USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz and Christine Tsai, Pillsbury Winthrop Shaw Pittman LLP
the parties as a marital asset; 4) assets and liabilities excluded from marital assets and liabilities by valid written agreement of the parties, and assets acquired and liabilities incurred in exchange for those assets and liabilities; and 5) any liability incurred by forgery or unauthorised signature of one spouse signing the name of the other spouse. Florida’s Constitution restricts the ability of a married person to transfer a primary residence without the consent of the owner’s spouse. As mentioned above, Florida excludes assets and liabilities from the definition of marital assets if there is valid written agreement by the parties, including prenuptial and postnuptial agreements, which may limit or amend the distribution of property to a spouse. Nuptial agreements may include, but are not limited to, many matters: 1) parties’ rights to assets/liabilities; 2) the right to buy, sell, or transfer property; 3) distri - bution of property upon separation or death; and 4) right to alimony. These agreements must be: 1) written and signed by both parties voluntarily; 2) reasonable; and 3) made after fair disclosures are available to the other party. In addition, upon divorce, each spouse may be enti - tled to a share of the homestead property. If the par - ties agree to sell the property or the court orders a sale of the property, then the “Save Our Homes” tax exemption (see 1.2 Exemptions ) can be divided 50/50 between the two parties, and each can transfer, or “port”, his or her part of the tax exemption to a new homestead. Prior agreements can also be used to ensure that the homestead property is properly divid - ed upon divorce. Note that Florida also allows spouses to use a Florida community property trust, which is akin to a commu - nity property regime. This is discussed in more detail
to the donee (ie, the same basis as the donor had in the asset). Additionally, the Florida Community Property Trust Act affords married couples potential positive income tax treatment of trust assets at the first spouse’s passing. Under the Act, married couples can use a community property trust which is akin to a community property regime. Assets transferred to a Florida community property trust can result in all of the assets receiving a step-up in tax basis upon the first spouse’s death, rather than only allowing a 50% step-up in income tax basis. This is unusual in the United States and valu - able, as it can reduce capital gains tax on the entire property. 2.6 Transfer of Assets: Vehicle and Planning Mechanisms There are various vehicles and planning mechanisms that can facilitate the transfer of wealth to younger generations in a transfer tax efficient manner. These include, but are not limited to the following: • Intentionally Defective Grantor Trust – an IDGT is an irrevocable trust created by one or more indi - viduals (the “grantor”) to hold assets usually for the benefit of the grantor’s family members, most commonly children and other descendants. The IDGT is a “grantor trust” meaning that the grantor pays all of the income taxes on the trust during their lifetime. The grantor can transfer appreciat - ing assets, such as stocks, real estate, or closely held business entities to the IDGT via a gift. The gift uses a portion of the grantor’s available gift exemption (currently USD13.99 million in 2025); however, if properly structured, it will result in no gift taxes due so long as the gift value is less than the available exemption amount. The gifted assets then grow in the IDGT gift and estate tax free for as long as they remain in trust. Certain jurisdictions, including Florida, permit trusts to exist for 1,000 years and can shield the assets from future transfer taxes during such term. These are referred to as “dynasty trusts”. • Grantor Retained Annuity Trust – a GRAT is a trust where the grantor transfers assets, often publicly traded stock, to the trust in exchange for an annual annuity payment for a specific term. Upon the expi -
in 2.5. Transfer of Property . 2.5 Transfer of Property
Property at death generally receives a step-up in basis (ie, to the fair market value of the asset on the date of the decedent’s death). The transfer of property dur - ing life by gift generally results in a carry-over basis
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