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


The 2017 Tax Act made significant changes to itemized deduction planning. The two (2) biggest changes for 2020 involved: 1. Much higher standard deduction (adjusted for inflation annually).For 2020: $24,800 for married couples filing jointly (plus $1,300 for each spouse attaining age 65: max $27,400)), $12,400 for unmarried individuals/married filing separately (plus $1,650 if attaining age 65 ($1,300 if married filing separately: max $14,050 if single (max $13,700 if married filing separately)), and $18,650 for head of household (plus $1,650 if attaining age 65: max $20,300). 2. The Itemized Deduction computation now has an important and costly limitation. State and local taxes that are deductible in a year are limited to $10,000 (not adjusted for inflation) ($5,000 if married filing separately). These state and local taxes (“SALT”) are primarily property taxes, state income taxes (so could time property tax and estimated state income tax payments if total annual SALT fluctuates above and below $10,000, maybe because of buying or selling a home), and, for some states (such as Arizona), vehicle license tags tax portion. Itemized deductions for most taxpayers (who still can benefit from itemizing) often consist primarily of mortgage interest (but for new mortgages, limited to interest on $750,000 of the principal balance of primary residence only; $375,000 if married filing separately), charitable contributions and $10,000 of state and local tax. So many have a greater standard deduction, and will no longer itemize. Bunching of charitable contributions and large uninsured medical expenses (to the extent they would exceed 10% of adjusted gross income into one year could yield a benefit if that would push itemized deductions over the standard deduction for a year. Changing the date of a mortgage payment at year-end could move another month’s interest into a “bunching year.” With the standard deduction at a new high (in 2020 as high as $27,500), the itemized deduction may offer no benefit when it had in the past. Also for many more potential or actual homeowners who now don’t itemize, there is no tax subsidy in homeownership. For many others who do, property taxes may now not be subsidized in whole or in part. Old rules scheduled to return: But don’t completely forget the old rules. In 2026 the standard deduction rules will revert to what they were before the 2017 Tax Act. For example, among other things, the standard deduction for married couples could be around $14,500 (estimated for inflation adjustments), and itemized deductions will have no SALT limitation and will include miscellaneous itemized deductions and phaseouts of deductions for higher-income taxpayers nixed by the 2017 Tax Act.


Important legislation is working its way through Congress. The Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”) as passed by the House of Representatives on May 23, 2019, and would impact how and when an IRA or retirement account beneficiary would be forced to receive distributions from an inherited account. The biggest change under the SECURE Act would be the replacement of the 5-year distribution rule for inherited IRAs with a 10-year rule. It would also eliminate “stretch IRAs.” If signed into law, the Act would impact plan participants and IRA owners who die after January 1, 2020, with limited exceptions. Under current tax law contributions to an IRA and retirement plan are not taxed until distributed after retirement (distribution must begin not later than age 70.5). Until distribution the investments grow tax free and create an incentive for a retiree to withdraw from their IRAs as a last resort to avoid taxation, loss of tax shelter, and potential method to pass an inheritance on to beneficiaries. Under the SECURE Act, all IRA and retirement plan distributions would need to be completed within a ten (10) year period beginning in the year following the year the participant or IRA owner died. The ten (10) year period would replace the current five (5) year default period and would apply regardless of whether the plan participant or IRA owner died before or after reaching their required minimum distribution date (RMD). The change would apply to distributions to a non-spouse beneficiary from retirement plans and IRAs (including Roth IRAs) made after the death of the plan participant or IRA owner who dies after December 31, 2019. Limited exceptions apply for: (i) a new class of individuals called “eligible designated beneficiaries” (surviving spouse, minor child, disabled individual or individual that is not more than 10 years younger than the deceased participant); (ii) collectively bargained plans; (iii) certain governmental plans; and (iv) existing annuity contracts. The minor child exception will cease once the minor child reaches the age of majority. Thereafter, the remainder of the distributions to that individual must be completed within ten (10) years after that date. A “disabled individual” includes an individual unable to engage in any substantial gainful activity due to a medically determinable physical or mental impairment. The determination as to the existence of an eligible designated beneficiary will be made upon the death of the plan participant or IRA owner. For most inherited IRA beneficiaries, the 10-year rule will provide far more flexibility for timing distributions than the existing 5-year rule. However, those desiring to utilize their retirement account as a wealth transfer vehicle could be adversely impacted.


Prior to the Tax Cuts & Jobs Act of 2017 ("ACT"), a divorced spouse could deduct any alimony payments made to his former spouse. The former spouse had to claim the alimony received as income. The ACT eliminated this tax deduction effective January 1, 2019. The implementation of this change remained unclear for agreements executed prior to December 31, 2018, but modified after that date. On July 22, 2019, the IRS issued an article clarifying the treatment of payments pursuant to a modified agreement. The article explained that "the new law applied to a modified agreement if the modified agreement 1) changed the terms of the alimony or separate maintenance payments and 2) stated that the alimony or separate payments are not deductible by the payer spouse or includable in the income of the receiving spouse." As a result, modified agreements that do not change or modify the terms of the payments and require them to be non-deductible remain subject to the old law.


Florida’s lawsuit climate ranked 46th out of 50 in a new national survey released on September 18, 2019, by the U.S. Chamber Institute for Legal Reform (ILR). The city of Miami ranked among the ten worst jurisdictions in the nation. The 2019 Lawsuit Climate Survey was conducted by The Harris Poll on behalf of the U.S. Chamber Institute for Legal Reform. The poor perception of Florida’s legal climate is critical because 89 percent of survey participants—an all-time high—said a state’s lawsuit environment is likely to impact their company’s decisions about where to locate or do business. The survey comes at the same time the Florida legislature has made strides toward improving the lawsuit climate. Last April, the Florida legislature passed legal reform bills aimed at curbing rampant insurance fraud. In May, the state Supreme Court finally adopted a rule to keep junk science out of Florida courtrooms—already law in 40 other states and in federal courts.


Exploitation of the elderly is a serious problem in our country. Many incidents involve caregivers that take advantage of the vulnerability of the individuals they are caring for. The California Legislature has closed loopholes in its Probate Code that allows abusive caregivers to marry their way into a dependent adult’s wealth. Assembly Bill 328, signed by California Governor Newsom on June 26, 2019, and effective on January 1, 2020, creates a presumption of undue influence that applies in two scenarios. California law previously presumed that a dependent adult who signs an instrument benefiting a “care custodian” (i.e., a caregiver who provides health or social services to a dependent adult) does so as a result of fraud or undue influence such that the instrument is presumptively invalid. However, the law exempted spouses, domestic partners, and cohabitants who receive gifts from dependent adults. The exclusion permitted an opportunistic care custodian to marry a dependent adult so as to avoid the presumption of invalidity. Assembly Bill 328 amends section 21611 of the California Statutes so that care custodians who marry dependent adults cannot make “omitted spouse” claims if the dependent adult dies less than six months after the marriage occurred. Legislation of this nature is needed in all US states and territories. Talk to your state representatives to promote it.

North Carolina Department of Revenue v. Kimberly Rice Kaestner 1992 Family Trust

On June 21, 2019, the U.S. Supreme Court addressed the case of North Carolina Department of Revenue v. Kimberly Rice Kaestner 1992 Family Trust. The Court, in a unanimous decision, found that the State of North Carolina may not tax trust income that (i) has not been distributed to the beneficiaries, for which the beneficiaries lack the right to demand the income, and (ii) for which the receipt of that income is uncertain simply because those beneficiaries reside in the state. North Carolina taxed the Kaestner trust based on N.C.G.S. §105-160.2, which provides that the state can tax any trust “that is for the benefit of a resident of this State” regardless of whether the beneficiary actually receives distributions from the trust, has the right to demand income from the trust in a given year or could ever count on receiving income from the trust.The Supreme Court found that state residency of a beneficiary alone is not enough for North Carolina’s statute to satisfy the first criteria of the Court’s Due Process analysis and that the North Carolina statute, as applied, violated the Due Process Clause of the United States Constitution. When creating a Trust it is important to consider the fact that several states, including Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming, have no state-level taxation of trusts. Others, including the District of Columbia, tax trustees of what they classify as “resident” trusts.


Many clients wonder whether it is best to leave their original estate planning documents with the attorney that drafted them or in their homes. The recent weather events and climate change, including hurricanes and tornadoes, has led to discussions on where would they best be protected? In many instances, people escape from their homes with only the clothes on their back, or even if they do have a bit of time to gather items to take, they may not think about their estate planning documents. In addition to paper copies, it is a good idea to preserve your estate planning documents electronically and store them either in a secure cloud back-up or a physical back-up to your computer housed in a different location. You should always create an electronic PDF copy of your documents as a further safeguard.

Spouses Do Not Need to Be Estranged to Request Spousal Waiver From Medicaid Application Process

A New Jersey appeals court has ruled that a married Medicaid applicant could request a spousal waiver for undue hardship even though the spouses were not estranged because the applicant's spouse refused to provide financial information. N.S. v. Division of Medical Assistance and Health Services (N.J. Super. Ct., App. Div., No. A-3562-17T2, July 8, 2019). The New Jersey Superior Court, Appellate Division, held that there is no requirement in federal law that "spouses be estranged in order to receive a spousal waiver for an undue hardship." The court holds that the "determination of undue hardship should be a fact-sensitive inquiry taking into account the totality of the circumstances," and it remands to the state to process the application based on the information and documents already submitted. While this law is not binding in Florida it can be used for argument purposes and to support a legal position.


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.