The Florida Estate Planning and Probate Law Blog is focused on recent federal and state case law and planning ideas.


Currently, the State of Connecticut holds the distinction of being the only state that imposes a gift tax. While the legislation was again proposed, which included a repeal of the Connecticut gift tax retroactive to January 1, 2019, and would have limited federally taxable gifts includable in the Connecticut taxable estate to those made within three years of death, it failed to make it into law. Minnesota (2013), Tennessee (2012), North Carolina (2009), and Louisiana (2008) were the most recent states to repeal their state gift tax. New York and Massachusetts do not impose a gift tax


On July 1, 2019, Indiana will become the eighteenth (18th) state to enact domestic asset protection legislation (“DAPT”). S.B. 265, enacted by the Indiana legislature on April 9, 2019, and signed into law on May 5, 2019 by the Governor, creates a new Section 30-4-8 to the Indiana Code to permit the establishment of “Legacy Trusts” (a form of self-settled domestic asset protection trusts). The section also provides spendthrift creditor protection to the settlors of Legacy Trusts. The new Indiana Legacy Trust statute is similar to those of other states that permit DAPTs. Under the statute, the owner of property or the holder of a general power of appointment can transfer assets to a Legacy Trust through a “qualified disposition.” To be a qualified disposition, the Legacy Trust must be irrevocable; have a “qualified trustee” (individual residing in Indiana or an entity authorized by Indiana law to act as a trustee as one of the trustees); incorporate Indiana law to govern the validity, construction and administration of the Legacy Trust; and have a spendthrift clause. The transferor of assets to a Legacy Trust must sign a “qualified affidavit” affirming that: (i) the transferor has full right to transfer property to the trust; (ii) the transfer will not cause the transferor to be insolvent; (iii) the transferor does not intend to defraud creditors with the transfer; (iv) there are no pending or threatened court actions against the transferor other than those identified by the transferor in the affidavit; (v) the transferor is involved in no administrative proceedings other than those identified in the affidavit; (vi) the transferor does not contemplate filing for bankruptcy; and (vii) the property transferred to the trust is not derived from unlawful activities. The act also provides that an Indiana court “to the maximum extent permitted by the United States Constitution and the Indiana Constitution,” must exercise jurisdiction over the trust even if a court of another jurisdiction has or may have proper jurisdiction of a matter involving the trust.


The State of Florida imposes a documentary stamp tax of seventy (70) cents per one hundred ($100) dollars of consideration. Consideration includes mortgage obligations or other liens. In 2018, a new Florida Homestead exemption went into effect that eliminated the documentary tax expense, associated with the recording of a deed, that transferred title to real property from the name of a formerly single individual into joint names with their spouse. The exemption only applied if the deed or other instrument was recorded within one (1) year after the date of marriage. Effective July 1,2019, the exemption has been expanded by new legislation signed into law by Governor DeSantis. The new exemption eliminates the one (1) requirement for the avoidance of the documentary stamp tax exemption for the conveyance of homestead property between spouses.

Florida Senate Committee Votes to Permanently Shorten Retroactive Medicaid Eligibility

A Florida Senate bill that would permanently shorten how long patients can have Medicaid cover past healthcare bills narrowly cleared its first state Senate committee hearing Monday, advancing an estimated $104 million policy that could affect about 11,500 Floridians’ care. SB 192, which passed 6-4 in the Senate Health Policy committee on party lines, would cement a policy that restricts the period patients are eligible for Medicaid coverage to the calendar month before their application. The prior policy, which the Legislature changed last year, allowed patients to have the safety net program cover healthcare costs up to three months before the date they applied for coverage. Though the Legislature voted to shorten the retroactive window last March, the policy went into effect last month after the federal government approved the change in November. The policy requires the Legislature to approve the change again for it to remain in effect past June 30. Opponents of the policy change have said it disproportionately hurts the poor, people with disabilities and seniors, particularly those in nursing homes who rely on Medicaid to help cover the cost of their long-term care. They have also argued that limiting the potential coverage period to the start of a calendar month means those who become eligible later in a month have less time to submit necessary paperwork. Nursing homes are also opposing the bill, saying that changing treatment plans and the shortened window for applying toward the end of a month make it more difficult to submit the paperwork in time. The bill does not yet have a House companion. It must pass two more committees before it can be taken up by the full Senate.


In December 2018, federal officials approved a state request that will provide Floridians less time to apply for Medicaid coverage if they want healthcare costs retroactively covered. The change means those who qualify for the safety-net program now have up to thirty (30) days of retroactive eligibility once they qualify for Medicaid, as opposed to the original ninety (90) days. After approval from the federal Centers for Medicare & Medicaid Services, which oversees the safety net program, the 30-day policy will go into effect Feb. 1 and remain in place until June 30 unless state lawmakers vote to extend the change. The state Agency for Health Care Administration requested the policy change after lawmakers voted to support shortening the retroactive eligibility period. State Medicaid officials had previously estimated the eligibility would affect about 39,000 people annually — with pregnant women and children exempt — and amount to $98 million. The agency also contended that the change would not harm applicants so long as they submitted their paperwork on time. Laern more at www.fl-estateplanning.com


On November 20, 2018, the IRS announced that individuals taking advantage of the 2018 through 2025 increased gift and estate tax exclusion amounts will not be adversely impacted if, after 2025, the exclusion amount reverts to pre-2018 levels. The Treasury Department and the IRS issued proposed regulations which implement this announcement so that individuals planning to make large gifts between 2018 and 2025 can do so without concern. To learn more please contact me directly.


The Tax Cuts and Jobs Act of 2017 (the “Act”) that went into effect on January 1, 2018, made important changes to existing tax laws. In the family law area, the Act eliminated the ability to deduct alimony payments made pursuant to divorces that are finalized after December 31, 2018. Under current tax law, alimony is tax deductible by the payor and taxable to the payee. This means that if you are the person paying alimony, then you get a deduction for the amount you paid. However, for divorces finalized on or after January 1, 2019, all alimony payments will be tax-neutral (non-deductible by the payor and no longer income to the recipient). The new tax law only impacts alimony payments that are required under divorce or separation instruments that are: (1) executed after December 31, 2018 or (2) modified after that date if the modification specifically states that the TCJA tax treatment of alimony payments (not deductible by the payer and not taxable income for the recipient) now applies. The reclassification of alimony payments is expected to make settlements more difficult as the higher-earning spouse will have more income taxes to pay and fewer funds with which to settle the case.


The Internal Revenue Service dollar limitations for retirement plans and other benefits for 2019. 401(k)/403(b) Contributions $19,000 457(b) Limit $19,000 Catch-up Contributions $6,000 SIMPLE Contributions $13,000 SIMPLE Catch-up Contributions $3,000 Compensation Limit $280,000 Highly Compensated Employees $125,000 Key Employee Officer Compensation $180,000 Maximum Annual Benefit Defined Benefit Plan $225,000 Maximum Annual Contribution Defined Contribution Plan $56,000 ESOP Limits Dollar limit for determining lengthening of 5-year period $225,000 Dollar amount for determining max. amount subject to 5-year distribution $1,130,000 FICA Wage Base $132,900


The Internal Revenue Service (“IRS”) has a new collection tool for taxpayers with serious delinquent tax deficiencies and it was created under § 7345 of the Internal Revenue Code. The tax section authorizes the IRS to certify to the State Department individuals who have serious delinquent tax debt. Receipt of the certification allows the State Department to deny or revoke the individual’s passport or limit it to permit only a return travel to the U.S. For purposes of enforcement, a “seriously delinquent tax debt” is defined as a tax liability (tax, penalty and interest) of an individual which meets all the following requirements: (i) the tax liability has been assessed; (ii) the liability is greater than $51,000; and (iii) a levy was issued or a notice of lien has been filed and the taxpayer has either exhausted its administrative rights or failed to timely exercise those rights. An individual will not be classified a seriously delinquent taxpayer if: (i) the taxpayer is paying the liability in installment payments approved by the IRS; (ii) the liability is being paid through an offer in compromise; or (iii) collection of the debt has been suspended under certain circumstances such as innocent spouse relief. In addition, in its discretion, the IRS may not certify an individual as a seriously delinquent taxpayer where: (i) the liability is uncollectible due to hardship; (ii) the liability results from identity theft; (iii) the taxpayer is in bankruptcy; or (iv) they are serving in a combat zone or participating in a contingency operation. The IRS may reverse a certification if: (i) all certified tax modules are fully paid; (ii) the tax becomes legally unenforceable; (iii) the tax debt falls under one of the statutory exclusions; or (iv) an adjustment reduces the tax debt below $51,000. To invoke the certification process the IRS must send a notice of certification to the taxpayer contemporaneous with sending the notice to the State Department. Upon receiving this notification, the taxpayer has a right to challenge the certification.


On October 18, 2018, over three (3) years after the Department of Veterans Affairs (“VA”) originally proposed them, new regulations to qualify for needs based benefits go into effect. The new regulations contain “net worth” limitations, look-back periods, penalties and definitions for those applying for benefits. The new regulations are a substantial change from current regulations which do not contain a prohibition on transferring assets prior to applying for benefits. Net Worth Limitations: An eligible applicant must have a net worth equal to or less than the prevailing maximum community spouse resource allowance (CSRA) for Medicaid ($123,600 in 2018). The term “net worth” amount includes both the applicant's assets and income and will increase annually at the same percentage as Social Security. The veteran's primary residence (even if the veteran lives in a nursing home) and the veteran's personal effects will not be considered assets under the new regulations. However, if the veteran's residence is sold, the proceeds will be considered assets unless a new residence is purchased within the same calendar year. Look-Back Period and Penalty: The regulations establish a thirty-six (36) month look-back period, beginning on the date on which the VA receives either an original or new pension claim after a period of non-entitlement, for the transfer of assets. The regulations include five (5) year penalty period for assets transferred at less than market value to qualify for a VA pension. There are exceptions for transfers made as the result of fraud, misrepresentation or to a trust for a child who is not able to support themselves. Deductible Medical Expense: The regulations define what the VA considers to be a deductible medical expense for all of its needs-based benefits. The definition includes: payments for items or services that are medically necessary; that improve a disabled individual's functioning; or that prevent, slow, or ease an individual's functional decline. This includes care by a health care provider, medications and medical equipment, adaptive equipment, transportation expenses, health insurance premiums, products to help quit smoking, and institutional forms of care.