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June 10, 2024 Focus: Wealth Management

Law firms expand to Florida as ultra-wealthy CT residents seek relief amid looming estate tax exemption sunset

HBJ PHOTO | STEVE LASCHEVER Dane Dudley, based in West Hartford, is the chair of law firm Day Pitney’s private client department.
By Andrew Larson

Law firms in Connecticut are expanding to Florida, and it’s not just for warmer weather and renowned beaches, but largely because of the financial incentives that are attracting their clients to the Sunshine State.

For decades, Connecticut residents have been taking up residency in Florida, where there is no income tax, their money has more purchasing power and, most importantly for ultra-wealthy families, there is no estate tax.

Law firms are aware of the migratory trend and are following their clients as they move, sometimes to change their permanent residency, other times to buy a second, or third, vacation home.

“My opinion is that it’d be wonderful to be wherever our clients like to be,” said Dane Dudley, chair of law firm Day Pitney’s private client department. “But the resources are such that you can’t just do that.”

Day Pitney has strategically expanded to locations where their clients’ legal needs are the greatest. The firm has more than 300 attorneys across 13 offices in six states — Connecticut, Florida, Massachusetts, New Jersey, New York and Rhode Island — and Washington, D.C.

Day Pitney, which has a prominent presence in Hartford, provides a variety of legal services, from estate planning to litigation.

Over the last five years, its attorney count in Florida has increased from about 15 to 30. Through the expansion, Day Pitney seeks to provide a continuity of services to clients leaving the Nutmeg State.

“If a client was in Connecticut, New York or Massachusetts, and they moved to Florida … you don’t lose any of that institutional knowledge,” said Dudley, a partner at the firm’s West Hartford office.

“At least at our firm, we operate off the same system,” he said. “So, there’s consistency in the documents themselves. They don’t have to rework and redraft everything — it’s usually amending things to take into consideration the change in the law from Connecticut to Florida, for example.”

Day Pitney established its presence in Florida in 2016, through a merger with Florida-based firm Chapin, Ballerano & Cheslack. The combined firm retained existing offices in Delray Beach (which has since closed) and Boca Raton, along with seven Florida-based attorneys who joined Day Pitney’s trusts and estates and corporate practices.

Two years later, Day Pitney completed its second Florida expansion, merging with South Florida-based law firm Richman Greer. The merger added two more Florida offices to Day Pitney’s roster: Miami and West Palm Beach, along with 15 attorneys.

Tasha Dickinson

“Services go where people are,” said Tasha Dickinson, a partner in Day Pitney’s West Palm Beach office. “Strategically, it made sense for Day Pitney to expand in Florida, particularly in the private client services arena, because a lot of people moving to Florida were high-net worth, either still working or post liquidation of a business. So, there was a need both on the pre-death side, and unfortunately, those people die and their families need services post-death as well.”

Clients’ legal needs include taxes, trusts and estates, and family offices.

The number of people moving to Florida has increased dramatically in recent years, Dickinson said, and it’s more often younger people pursuing life changes, in addition to tax benefits.

“Now, a typical client would be moving their business and their family into Florida,” she said.

Over a 10-year period ending in 2022, and excluding the pandemic year of 2020, Connecticut lost a net 71,044 residents to Florida, according to an HBJ analysis of U.S. Census Bureau data.

During that time period, 132,988 former Connecticut residents moved to Florida, while 62,210 former Sunshine State residents relocated here, HBJ’s analysis found.

More urgent planning

In early May, New Haven-based law firm Wiggin and Dana announced that it was absorbing Ellis Law Group, a boutique trusts and estates firm with four attorneys based in Boca Raton, Florida.

Ellis Law Group specialized in setting up trusts and planning estates, as well as asset and wealth protection, business succession planning and general business counsel.

Wiggin and Dana said its investment in Florida was driven by the upcoming sunset of the $13.61 million per-person federal estate tax exemption. On Jan. 1, 2026, the exemption is set to drop to $5.6 million per-person.

Connecticut’s estate tax exemption is tied to the federal level, so as of Jan. 1, 2026, Connecticut’s estate tax exemption will drop to $5.6 million as well.

At the current level, an heir of a decedent may receive up to $13.61 million without paying the federal or state estate tax in Connecticut. However, as of Jan. 1, 2026, that will change.

Heather Rhoades

Typically, after credits are applied, the federal estate tax rate is about 40%, and Connecticut’s estate tax rate is an additional 10%, said Heather Rhoades, chair of Stamford law firm Cummings & Lockwood’s private clients group.

Notwithstanding potential congressional action to extend the $13.61 million federal exclusion, more Connecticut estates soon will be subject to both the federal and state estate taxes, which can devour roughly 50% of their value.

Connecticut’s estate and gift tax generated $218.35 million in revenue in 2022-23, according to a report from the Department of Revenue Services.

That same year, there were 54 tax returns filed for estates worth $10 million to $15 million; 28 returns for estates worth $15 million to $25 million; and 28 returns for estates over $25 million, according to DRS.

There are questions about whether Connecticut could decouple its estate tax exemption from the federal level to help prevent wealthy families from potentially leaving.

Gov. Ned Lamont’s office didn’t respond to a request for comment on whether there has been any consideration of the issue.

But law firms are preparing for an influx of clients trying to minimize the potential tax impact.

Seth Ellis

“Our high-net-worth clients are thinking more urgently about their estate planning ahead of the (Dec. 31,) 2025, tax sunset,” said Seth Ellis, who founded Ellis Law Group in 1999 and is now a Wiggin and Dana partner in its Boca Raton office.

The federal exemption nearly doubled to a historical high under the Tax Cuts and Jobs Act of 2017 — just two months after Connecticut tied its exemption to the federal threshold.

The Tax Cuts and Jobs Act took effect in 2018. Prior to 2018, Connecticut’s exemption stood at $2 million for nearly 15 years.

Some experts have speculated that if a new presidential administration takes over in January 2025, it could extend the higher exemption level.

Florida is among 33 states that do not have an estate tax, putting states like Connecticut, in the minority.

Families with multiple homes must establish their primary residence in a state without an estate tax to avoid being subject to the Connecticut tax, Rhoades said.

Generally, a household’s “primary residence” is where they spend the majority of their time. For some, that could mean living in one home for six months and one day per year, and spending the rest of their time in one or more other homes.

“The New England states have been pretty aggressive in auditing that type of change over time,” Rhoades said. “So, clients do have to be careful that they actually intend to call Florida home when they change their domicile.”

Early mover

Cummings & Lockwood was among the first law firms to notice Nutmeggers’ predilection for Florida.

Founded in Stamford in 1909, the firm opened its first Florida location in Naples in 1978. It now has three offices in Florida — two on the west coast and one on the east coast — with a total of 23 attorneys.

Cummings & Lockwood has more than 200 attorneys overall and is considered one of the largest trusts and estates practices in the United States. It has six offices evenly spread between Connecticut and Florida.

While the firm has clients across the U.S. and in 20 countries, one of its main focuses is migration from Connecticut to Florida.

“The income tax, the estate tax, everything feels more burdensome for clients over time,” Rhoades said. “And we see this increasing trend over time where clients are looking for other states. Florida is the primary one. There are other tax-friendly states as well, but I would say Florida is definitely the majority.”

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