes simply don’t impose one, and the old “pick-up” estate tax tied to a federal credit was phased out years ago. So when a neighbor in Palm Beach warns you about “Florida death taxes,” they’re mistaken. The real exposure for high-net-worth families is the federal estate tax, which is a separate animal entirely.

Mistake #2: Forgetting the Federal Estate Tax Still Applies

The federal estate tax applies to the value of everything you own at death, real estate, brokerage accounts, business interests, life insurance you control, and more. There is a generous lifetime exemption amount, and only estates above that threshold owe federal tax. The catch in Palm Beach is that waterfront homes, art, and concentrated stock positions can push an estate over the line faster than people expect. Because exemption amounts change with legislation, never rely on a figure you heard a few years ago, confirm the current number before assuming you’re safe.

Mistake #3: Ignoring Portability Between Spouses

Married couples often waste one spouse’s exemption simply by not making a timely election. “Portability” lets a surviving spouse use the deceased spouse’s unused federal exemption, but it generally requires filing a federal estate tax return after the first death, even if no tax is owed. We’ve met Palm Beach widows and widowers who lost millions in shelter because no one filed that return on time. This is one of the costliest oversights in the entire process.

Mistake #4: Confusing Probate Cost With Estate Tax

Families sometimes blur two different concerns. Estate tax is about what the government takes; probate is about the court process of transferring assets. In Florida, estates move through either summary administration (for smaller estates or after a long waiting period) or formal administration under the Florida Probate Code (Chapters 731 through 735). Avoiding probate through a revocable trust under Chapter 736 can save time and privacy, but it does not by itself reduce federal estate tax. Treat them as two separate planning goals.

Mistake #5: Overlooking Florida’s Homestead Protection

Your Palm Beach homestead enjoys powerful protection under Article X, Section 4 of the Florida Constitution, both from most creditors and through restrictions on how it can pass at death. But homestead rules can complicate your plan if you also have a spouse and minor children, because the constitution limits how you may leave the property. Many families draft a will assuming they can freely give the house to anyone, only to discover the homestead provisions override their wishes.

Mistake #6: Treating the Plan as Permanent

Tax law shifts, property values in Palm Beach climb, and families grow. A plan that comfortably sat under the exemption a decade ago may not today. Review your documents after any major change in the law, your assets, or your family.

A Note Before You Act

Estate tax planning blends federal tax rules with Florida-specific homestead, elective share, and probate law, and the details matter enormously. Before relying on anything here, speak with a licensed Florida estate planning attorney who can review your particular situation in Palm Beach and design a plan that fits.