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


In 2018, Florida voters will have the opportunity to vote on a constitutional amendment to raise the Florida homestead exemption from $50,000 to $75,000, on homes worth $100,000 or more. If 60% of voters approve, the new rate will take effect January 1, 2019. The Florida homestead exemption reduces the value of a Florida residents home for property tax assessment purposes. The proposed amendment would save Florida state residents about $644 million with the average homeowner receiving an annual savings of $170. Florida municipalities and counties are concerned about the decreased revenues impact on critical services (fire department, library, police, etc...).


The IRS has issued Revenue Procedure 2017-37 which contains the annual inflation-adjusted contribution, deductible and out-of-pocket expense limits for health savings accounts (HSAs) in 2018. Annual contribution limitations, deductibles and out of pocket expenses for 2018 increased in all categories from 2017: Limitation on deductions for an individual with self-only coverage under a High Deductible Health Plan (HDHP) to $3,450 Limitation on deductions for an individual with family coverage under an HDHP to $6,900 Annual deductible for self-only coverage that is not less than $1,350 Annual deductible for family coverage that is not less than $2,700 Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) for self-only coverage - do not exceed $6,650 Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) for family coverage - do not exceed $13,300


In an effort to help protect the elderly U.S. population the Financial Industry Regulatory Authority (FINRA) has announced that the Securities and Exchange Commission (SEC) has approved a new rule and an amendment that are specific to customers who are elders. Regulatory Notice 17-11 explains the new rule and amendment: (1) the adoption of new FINRA Rule 2165 (Financial Exploitation of Specified Adults) to permit members to place temporary holds on disbursements of funds or securities from the accounts of specified customers where there is a reasonable belief of financial exploitation of these customers; and (2) amendments to FINRA Rule 4512 (Customer Account Information) to require members to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. Both New Rule 2165 and the amendments to Rule 4512 become effective February 5, 2018. The new rule and amendment are designed to enable financial specialists to be able to more quickly and effectively address suspected financial exploitation of seniors and other specified adults.


Many individuals in our aging population are transitioning from home ownership to life in an assisted living facility (“ALF”). Many ALF’s require a onetime entry fee and ongoing monthly charges for housing and services (meal plans, housekeeping, transportation, and social and recreational activities). The benefit of an ALF is that when a resident’s health and personal care needs become more acute, they are not forced to move to a new facility, as their level of service can be increased to include long-term care and skilled nursing care. Although the costs of an ALF can be substantial, a percentage or all of the costs can be deducted as a medical expense income tax deduction either by the individual or third party if they are providing more than half of the resident’s support. Section 213(a) of the Internal Revenue Code (IRC) allows as a deduction any expenses that are paid during the taxable year for the medical care of the taxpayer, his or her spouse, and dependents who are not compensated by insurance or otherwise. Estate of Smith v. Commissioner, 79 T.C. 313, 318 (1982). The deduction is allowed only to the extent the amount exceeds seven and one-half (7.5%) percent of adjusted gross income. Sec. 213(a); sec. 1.213-1(a)(3), Income Tax Regs. For purposes of Sec. 213 the term “medical care” includes amounts paid “for the diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body.” The entire ALF cost, including room and board, can be fully deducted on a federal income tax return as a medical expense if the individual’s health problems are classified as being “chronically ill” and if the appropriate services are “provided pursuant to a plan of care prescribed by a licensed health care practitioner” (physician, registered professional nurse or licensed social worker). An individual will qualify as “chronically ill” if a licensed health care practitioner certifies that the individual: (i) is unable to perform at least two (2) basic activities of daily living (including eating, toileting, transferring, bathing, dressing) without assistance from another individual due to loss of functional capacity for at least ninety (90) days; or (ii) requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.


In Gallardo v. Dudek (N.D. Fla., No. 4:16-cv-116-MW/CAS, April 18, 2017), a federal district court ruled that federal law prohibits the state of Florida from seeking reimbursement for Medicaid payments it made on a recipient’s behalf from portions of the recipient’s personal injury settlement that were allocated to future medical expenses. Florida’s reimbursement statute uses a uniform formula in which the recipient’s gross settlement is first reduced by twenty (25%) percent to account for attorney fees, the remainder is divided in half (1/2), and the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, is then entitled to recover the lesser of its total medical payments or one half (1/2). Under this formula, AHCA would recover $323,508.29 in medical payments from Gianinna's settlement. Gianinna’s parents filed suit against the agency in federal court seeking an injunction and a declaration that Florida’s reimbursement statute violates federal law inasmuch as it allows the state to recover from the portion of her settlement beyond that allocable to past medical expenses. AHCA countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. The parties filed cross motions for summary judgment. The U.S. District Court, N.D. Florida, granted the Gallardos’ motion for summary judgment and denied AHCA’s motion. The court held, consistent with the U.S. Supreme Court’s decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), that the AHCA is entitled to recover for past medical payments it made on Gianinna’s behalf only from that portion of the settlement allocated to past medical expenses. The court held that where the state reimbursement law explicitly allows for recovery from the portion of the settlement attributable to future medical care, that portion of the state law violates, and is preempted by, federal Medicaid law.


On Wednesday, April 27, 2017, President Trump outlined his plan for income tax reform. His plan includes the following: decreasing the top corporate tax rate from 35% to 15%; imposing a one-time tax on the repatriation of previously untaxed overseas profits at a to-be-determined rate; conversion from the current system of taxation on worldwide profits to a territorial-tax system in which foreign profits are not taxed; decreasing the number of income tax brackets from seven (7) to three (3); a top individual income tax rate of 35% (down from the current 39.6 percent); maintaining the long-term capital gains and dividends tax rate at a maximum rate of 20%; repeal of the Alternative Minimum Tax, Estate Tax, and 3.8% Medicare tax on Net Investment Income; elimination of itemized deductions (deduction for state and local taxes); and doubling of the standard deduction (from $12,000 to $24,000 for married couples filing jointly and from $6,000 to $12,000 for single filers). The 15% corporate rate would apply to profits of pass-through businesses (S Corporations and LLCs) whose profits currently flow through to individual taxpayers and are taxed at a current rate as high as 39.6%. Itemized tax deductions for charitable contributions, mortgage interest and retirement savings will remain in place.


We live in an ever-changing federal income and estate tax environment. On January 1, 2017, the federal estate tax exemption increased to $5.49 million per individual. That amount excludes over ninety-five (95%) percent of all decedent estates from payment of any federal estate tax. In addition, thirty (30) U.S. states have no estate or inheritance taxes while twenty (20) states and the District of Columbia currently impose an estate (14 states) or inheritance (6 states) tax, or both. As a result, your estate could be exempt from the federal estate tax but subject to a large state estate tax.


With almost 70% of the retiree population solely living on social security it is not surprising that the percentage of families with debt headed by someone age 65 to 74 rose from about 50% in 1989 to about 66% in 2013. Personal debt nearly doubled during the same time period from 21% to about 41%. For most seniors the debt is not being utilized to live a lavished lifestyle but to pay for expensive nursing home, aids and in-home care. As seniors accumulate this debt their families become concerned over what happens to their unpaid bills when they die. It is recommended that families discuss these increasing debts, what amounts, if any, will be the responsibility of their estate, and what they can do to protect an inheritance for their heirs. Families need to recognize that their children are not responsible for their debts at death and only the decedent’s estate assets (subject to probate or Trust administration, but excluding exempt assets) can be utilized to repay the debt. For example, a retirement account (IRA or 401(k)) with a designated beneficiary is creditor protected. A parent’s federal student loan debt will be canceled at death, although taxes may be owed on the forgiven debt. It is important to consult with a legal specialist to learn more about the options that are available in each state.


The new State of Washington Power of Attorney statute went into effect on January 1, 2017 (“Act”). The Act provides several changes and additions to the previous law, which aim to address previous ambiguity in the law and to provide safeguards to prevent possible abuse of authority by an agent under the power of attorney. Some of the key provisions of the Act are: Agent/Attorney in Fact: If the principal names co-agents to act on his or her behalf, the Act now clarifies that co-agents must exercise their authority jointly, unless the document specifies that each co-agent may act independently. When Effective: Under the Act, a power of attorney must now expressly state that the document is not affected by the disability of the principal, or that it becomes effective upon the disability of the principal in order for the power of attorney to be “durable” and not affected by the principal’s subsequent disability. The powers granted to the agent may be effective immediately upon signing or may spring into effect only when the principal becomes incapacitated. Powers Granted to Agent: The Act allows the principal to grant authority to the agent over broad subject matters, including but not limited to, the authority to manage the principal’s real and personal property, stocks, bonds, and other financial instruments; to make gifts; to manage the principal’s estate, trusts, and other beneficial interests; and to manage and operate a business. By drafting the power of attorney to refer to certain specific categories of powers the agent may be granted, the power of attorney can incorporate the more detailed descriptions of these powers set forth in the Act. This could eliminate ambiguity in the document itself regarding the scope of the agent’s particular powers and may allow the power of attorney document itself to be simplified. Under the Act, the authority to make gifts is limited to the amount of the federal gift tax annual exclusion ($14,000 per year to each recipient) unless otherwise stated in the document. Formalities: The principal’s signature must either be: (i) acknowledged by a notary; or (ii) attested by two or more witnesses, who are competent, and are not home care providers for the principal or related to either the principal or agent by blood or marriage.


Section 732.802 of the Florida Statutes is known as the “Florida Slayer Statute.” Subsection (3) provides “that a named beneficiary of a life insurance policy “who unlawfully and intentionally kills … the person upon whose life the policy is issued is not entitled to any benefit …” Moreover, subsection (5) provides that a final judgment of conviction of murder of any degree is conclusive, but in the absence of such a conviction, “the court may determine by the greater weight of the evidence whether the killing was unlawful and intentional for purposes of this section.” In The Prudential Ins. Co. of Am. v. Harding, 2016 WL 6568085 (M.D. Fla. Nov. 4, 2016), a court found the claim of self-defense to be enough to avoid application of the Florida Slayer Statute in a domestic partners death. A physical altercation in February 2015, resulted in the death of one of the partners (the owner of a life insurance policy with a beneficial value of $466,000). The alleged criminal perpetrator was the sole beneficiary of that life insurance policy. The decedent’s sister argued that the surviving partner was ineligible to collect the life insurance benefits under Florida’s Slayer Statute. However, the State Attorney didn’t pursue charges against the surviving partner as it did not believe there was enough evidence to obtain a conviction. The Circuit Court applied the greater weight of the evidence standard and found that it wasn’t more likely than not that surviving partner acted unlawfully in his actions; and it was just as possible that he acted in self-defense. Accordingly, the court found that Florida’s Slayer Statute didn’t apply and ordered the distribution of the life insurance benefits to the surviving partner.