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Understanding the Tax Consequences: Wills vs. Trusts in Florida

Updated: Jul 28, 2023


When it comes to estate planning in Florida, considering the tax consequences is crucial for preserving your wealth and ensuring an efficient transfer of assets to your beneficiaries. Wills and trusts are two common estate planning instruments with different tax implications. In this blog post, we will explore the tax consequences associated with wills and trusts in Florida to help you make informed decisions for your estate plan.



Estate Taxes: Estate taxes are imposed on the value of a deceased person's estate before it is distributed to beneficiaries. In Florida, the tax consequences differ between wills and trusts:

  1. Wills: With a will, the estate goes through the probate process in Florida, and estate taxes, if applicable, are calculated based on the total value of the assets passing through probate. It's important to note that Florida does not currently impose a state-level estate tax. However, federal estate taxes may apply if the value of the estate exceeds the federal estate tax exemption threshold. Consulting with a tax professional is crucial to understand the federal estate tax implications.

  2. Trusts: Certain types of trusts, such as irrevocable trusts, can help minimize estate taxes at the federal level. By transferring assets into an irrevocable trust, they are removed from the grantor's taxable estate, potentially reducing the overall estate tax liability. It's important to consult with a tax professional and an attorney at Beckwith Legal experienced in Florida law to ensure compliance with both federal and state regulations.


Income Taxes: Income taxes are another important consideration when comparing wills and trusts in Florida:

  1. Wills: In general, assets passing through a will do not trigger income taxes for the beneficiaries. However, if an estate generates income during the probate process, such as rental income or interest on investments, the estate itself may be subject to income taxes. It's important to consult with a tax professional to understand the potential income tax implications during probate.

  2. Trusts: Trusts may have separate tax identification numbers and may be responsible for filing income tax returns in Florida. The tax consequences depend on the type of trust:

i. Revocable Living Trusts: During the grantor's lifetime, a revocable living trust is typically treated as a pass-through entity for tax purposes in Florida. Income generated by the trust is reported on the grantor's personal income tax return.

ii. Irrevocable Trusts: Irrevocable trusts, such as grantor-retained annuity trusts or charitable trusts, may be subject to their own income tax calculations and filing requirements in Florida. Consulting with a tax professional and an attorney at Beckwith Legal is crucial to understand the specific tax implications of each type of irrevocable trust.



Gift Taxes: When making lifetime transfers of assets, gift taxes may come into play:

  1. Wills: Wills do not typically trigger gift taxes since they only take effect upon the grantor's death.

  2. Trusts: Irrevocable trusts, particularly those used for gifting purposes, can have gift tax implications in Florida. When transferring assets into an irrevocable trust during your lifetime, the value of the gift may be subject to gift taxes. However, there are certain exemptions and strategies available to minimize or eliminate gift tax liability. Seeking advice from a tax professional and an attorney at Beckwith Legal experienced in Florida law is crucial to navigate these complexities.


Understanding the tax consequences of your estate plan in Florida is vital for effective wealth preservation and ensuring the smooth transfer of assets to your beneficiaries. While wills may be subject to estate taxes at the federal level, certain types of trusts, such as irrevocable trusts, can provide opportunities for estate tax minimization. Additionally, both wills and trusts may have income tax and gift tax implications that require careful consideration. To navigate these complexities effectively in Florida, consult with an attorney at Beckwith Legal and a tax professional who can provide guidance tailored to your specific circumstances and Florida tax laws.

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