The Benefits of Establishing Florida Residency and Its Impact on Your Estate

If you're considering making Florida your permanent home, you’re not alone. According to Consumer Affairs, “… in 2023, the state’s population grew by 1.6%, or 365,205 residents, the second highest population growth in the U.S.”

Along with the sunshine, golf courses and beaches, Florida offers numerous financial and legal benefits, particularly when it comes to estate planning.

Let’s look at why establishing Florida residency can be a smart move and how it can impact your estate.

There are Many Financial Advantages of Florida Residency

No State Personal Income Tax
Florida is one of the few states that does not impose a state personal income tax. This can lead to significant savings, especially for retirees with pensions, Social Security income, or investments.

No Estate or Inheritance Tax
Unlike many other states, Florida does not levy estate, gift or inheritance taxes, making it an appealing choice for individuals looking to maximize the assets they pass on to their heirs. Florida residents are still subject to federal estate and gift taxes.

A Florida resident who dies may still owe estate tax on a property they owned located in another state, depending on that state’s tax laws, how the estate plan was designed, and if their Florida residency is challenged.

Homestead Exemption
Florida’s homestead exemption has four benefits and are portable to future Florida properties you may reside in. It offers Floridians creditor protection for your primary residence. There are exemptions, so be sure to pay your taxes, mortgages/credit lines, home repair companies and contractors, and be aware that certain pre-dated liens on condos and HOA’s can be a problem.

The "Save Our Homes" cap limits annual property tax increases on any homesteaded properties, providing long-term savings.

An exemption of up to $50,000 is available to all qualifying residents. Other smaller exemptions are available through the county’s Property Appraisers office.

There are protections built into the law for spouses and minor children. It is important to consult with a Florida Trust Officer or an estate planning attorney to see if your plans will work.

What are the Legal Benefits in Florida for Estate Planning?

Asset Protection
Florida laws may provide robust protections for certain assets, such as life insurance proceeds (depending on how the beneficiary designations are set), annuities, retirement accounts, and even may shield some assets during bankruptcy proceedings.

Simplified Estate Settlement Process
Florida’s streamlined probate and trust laws can make settling an estate more straightforward and less expensive, particularly for those who utilize tools like revocable trusts or proper beneficiary designations.

Homestead Property Protections
Florida’s homestead laws not only protect your primary residence from creditors but also ensure the property can pass seamlessly to heirs under specific circumstances.

The First Step is Establishing Florida Residency

To enjoy these benefits, you must officially establish Florida as your domicile. Here’s how:

File a Declaration of Domicile with any county Clerk of Court, either in person or online. Simply purchasing a house in Florida doesn’t necessarily make you a resident. A Declaration of Domicile is a legal document that shows intent to make Florida your permanent home

Obtain a Florida driver’s license or ID card and register your vehicle(s) - cars, boats, golf carts, R.V.s - in Florida. Be careful how these are titled. The sole owner should be the sole driver for extra protection, if marital assets are titled properly!

Register to vote in Florida. Before you can register to vote, you’ll need to get your Florida driver’s license or ID card first. You can often do this at the DMV when you apply for your driver’s license.

Update your address on financial accounts, Social Security checks and tax filings. National bank accounts opened in other states can be problematic if you just change the address.

Is My Estate Plan Created in Another State Affected by Moving to Florida?

Validity of Out-of-State Estate Documents

Estate planning documents created in another state are valid in Florida, if executed properly and comply with the laws of the originating state, under the Full Faith and Credit Clause of the U.S. Constitution. However, nuances in Florida law may mean those documents are not optimized for full use in Florida.

Reviewing Estate Documents

Having your documents reviewed by a professional, such as a Crews Bank & Trust Wealth Strategist or a Florida attorney, is sound advice. Florida has unique laws and benefits that may necessitate updates to ensure full compliance and take advantage of local protections.

Necessary Updates for Florida Residency

• Wills or Trusts: Florida has specific laws regarding homestead property and spousal rights that may differ from other states. (Be sure your prenup will work!) Updating these documents ensures alignment with state statutes.
• Powers of Attorney: Florida requires certain powers to be specifically listed out for them to be valid under Florida law. Documents from other states might not include these powers. The execution standard for powers of attorney in Florida matches how Florida deeds are executed.
• Advanced Directives: Florida's requirements for health care surrogates and living wills are unique, and it’s best to use forms familiar to Florida healthcare providers.
• Revocable Living Trusts: While interpreted based on the state where they were created, some provisions might conflict with Florida law or fail to take advantage of Florida benefits.
• Homestead Designation: Florida offers robust creditor protections and significant property tax benefits for homestead properties. Proper designation and alignment with Florida statutes are critical for maximizing these benefits.

Establishing Florida residency offers compelling financial and legal advantages, particularly for estate planning. Whether you’re looking to reduce taxes, protect assets, or simplify the transfer of wealth, Florida provides a favorable environment. 

If you have questions about your estate plan prepared in another state, documents prepared several year ago, or have questions about the information in this blog, we can help! The Crews Bank Trust & Wealth team offers free seminars on Estate Planning and on Florida Residency. Consider joining one live or online via WebEx. Our experienced Wealth Strategists will answer your questions and share valuable tips. They are also available to schedule free 30-minute sessions to review your existing documents if you would prefer a personal, one-on-one discussion.

By working with our experienced Trust & Wealth Management team or an estate planning attorney familiar with Florida law, you can ensure that your estate plan fully capitalizes on these benefits while reflecting your unique needs and goals. 

As a community bank, we seek ways to enrich the lives of our customers and our communities. We share this solely for informational purposes and this information is not a substitute for legal or tax advice. Crews Bank & Trust and its representatives are unable to provide legal or tax advice; please consult an appropriate advisor regarding such matters.