Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.


On May 10, 2018, the IRS released Revenue Procedure 2018-30 which sets forth the dollar limitations for health savings accounts (HSAs) in 2019. HSAs are subject to annual aggregate contribution limits and participants age fifty-five (55) or older can contribute additional catch-up contributions. In 2019, the maximum contribution amount will increase to $3,500 for an individual and $7,000 for a family. The catch-up contribution limit remains at $1,000.


Under existing social security rules, men that have children later in life (it would be gender discrimination but biologically women can’t currently conceive a child after age 60) are eligible for an extra Social Security benefit. Under the rule, when a man files for his social security benefits, each of his children under the age of 18 years is entitled to one-half (1/2) of what he would receive at full retirement age (even if he collects social security benefits early). Eligibility for the child benefit requires them to be: (i) under the age of 18 years; (ii) 18-19 years old if a full-time student (not higher than grade 12). For example, if a 62-year old man with a 10-year old child began collecting social security benefits immediately, not waiting till age 70 years, he would also receive one-half (1/2) of the maximum amount he would have received had he waited to collect at age 70 years, until his child reached the age of 18 years. At present, Donald Trump is receiving an extra $15,000 per year since his son is under age 18.


Effective January 1, 2019, residents of the state of Maryland will see their state estate tax exemption increased from $4 million to $5 million. The law went into effect on April 5, 2018, and is not be indexed for inflation. The maximum Maryland estate tax rate of 16% remains unchanged and the inheritance tax is unaltered (dependent upon how closely related the decedent was to the people who inherit from him or her, not on the size of the estate). Legislation is pending in the District of Columbia, where the estate tax exemption currently matches the federal exemption amount of $11.18 million, to “decouple” from the federal exemption. The legislation proposes an exemption amount at $2,185,800, adjusted annually for inflation, for decedents dying on or after January 1, 2019.


The Fair Housing Act (FHA) states that housing providers may not “discriminate against any person in the terms, conditions, or privileges of . . . rental of a dwelling . . . because of a handicap of any person associated with that person.” 42 U.S.C. § 3604(f)(2)(C). Prohibited discrimination includes “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” Id. § 3604(f)(3)(B). “The reasonable accommodation inquiry is highly fact-specific, requiring case-by-case determination.” Janush v. Charities Hous. Dev. Corp., 169 F. Supp. 2d 1133, 1136 (N.D. Cal. 2000) (quotation omitted). If a landlord has a “no-pets policy,” a tenant will be provided a reasonable accommodation for an assistance animal if the tenant can demonstrate that he or she is disabled and that the tenant has a disability-related need for the assistance animal. However, a specific service animal denial may occur if: (i) the animal poses a direct threat to the health or safety of others that cannot be reduced or eliminated by another reasonable accommodation, or (2) the animal would cause substantial physical damage to the property of others that cannot be reduced or eliminated by another reasonable accommodation. However, the denial may not be based on a dog’s breed or size, mere speculation or fear that the animal may harm someone or damage property, or evidence of damage caused by other animals. The Federal Housing Administration (FHA) construes the law very favorably toward any individual that alleges a need for an emotional support animal. A medical professional attestation that the individual meets the FHA disability definition for having an emotional support animal, regardless of how they obtained the diagnosis, is sufficient: (i) physical or mental impairment (including emotional or mental illness) that substantially limits one or more major life activities; (ii) record of such impairment; or (iii) having such impairment. In the recent Vermont Supreme Court case of Gill Terrace Retirement Apartments, Inc. v. Johnson, (2017) VT 88 No. 2016-372, the Court addressed these specific type of situations. The Johnson case involved a tenant eviction for violation of a “no-smoking” and “no pets” policy. Despite the landlord’s approval of Johnson’s request for an assistance animal as a reasonable accommodation, it did not approve her specific animal because of the dog’s hostility, complaints from other residents, and tenant’s inability to restrain the dog. The Trial Court, in granting the eviction, concurred with the landlord and held that while an individual is entitled to an Emotional Support Animal, they are not entitled to any animal or bread that (i) exhibits aggressive behavior or tendencies; or (ii) scares other tenants or occupants (some “residents deliberately stayed indoors to avoid” the dog). Johnson ultimately appealed her eviction for violation of the pet policy all the way to the Vermont Supreme Court which upheld the Trial Court.


When the new tax law was signed by President Trump most experts viewed it as detrimental to future charitable donations and deductions. The significantly increased standard deduction meant fewer taxpayers needed to file an itemized income tax return and non-itemizers would not benefit from a charitable tax deduction. While the value of a charitable deduction may have decreased in value for individuals that reside in states without a state income tax it has increased in value for individuals that reside in states with a state income tax. Under the new tax law, the deduction for state income taxes is limited to $10,000. While a charitable gift may not result in any reduction in state income taxes it can provide a deduction for federal income tax purposes. Utilizing a charitable gift deduction, after maximizing the amount of your state income tax deduction, can decrease the amount of federal income tax due and owing for those who do not file an itemized income tax return. In addition, under the new tax law, the donation of appreciated stocks, bonds or other assets still avoided capital gains taxes regardless of whether or not the donor itemizes. Individuals age 70 ½ or older also retained the ability to make a charitable donate directly from their IRA.


The Budget Act of 2018, signed into law on February 9, 2018, provides individuals with 401K retirement plans relaxed hardship restrictions. The new relaxed restrictions include: (i) Rescission of the IRS rule that prohibits a participant from making an elective 401(k) deferral for six months after taking a hardship withdrawal; (ii) Allowing plan participants to take a hardship withdrawal from funds attributable to qualified non-elective contributions or qualified matching contributions made by employers under a safe harbor plan; and (iii) Allowing a hardship withdrawal to include not only the actual amount of elective 401(k) deferrals made but the earnings on those contributions. The changes are effective for plan years beginning after December 31, 2018.


The federal income tax code has long favored home ownership over renting. A homeowner could claim an unlimited deduction for mortgage interest paid and state and local taxes incurred. The new tax law has turned this once advantageous situation on its head through a combination of an increased standard deduction, lower marginal income tax rates and limit on mortgage interest deductions. It is estimated that the increased standard deduction (from $12,700 to $24,000 for a couple) will decrease the number of individuals that itemize on their tax returns from 44% to 14%. The new tax law also caps the amount of deductible property and other state and local taxes at $10,000 and lowers the mortgage interest deduction from $1,000,000 to $750,000. The end result is that a homeowners’ individual deductions may no longer be larger than their new standard deduction and will eliminate the need for them to itemize their deductions. One recent study found that under the new tax law, so-called “breakeven” rents — the monthly amount above which renters are better off becoming homeowners — jumped significantly for upper-middle class and wealthy taxpayers.


The new tax law makes significant changes to federal tax law and has implications for your existing estate plan. The following is a list of issues to consider when determining whether to update your estate planning documents. 1. Will the new federal tax law change impact my estate plan? The new tax law increases the federal exemption amount from $5,600,000 in 2017 to $11,200,000 in 2018. As a result, there will no longer be any federal tax assessed on estates valued between $5.6 million and $11.2 million. Many estate plans created marital trusts to avoid having to pay any estate taxes on the first spouse’s death. The increase in the federal exemption amount makes those plans obsolete. You should review your existing estate planning documents to ensure your plan will properly operate under the new federal estate tax thresholds. 2. How will the new federal tax law affect my state estate tax? Only individuals living in one of the fifteen states (Minnesota, Iowa, Nebraska, Washington, Oregon, Kentucky, Tennessee, Pennsylvania, New Jersey, Massachusetts, Rhode Island, Connecticut, Delaware, Maryland and the District of Columbia) that still have some form of estate tax will be impacted. It is important to check whether your state of residence links its estate tax exemption limits with the federal limits to avoid an unnecessary tax at death. 3. Should I have my existing estate plan reviewed? Individuals that have not updated their existing estate plans in at least ten (10) years should absolutely have them reviewed to prevent unintended consequences. It is important that your estate plan change with your changing circumstances.


The new Tax Cuts and Jobs Act of 2017 (the “Act”) brings a new savings opportunity for those who desire to put away funds for a child, grandchild or other family members future education expenses. The Act, which went into effect on January 1, 2018, expands the use of 529 Savings Plans (“529 Plan”). A 529 Plan is legally known as “qualified tuition plans,” are sponsored by states or educational institutions and are authorized under Section 529 of the Internal Revenue Code. 529 Plans were designed to encourage saving for future college costs and provide for qualified higher education expenses (tuition, fees, books, supplies, computers and related equipment). 529 plans also have no income, age or annual contribution limits. Although contributions to a 529 Plan are not federal tax deductible, the contributed funds will grow federal income tax-free and will not be taxed when taken out to pay for qualified higher education expenses. The Act now allows for a 529 Plan's payment of qualified education expenses for attendance at an elementary or secondary school. This amount is capped at $10,000 per plan beneficiary per year. It is important to note that assets held in a 529 account owned by a grandparent, other relative or anyone else besides a dependent student or one of their parents will have no adverse impact on the student's ability to apply for federal student aid. However, the withdrawal of funds to pay for the child’s qualified education expenses will count as student income for purposes of their eligibility for federal student aid.


On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act of 2017 (the “Act”) that was passed by Congress on December 20, 2017. The Act will take effect on January 1, 2018 and will make important changes to existing tax laws and impact you. INCOME, ESTATE, GIFT, AND GENERATION-SKIPPING TAXATION: Estate, Gift, and Generation-Skipping Tax Exemption. The Act doubles the individual federal estate, gift, and generation-skipping tax exemptions from $5,000,000, adjusted for inflation ($5.49 million in 2017) to $10,000,000, adjusted for inflation ($11.0 million in 2017). The Act also maintains the basis step-up of inherited assets to their fair market value at death. Income Taxation of Individuals. The Act maintains seven (7) income tax brackets but lowers the income tax rates to 10%, 12%, 22%, 24%, 32%, 35% and 37% from 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The Act also decreases the income threshold to $600,000 for married taxpayers filing jointly and $500,000 for single filers. The new individual tax rates will sunset on December 31, 2025. For comparative purposes, under 2017 federal income tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 25% tax bracket and would have a tax liability of $5,739. While under the new 2018 tax brackets and rates, a single taxpayer with $40,000 of taxable income would be in the 22% tax bracket and would have a tax liability of $4,740. Alternative Minimum Tax. The Act also increases the individual exclusions and phase-out thresholds for the individual alternative minimum tax to $1,000,000 for couples and $500,000 for single taxpayers but does not eliminate the alternative minimum tax. Income Taxation of Trusts and Estates. Income in excess of $12,500 will be subject to the 37% income tax bracket. DEDUCTIONS: Standard Deduction: The standard deduction for single and married taxpayers filing separately is increased from $6,350 to $12,000. A surviving spouse and married taxpayers filing jointly will receive a $24,000 deduction (increased from $12,700). The standard deduction for heads of household is increased to $18,000 from $9,350. The Act leaves intact the additional standard deduction for filers who are 65 and over or blind which allows a married couple to claim an additional $2,600 and single taxpayer an additional $1,600 when they file their 2018 taxes. It is anticipated to result in more taxpayers utilizing their standard deduction instead of itemized deductions. Personal Exemption: The $4,050 per person exemption is eliminated. Child Tax Credit: The credit is increased from $1,000 to $2,000 per child with modified adjusted gross income phase outs at $400,000 for married taxpayers filing jointly; and $200,000 for single, head of household and married filing separately taxpayers. However, only up to $1,400 is refundable for certain filers. A new $500 nonrefundable credit is also available for dependents who do not qualify for the child tax credit. Taxpayers can claim this credit for children who are too old for the child tax credit, as well as for non-child dependents. Medical Expense Deduction: The deductible limit is decreased from 10% to 7.5% of adjusted gross income for 2017 and 2018. State and Local Tax Deduction. State income, property, and sales taxes will be deductible for individual taxpayers only up to an aggregate cap of $10,000. This cap will sunset on December 31, 2025. The Act prevents a deduction for the prepayment of any state income taxes related to a year beginning after 2017. Mortgage Interest and Home Equity Loans. The mortgage interest deduction for home loans entered into after December 31, 2017, is decreased from $1,000,000 to $750,000. Mortgage loans entered into prior to January 1, 2018 will not be impacted. While taxpayers will continue to be able to deduct interest on second homes the interest expense deduction is eliminated for home equity loans beginning after December 31, 2017. Charitable Contribution Deduction. The current deduction limitation of 50% of the individual’s adjusted gross income for contributions to public charities is increased to 60%. Existing limits continue to apply to contributions of marketable securities or other property to public charities and to all contributions to private foundations. Alimony Deduction. Under the Act, with regard to divorce or separation agreements executed on or after January 1, 2019, alimony payments will no longer be deductible by the payor or income to the recipient. Moving Expense Deduction. The Act eliminates the moving expense deduction, except for the expenses of active members of the military who relocate pursuant to military orders. Under prior tax law a taxpayer could utilize the deduction when moving due to new employment that is located at least 50 miles further than the taxpayer’s previous place of employment from the taxpayer’s residence. Other Deductions. The following deductions remain status quo under the Act: Educator Expense Deduction which allows K-12 educators to deduct up to $250 per year for unreimbursed classroom supplies; Student Loan Interest paid can be deducted up to $2,500 by qualifying taxpayers; Health Savings Account (HSA) deduction; IRA deduction; and deductions for self-employed taxpayers (SE tax, SE health insurance, SE qualified retirement plan contributions). PENALTIES: The Act eliminates the Affordable Care Act’s mandate that people have health insurance or pay a penalty.