The Short Answer
A Florida Community Property Trust lets a married couple agree to treat what they put inside it as community property, the shared form of ownership used in states like Texas and California. Florida is not naturally a community-property state, so this is a choice you opt into, and couples make that choice for one reason: a potential double step-up in basis when the first spouse dies, which can erase the capital-gains tax on assets that have grown enormously in value. It is a sophisticated move, and it is not for everyone, so let us walk through who it actually helps.
The Problem It Solves
Imagine a couple bought stock, or a rental property, decades ago for $200,000, and today it is worth $1,000,000. That $800,000 of growth is a built-in capital gain, and selling it triggers tax on the gain. Here is where it stings: when one spouse dies, the normal rule resets the basis on only that spouse’s half. The survivor’s half keeps its old, low basis, so selling still owes tax on a big chunk of the growth. For couples who plan to sell appreciated assets after one of them is gone, that is real money lost to tax that better planning could have avoided.
How the Double Step-Up Works
A community property trust changes the math. Because the assets inside it are treated as community property, the law can reset the basis on the entire asset, both halves, at the first spouse’s death, not just the deceased spouse’s share. In the example above, the survivor’s basis could jump from $200,000 to the full $1,000,000, so selling shortly after would owe little or no capital-gains tax on that lifetime of growth. On a large, low-basis asset, the savings can run well into six figures. That is the whole appeal.
You Don’t Have to Live in Florida
This is what makes it a tool for families anywhere, not just Florida residents. The trust needs at least one qualified Florida trustee (a Florida resident or a Florida trust company), but the couple themselves can live in another state. A couple in a high-tax state can reach for Florida’s basis benefit while keeping their home and lives where they are, and because Florida has no state income or estate tax, using the tool does not add a Florida tax bill (curious what your own state’s estate tax costs? compare it with Florida). We always coordinate this with your advisors back home so the pieces fit your whole picture.
The Honest Caveat
We will not oversell this. Florida’s statute is clear about allowing these trusts, but the IRS has not issued direct guidance confirming that an opt-in community property trust delivers a double step-up in every situation. That leaves some risk the benefit could be questioned. For a couple with a large built-in gain, the potential savings are usually big enough to justify the strategy with that risk understood, but you should never enter it believing it is guaranteed. Anyone who promises you a certain result here is not being straight with you.
The Trade-Offs
Converting assets to community property genuinely changes who owns what. Each spouse comes to own half, which matters if a marriage ever ends in divorce, and it can change how creditors reach the property compared with other ways Florida couples hold assets. This is a deliberate trade: you give up some ownership and protection features in exchange for a potentially large tax benefit. Whether that trade makes sense depends on your assets, your marriage, and your goals, which is exactly the conversation we have before anyone signs anything.
Sitting on a big unrealized gain?
In a free 30-minute consult we will run the numbers and tell you honestly whether a community property trust is worth it for your family, or whether a simpler plan wins.
Book your free consultIs It Right for You?
Lean toward it when you are a married couple holding highly appreciated assets you may sell: long-held stock, a business, real estate bought long ago. Lean away when most of your wealth is in retirement accounts (which get no step-up at all) or in assets without much built-in gain. If you are unsure which describes you, that is normal, and it is what the consult sorts out. A community property trust often works alongside a revocable living trust and, for those who can move, a change of domicile to Florida.
What It Costs
This is custom planning, not a flat-fee form, so we quote it at the consult once we understand your assets and goals. And if the likely tax savings do not justify the cost and complexity for your situation, we will tell you, because for many couples a simpler plan is the right answer. The 30-minute consult is free. See our flat-fee planning prices →
Frequently Asked Questions
What Is a Florida Community Property Trust?
It is a special trust, available since 2021, that lets a married couple agree to treat the assets they put into it as community property, the way property is owned in states like Texas or California. Florida is not naturally a community-property state, so this is an opt-in choice. The reason couples do it is a single, powerful tax benefit: a potential double step-up in basis at the first spouse’s death, which can erase the capital-gains tax on assets that have grown a lot in value.
What Is the Double Step-Up in Basis?
When you die, the things you own get their tax basis reset to the value on that date, which is what spares your heirs capital-gains tax on all the growth during your lifetime. The catch for a married couple owning something jointly is that normally only the deceased spouse’s half gets that reset; the survivor’s half keeps its old, low basis. A community property trust can step up the entire asset, both halves, when the first spouse dies. On something that has appreciated a lot, that difference can be worth a great deal in saved tax.
Do I Have to Live in Florida to Use One?
No, and this is what makes it powerful for out-of-state couples. The trust needs at least one qualified Florida trustee (a Florida resident or a Florida trust company), but the couple themselves do not have to live here. That lets a couple in a high-tax state use Florida’s tool for the basis benefit while keeping their home and life where they are. It should always be coordinated with advice in your own state.
Is the Double Step-Up Guaranteed?
No, and we will not pretend otherwise. Florida’s statute is clear, but the IRS has not issued direct guidance confirming that these opt-in community property trusts produce a double step-up in every situation, so there is some risk the benefit could be challenged. For the right couple with significant appreciated assets, the potential savings are large enough to be worth the strategy, but it has to be entered with eyes open. We walk through that honestly before you decide.
What Are the Trade-Offs I Should Understand?
Converting assets to community property genuinely changes ownership: each spouse comes to own half, which has real consequences if the marriage ends in divorce, and it can change how creditors reach the property compared to other ways Florida married couples hold assets. It is not a free lunch; it is a deliberate trade of some ownership and protection features for a potentially large tax benefit. Whether that trade is worth it depends entirely on your assets and your marriage, which is exactly what the planning conversation is for.
Who Is This Really For?
Married couples who own highly appreciated assets they may eventually sell: long-held stock, a closely held business, real estate bought decades ago, or other property worth far more than they paid. If most of your wealth is in assets with little built-in gain, or in retirement accounts (which do not get a step-up at all), a community property trust may do little for you. It shines when there is a big, unrealized capital gain sitting in a jointly owned asset.
Does Florida Tax Any of This?
No. Florida has no state income tax and no state estate tax, so this is purely a federal capital-gains strategy. That is part of why Florida is a useful jurisdiction to reach for, even for couples who live elsewhere: you get the tool without adding a Florida tax bill on top.
What Does It Cost to Set Up?
A community property trust is custom work, not a flat-fee form, so we quote it at the consult after we understand your assets and goals. We will also tell you honestly if the likely tax savings do not justify the cost and complexity for your situation, because for many couples a simpler plan is the better answer.
Common Situations
The long-held stock. A retired couple holds tech stock bought in the 1990s for $150,000, now worth $1.2 million. Putting it in a community property trust positions the whole position for a basis step-up at the first death, so the survivor could sell with little capital-gains tax instead of owing on a million dollars of gain.
The out-of-state couple. A married couple in Massachusetts owns a highly appreciated rental. They do not want to move, but with a qualified Florida trustee they can use a Florida community property trust for the basis benefit, coordinated with their Massachusetts advisors.
The couple we talked out of it. A pair whose wealth is mostly in IRAs comes in asking for one. Because retirement accounts get no step-up, the trust would do little for them, and we say so. The honest answer is sometimes no.
Sources of Law
- Fla. Stat. ch. 736, Part XV, §§736.1501 to 736.1512: Florida Community Property Trust Act (effective July 1, 2021). flsenate.gov (retrieved 2026-06-07)
- IRC §1014(b)(6): basis of community property at the death of a spouse. There is no direct IRS ruling confirming a double step-up for elective community property trusts; the benefit is well-supported but not guaranteed.
- Florida imposes no state income tax and no state estate tax.
Updated on June 7, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. General information about Florida law and federal tax, not legal or tax advice, and no attorney-client relationship is created. Tax outcomes depend on your specific facts and on federal law that may change; nothing here is a guarantee of any tax result. Do not send confidential information until we have agreed to represent you.