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Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank, Member FDIC.
M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.
WTIA, WFMC, and WTIM are investment advisers registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, and WTIM is also available on the SEC's website at adviserinfo.sec.gov. 
Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.
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Investment and Insurance Products   • Are NOT Deposits  • Are NOT FDIC Insured  • Are NOT Insured By Any Federal Government Agency  • Have NO Bank Guarantee  • May Go Down In Value  
Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance the any investment, financial or estate planning strategy will be successful.

While Florida is commonly known for its year-round sunshine and beautiful sandy beaches, it’s also home to many tax and financial advantages as well. Generally considered a low-tax state, Florida residents likely enjoy reduced tax obligations compared to those of many other states. Florida does not impose a personal income tax, an inheritance tax, a gift tax, or an intangible personal property tax. Florida tax laws are governed under the Florida Constitution and would require a super-majority to evoke change. Some of the tax features of living in Florida include:

No state income tax
The assessment of an individual state income tax is prohibited by the Florida Constitution, so residents are free from state income tax liabilities. However, beware of the “snowbird tax” if you own property in another state as well. States such as New York, for example, consider you a resident for state income tax purposes if you still have a home in the state and you spend approximately 184 days or more in New York during the tax year. In addition, you may be subject to a personal income tax in New York for any taxable income derived from or connected with sources in that state, such as rental income from a New York-based property. Other states are becoming more aggressive and are mirroring New York’s tax revenue department. 

No state estate taxes
While a Florida estate tax return must be submitted to the state of Florida for estates where a federal estate tax return is required, there is no separate Florida estate tax due. In contrast, many of the northeastern states have “decoupled” from the federal estate tax and still impose a state estate tax on much lower asset values. For example, even though the federal government charges an estate tax on assets valued over the exemption amount of $12.06 million per person (2022), the state of Massachusetts charges on assets valued over $1 million. Additionally, Florida does not assess an inheritance tax, which some states impose. 

Homestead advantage of living in Florida
Every Florida resident who owns and resides on real property in Florida on January 1 and makes the property his or her permanent residence or the permanent residence of his or her dependent is eligible to receive a homestead exemption that would decrease the property’s taxable value by as much as $50,000. While the exemption is nontransferable, a homeowner may be able to transfer or “port” all or part of the assessment difference to a new Florida homestead. This exemption qualifies the home for the Save Our Homes assessment limitation, which states that after the first year a home receives a homestead exemption and the property appraiser assesses it at just value, the assessment for each following year cannot increase more than 3 percent or the percent change in the Consumer Price Index (CPI), whichever is less. Even if the value of your home decreases, the assessed value may increase, but only by this limited amount. The assessed value will never be more than the just value of your home. (www.floridarevenue.com)

Creditor protection in Florida
Florida’s Constitution also provides protection for homeowners through its Homestead Law. This law protects Florida residents who own “homestead” property from losing that property to a creditor or any lien holder. Homestead property is defined as real property that an individual owns and lives in and that is considered his or her primary residence. Vacation property and second homes are not considered homestead property. In essence, a Florida resident cannot lose his or her home because of unpaid debts, regardless of the market value of the home. 

The only exception to this rule is if the creditor has provided financing for the property in the form of a mortgage, equity line, or other type of home loan; in that case the creditor can foreclose your interests in the home in order to receive payment for the loan. In addition to protecting your home, Florida also offers additional asset protection opportunities for the following: assets held by husband and wife as tenants by the entireties; qualified deferred compensation plans, which include IRAs and 529 college plans; pension and profit sharing plans; life insurance proceeds; and annuities. All of these assets cannot be touched by claims of creditors in Florida, affording residents’ protection from frivolous lawsuits, accidents, and other financial tragedies. Check with your attorney or accountant for other asset protection opportunities.

Changing your domicile
Many states with high personal income taxes may be aggressive in seeking to challenge your claim of permanent Florida residency. The more ties you have to Florida, the more likely your Florida domicile will be respected. Some of the general steps that a state considers when determining residency include, but are not limited to:

  • Filing a Declaration of Domicile to establish residency
  • Obtaining a driver’s license
  • Registering your automobiles and obtaining license plates
  • Registering to vote and voting in the state
  • Updating your will, trust(s), power(s) of attorney, and other legal documents to conform with state law and executing those documents in the state with a  state-licensed attorney
  • Listing the state as your residence on all deeds and other legal documents
  • Establishing bank and investment accounts in the state and transferring your assets to those  accounts
  • Opening and maintaining a safe deposit box in the state
  • Notifying Social Security, Medicare, etc. of your address change
  • Having all mail delivered to your new address

Prior to beginning the process of changing your residency, you should discuss the pros and cons with your attorney and accountant in context of your overall financial, tax, and estate planning situation. Changing your permanent state of domicile is an important decision and should be carefully considered in order to make an informed decision.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. This article is not designed or intended to provide financial, tax, legal, accounting, investment or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.

There is no assurance that any investment, financial, or estate planning strategy will be successful. These strategies require consideration for suitability of the individual, business, or investor.

Sources: Home | Internal Revenue Service ; State of Florida.com | Florida Tax Guide

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