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


The crazy 2015 stock market offers some excellent planning opportunities, if you qualify.  While year-end has not brought the stock market back to where it started the year, it opens the door to those interested in making a Roth IRA conversion. Converting a traditional Individual Retirement Account (IRA) to a Roth IRA would allow the assets to grow tax-free, while remaining in your account, and tax-free distributions once you start withdrawing funds.

There is no income limit or other restrictions on who is eligible to convert a traditional retirement account to a Roth IRA. The account owner will have to pay income taxes on the account’s value on the date of conversion.  However, the new investment account will never again be subject to income taxes or required minimum distributions. Considerations that should be reviewed include (i) whether your income tax rate be lower now, or during your future retirement years; and (ii) do you have funds to pay the income taxes, other than the converted funds (if you’re under age 59 ½ and use a portion of the IRA to pay the tax bill, the payment is treated as an early distribution of the traditional IRA). 


2015 Year-End Planning Moves:

·  Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later.
·  Postpone income until 2016 and accelerate deductions into 2015 to lower your 2015 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2015 that are phased out over varying levels of adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for those taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances.
· Consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2015.
·  If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by recharacterizing the conversion, transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer.
·  Use a credit card to pay deductible expenses before the end of the year. This will increase your 2015 deductions, even if you don’t pay the bill until 2016.
·  If you expect to owe state and federal income taxes when you file your return next year, ask your employer to increase withholding of state and federal taxes (or pay estimated tax payments of state and federal taxes) before year-end to pull the deduction of those taxes into 2015 if you won’t be subject to the alternative minimum tax (AMT) in 2015.
·  Estimate the effect of any year-end planning moves on the AMT for 2015, keeping in mind that many tax breaks allowed for purposes of calculating regular taxes are disallowed for AMT purposes. These include the deduction for state property taxes on your residence, state income taxes, miscellaneous itemized deductions, and personal exemption deductions. Other deductions, such as for medical expenses of a taxpayer who is at least age 65 or whose spouse is at least 65 as of the close of the tax year, are calculated in a more restrictive way for AMT purposes than for regular tax purposes. If you are subject to the AMT for 2015, or suspect you might be, these types of deductions should not be accelerated.
· You may be able to save taxes by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses, and other itemized deductions.
· Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70- 1/2. That start date also applies to company plans, but non-5% company owners who continue working may defer RMDs until April 1 following the year they retire. Failure to take a required withdrawal can result in a penalty of 50% of the amount of the RMD not withdrawn. If you turned age 70- 1/2 in 2015, you can delay the first required distribution to 2016, but if you do, you will have to take a double distribution in 2016, the amount required for 2015 plus the amount required for 2016. Think twice before delaying 2015 distributions to 2016, as bunching income into 2016 might push you into a higher tax bracket or have a detrimental impact on various income tax deductions that are reduced at higher income levels. However, it could be beneficial to take both distributions in 2016 if you will be in a substantially lower bracket that year.
· Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.
·  Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2015 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next.

Tax Factors for Consideration:

Higher-income earners have unique concerns to address when mapping out year-end plans. They must be wary of the 3.8% surtax on certain unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax. The latter tax applies to individuals for whom the sum of their wages received with respect to employment and their self-employment income is in excess of an unindexed threshold amount ($250,000 for joint filers, $125,000 for married couples filing separately, and $200,000 in any other case).  The surtax is 3.8% of the lesser of: (1) net investment income (NII), or (2) the excess of modified adjusted gross income (MAGI) over an unindexed threshold amount ($250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case). As year-end nears, a taxpayer’s approach to minimizing or eliminating the 3.8% surtax will depend on estimated MAGI and NII for the year. Some taxpayers should consider ways to minimize (e.g., through deferral) additional NII for the balance of the year; others should try to see if they can reduce MAGI other than NII, and still other individuals will need to consider ways to minimize both NII and other types of MAGI.

The 0.9% additional Medicare tax also may require year-end actions. Employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income. Self-employed persons must take it into account in figuring estimated tax. There could be situations where an employee may need to have more withheld toward the end of the year to cover the tax. For example, if an individual earns $200,000 from one employer during the first half of the year and a like amount from another employer during the balance of the year, he would owe the additional Medicare tax, but there would be no withholding by either employer for the additional Medicare tax since wages from each employer don’t exceed $200,000. Also, in determining whether they may need to make adjustments to avoid a penalty for underpayment of estimated tax, individuals also should be mindful that the additional Medicare tax may be overwithheld. This could occur, for example, where only one of two married spouses works and reaches the threshold for the employer to withhold, but the couple’s combined income won’t be high enough to actually cause the tax to be owed.

Tax Breaks Not Extended, as of Yet:

Some of these tax breaks ultimately may be retroactively reinstated and extended, as they were last year, but Congress may not decide the fate of these tax breaks until the very end of 2015 (or later). These breaks include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line-deduction for qualified higher education expenses; tax-free IRA distributions for charitable purposes by those age 70- 1/2 or older; and the exclusion for up to $2 million of mortgage debt forgiveness on a principal residence.


On November 25, 2015, the Second District Court of Appeals, in the case of Lutheran Services Florida, Inc. v. Department of Children and Families (Fl. Ct. App., 2nd Dist., No. 2D13-5840, Nov. 25, 2015) held that the guardian of a Medicaid recipient may not deduct a guardianship fee from the recipient's income because the fee is not medically necessary. The case originated from a court order which authorized a professional guardian to deduct a monthly sum from an indigent and incapacitated individuals income and patient responsibility amount. The professional guardian then petitioned the Department of Children and Families (DCF) to deduct the monthly guardianship fee on their behalf, which they denied to do. DCF took the position that the fee could not be deducted from a Medicaid recipient's income because it is not "medically necessary" under state law. A hearing officer upheld the determination, noting that state law defines medically necessary as services provided in accordance with generally accepted standards of medical practice and reviewed by a physician. The 2nd DCA affirmed the decision on appeal.


Upon creation of a Revocable or Irrevocable Trust (a legal arrangement through which a trustee holds legal title to property for another person), you will need to appoint an individual or trust company to serve as its trustee (person or entity in charge). With a Revocable Trust, that individual is typically the creator of the Trust. With an Irrevocable Trust, this can be either an individual or individual (but not the creator). Regardless of the type of Trust created, it is important to appoint an individual or institution to serve if the named individual or institution is unable to continuing serving for the Trust. Selection of the right trustee can be crucial to making sure the intent of the Trust is fulfilled and your goals accomplished. Their responsibilities include making proper investments, paying bills, keeping accounts, and preparing tax returns. The main consideration when selecting a trustee is whether they are trustworthy and can manage the assets in the beneficiary's best interest. Regardless of whom may be selected, it is important to revaluate the selection every few years to ensure they are the right individual or entity for the job and still capable of fulfilling their obligations to the beneficiaries. The right individual or institution today may not be right tomorrow.


Year end retirement planning deadlines you need to meet in order to qualify for income tax deductions and credits:

Make last-minute 401(k) contributions. An employee can contribute up to $18,000 to a 401(k) account in 2015. Workers age 50 and older can make catch-up contributions worth an additional $6,000, or a total of $24,000 in 2015, which are also due by Dec. 31. An investor over age 50 who is in the 25 percent tax bracket and maxes out his traditional 401(k) will save $6,000 on his federal income tax bill. But even a smaller contribution of $5,000 would save him $1,250 in taxes. At a minimum, double check that you have saved enough to get any employer match offered by your company.

Take required minimum distributions. Retirees born before July 1, 1945, are required to take distributions from their individual retirement accounts and 401(k) plans by Dec. 31, 2015. The distribution amount is calculated by dividing the account balance by an IRS estimate of your life expectancy, and sometimes a spouse's age is also taken into account. The penalty for missing a required distribution is a stiff 50 percent of the amount that should have been withdrawn. However, if you turned 70 1/2 in 2015, which is those born after June 30, 1944, and before July 1, 1945, there is a special rule that allows you to delay your first required distribution until April 1, 2016. But the second (and all subsequent) distributions will be due by Dec. 31 of the same year. Retirees who delay their first required minimum distribution will need to take two distributions in the same year. "Taking a double distribution in 2016 could cause you to pay more for taxes and may even push you into a higher tax bracket," says Helga Cuthbert, a certified financial planner for Cuthbert Financial Guidance in Decatur, Georgia. "You're usually better off taking it the year you turn 70 1/2."

Extra time for IRA contributions. You have until April 15, 2016, to contribute up to $5,500 to an IRA that can be applied to tax year 2015. Workers age 50 and older are eligible to contribute an additional $1,000, for a total contribution of $6,500 in 2015. You can reduce the amount you owe and help increase your retirement savings by putting some money in an IRA. 

Claim the saver's credit. If your adjusted gross is below $30,500 for individuals, $45,750 for heads of household and $61,000 for couples in 2015 and you contribute to a 401(k) or IRA, you may be able to qualify for the savers credit. This valuable tax credit is worth between 10 and 50 percent of the amount you contribute to a retirement account, up to $2,000 for individuals and $4,000 for couples.

Get ready for 2016. 401(k) and IRA contribution limits will remain the same in 2016. But if you weren't able to max out your accounts in 2015, consider setting your contribution amount a little higher next year. If you get a raise, bonus or tax refund, redirecting part of it to a retirement account will set you up for a lower tax bill in 2016.


For decades, states have granted courts the power to appoint guardians or conservators for elderly or disabled people unable to tend to their basic needs. Most appointed guardians are family members, but judges can turn to a growing industry of professional, unrelated guardians. Often the guardians are granted broad authority over a ward’s finances, medical care and living conditions. But guardianship systems across the country are plagued by allegations of financial exploitation and abuse, despite waves of reform efforts, according to a Wall Street Journal Page One story. As a result, critics say, many elderly people with significant assets become ensnared in a system that seems mainly to succeed at generating billings. “These laws which were designed to protect the vulnerable are being used against them to exploit them,” says Dr. Sam Sugar, founder of Americans Against Abusive Probate Guardianship, an advocacy group. Because guardianship systems vary by state and county and record-keeping systems are inconsistent, precise national data is unavailable. But the roughly 1.5 million adult guardianships in the U.S. involve an estimated $273 billion in assets, according to Anthony Palmieri, auditor for the guardianship fraud program in Palm Beach County, Fla. The problems are more urgent as aging baby boomers cause the population of seniors nearly to double by 2050, according to Census estimates. In New Jersey, the number of adult guardianships added annually increased 21% from 2009 to 2014, to 2,689 cases. Guardians properly supervised by courts typically do a good job protecting elderly people from exploitation by acquaintances and others, says Catherine Seal, a guardianship attorney in Colorado Springs, Colo., and president-elect of the National Academy of Elder Law Attorneys. “The worst cases that I see are the ones where there is no guardian,” she says. Expenses that arise as a result of a guardianship, including lawyers for both guardians and wards, typically get paid from the ward’s assets. (In some jurisdictions, there is a public guardian’s office that handles cases for indigent clients.) The financial arrangement, critics say, encourages lawyers and guardians to perpetuate guardianships indefinitely. Check out the story for anecdotes involving guardians and their wards. Linda McDowell, of Sequim, Wash., lost about $470,000 in assets during her 30-month stay in Washington state’s guardianship system. After Ernestine Franks of Pensacola, Fla., was placed into guardianship, withdrawals from a $1.3 million trust set up to pay her expenses jumped to $297,000 in 2014 from $94,000 in 2011, when Ms. Franks mostly made her own financial decisions. Article published in the Wall Street Journal on Oct. 30, 2015.


The following chart details the compensation, contribution and benefit limits for 2016. All limits are applicable for the plan year commencing in the respective year, except as stated otherwise below.
$18,000 (Calendar Year Limit)
 $18,000 (Calendar Year Limit)
 $17,500 (Calendar Year Limit)
$18,000 (Calendar Year Limit)
 $18,000 (Calendar Year Limit)
$17,500 (Calendar Year Limit)
$6,000 (Calendar Year Limit)
$6,000 (Calendar Year Limit)
$5,500 (Calendar Year Limit)
$53,000 (Effective for Limitation Years Ending in 2016)
$53,000 (Effective for Limitation Years Ending in 2015)
$52,000 (Effective for Limitation Years Ending in 2014)
For Determining HCEs in 2016, Employees Who Earned More than $120,000 in 2015
For Determining HCEs in 2015, Employees Who Earned More than $115,000 in 2014
For Determining HCEs in 2014, Employees Who Earned More than $115,000 in 2013


During the Florida probate administration the personal representative may take possession of all of the decedent’s property.  Fla. Stat. § 733.607(1).  However, this provision of the Probate Code also provides that such property can be left with the person presumptively entitled to it.  As a result, it is very common for disputes to arise as to (i) whether property is, in fact, the decedent’s property; and (ii) whether someone other than the personal representative has a right to possession of the property during administration.
Florida’s Fourth District Court of Appeals recently addressed this issue in Delbrouck v. Eberling, et al., __ So.3d __ (Fla. 4th DCA 2015). In Delbrouck, an estate beneficiary and the personal representative argued over the right to possess certain real property in the decedent’s name while estate administration was pending.  The personal representative filed a motion seeking surrender of the assets in question because the assets were titled in the decedent’s name.  The beneficiary countered by moving for authorization to occupy the properties, arguing that the Probate Code provides for a person presumptively entitled to possession of property to retain possession (Fla. Stat. § 733.607(1)). 
On appeal, the Fourth District reversed, holding that where a claim of possession is made on property titled in the decedent’s name, the determination as to who is entitled to temporary possession during probate requires an evidentiary hearing.  The appellate court reasoned that if “ownership of an asset can be contested during probate, it cannot be the case that a personal representative’s assertion of the right to possession can never be challenged.”


Florida Estate planning does not only involve the preparation of a Will, Trust, or Power of Attorney, but also takes into consideration retirement issues. For the ordinary individual, both the means-tested and non-means-tested government benefit programs (Security Security, Medicare and Medicaid) are an important retirement consideration.
As a result, individuals must consider whether they should dispose of their assets, prior to death, through pre-need planning in order to qualify for means-tested government programs (Medicaid – which may pay for the cost of long term nursing home care). However, in order to qualify for these programs, the programs will consider the transfers of assets in the 60 months prior to the benefits application, with limited exceptions (irrevocable college saving plans, and the "two-year caretaker rule”). Veteran benefits and health care may also be available for eligible individuals and their surviving family. 
In addition, a means-tested government benefit recipient who receives an inheritance or is the beneficiary of a life insurance policy, may have their government benefits terminate as a result of the windfall. As a result, more sophisticated estate planning techniques may be utilized to ensure the beneficiary does not lose their eligibility for government benefits and can still receive the benefit of the bequest.


The Achieving a Better Life Experience (the ABLE Act) was signed into Federal law on December 19, 2014. Each state is responsible to pass legislation to create the vehicle for ABLE accounts to be created and administered. The law creates a new savings vehicle for those individuals suffering with disabilities. The account funds can be utilized for education, medical and dental care, job training, housing, transportation and other expenses.
The first $100,000 is disregarded when determining SSI (Social Security Income) eligibility. Without this Act a person receiving Medicaid could only have personal liquid assets of $2,000 or less. Contributions grow tax free and withdrawals for qualified expenses are also tax free.

Eligibility for an account requires an individual to be entitled to Social Security benefits, based on a blindness or disability that occurred before the date on which the individual turned age 26. A beneficiary is limited to one ABLE account and the account must be set up and established in the state in which they live. Account contributions are treated as a completed gift (they are non-deductible cash contributions) and limited to $14,000 per year.

An ABLE Account may be rolled-over tax free from one account to another for the same beneficiary, but only once in a 12 month period. Any amounts remaining in an ABLE Account at the beneficiaries death are subject to a claim from the state for an amount to replace Medicaid payments made by the state.

In contrast, a Special Needs Trust can be established for any age beneficiary and is not subject to this payback provision. There are also no dollar limits that can be contributed or accumulated in a Special Needs Trust.


It is estimated that on January 1, 2016, the federal estate and gift tax exemption will rise to $5.45 million (up from $5.43 million).  This would allow a married couple to shield $10.9 million from federal estate taxes. With the top federal estate tax rate at 40%, this number is important to individuals who try to decrease the size of their estates and avoid the tax. Over the years, the exemption amount has risen from $675,000 in 2001, $1.0 million in 2003, $2.0 million in 2008, until it was set at $5 million in 2011, and indexed for inflation.

It is important to note that the gift tax is tied to the estate tax, so the inflation indexing helps individuals make the most of tax-free lifetime giving too.  This increase in the exemption amount will allow an individual, who previously made a $5 million gift to their children to provide them with an additional $450,000. 

Separate and distinct from the federal estate and gift tax exemption is the annual gift tax exclusion amount. In 2016, it is projected to remain at $14,000 (the same as 2014-2015). The annual gift tax exclusion allows individuals to gift the sum of $14,000 to as many individuals as they desire without any gift tax consequences.  A husband and wife can make a joint gift of $28,000. It is important to consider the federal kiddie tax when making gifts to young individuals and students through the age of 23, since the young individual pays no tax on the first $1,050 of unearned income and then a 15% rate on the next $1,000. Investment income, above these small amounts, will then be taxed at the parent’s tax bracket. 


In Hahamovitch v. Hahamvitch, the Florida Supreme Court Case No. Sc14-277 (September 10, 2015) addressed a divorcing spouse claim that a twenty (20) year old pre-marital agreement did not apply to the enhanced value of non-marital property, attributable to marital labor. Her position was that the enhanced value to the husband’s assets was subject to equitable distribution. The divorcing spouse additionally claimed an interest her husband’s earnings, since their agreement did not specifically address the issue.

The husband argued that the agreement did provide that the property “owned or hereby acquired by each of them respectively” would be free of claims of the other spouse. It also provided that “each party agrees that neither will ever claim any interest in the other’s property,” and if one party “purchases, [a]cquires, or otherwise obtains, property in [his/her] own name, then [that party] shall be the sole owner of same.” Thankfully, both the District Court of Appeals and the Supreme Court concurred and found that the above general waiver language was broad enough to protect enhancement in value of property and the husband’s separate earnings as separate property of the husband, thus denying the wife an interest in those assets upon divorce.

When drafting marital agreements it is important to look to Fla.Stats. Section 61.079 and Casto v. Casto,  508 So.2d 330 (Fla. 1987), in which the Florida Supreme Court found that unfairness or unreasonableness can negate enforceability, although full and complete financial disclosures will still allow for enforceability even if the agreement is unfair or unreasonable.


Over seventy (70%) percent of Americans, dream of spending their final days at home, in peace and comfort, surrounded by loved ones who care for you compassionately until their last breath. In reality, seventy (70%) percent actually die in a hospital, nursing home or long-term care facility. To avoid this happening to you, it's never too early to start planning because there are no guarantees for the future.
Prepare Estate Planning Documents. According to a survey, forty-one (41%) percent of all baby boomers do not have an estate plan and fifty (50%) percent of all Americans die without a valid Last Will and Testament. As a result, your state of residence, at date of death, will determine how your assets are distributed.
Protect Minor Children. According to a survey, fifty-five (55%) percent of Americans, with minor children, do not have an estate plan and have not named a legal guardian for their children. As a result, the state will determine who receives custody of the minor child(ren) if both parents die.
End-Of-Life Care. Less than one-third (1/3) of Americans have an advanced directive (Power of Attorney, Health Care Surrogate and Living Will). These instruments can provide valuable instructions to health care professionals on the type and extent of care to be delivered in a life-threatening situation. Without a Living Will or other form of advance directive, in the event of an end of life situation you will receive aggressive, full medical treatment, which you may not really want and have no one to enforce your desires.
Final Remembrance. How and where you choose to be laid to rest is a personal decision. Whether it be a military funeral, social style or small family event, it is important to make your family aware of your desires in advance. You can also make arrangements in advance for your own funeral and leave detailed instructions so your loved ones will know what to arrange for you.
Talk To Your Loved Ones. To avoid conflicts over how to handle financial, health care, or after-death arrangements, you should communicate your specific desires (sit down conversation, detailed instructions, etc.) and create the necessary legal documents to ensure your desires are met. This should include future placement in an assisted living facility or retirement home or spending your final days at home


If you think that using your frequent flyer miles is a hassle while you are alive, it is even worse when you are dead. In the Florida probate area a frequent question is can I inherit a decedents frequent flyer miles. Some of the big North American lines specifically address the issue of transfer to heirs (and divorced spouses) in their frequent flyer membership rules:

Air Canada: Miles or rewards are personal and cannot be assigned, traded, willed or otherwise transferred.

American: Neither accrued mileage, nor award tickets, nor upgrades are transferable by the member (i) upon death, (ii) as part of a domestic relations matter, or (iii) otherwise by operation of law. However, American Airlines, in its sole discretion, may credit accrued mileage to persons specifically identified in court approved divorce decrees and wills upon receipt of documentation satisfactory to American Airlines and upon payment of any applicable fees.

Jet Blue: Accrued points and award travel do not constitute property of member and are non-transferable (i) upon death, (ii) as part of a domestic relations matter, or (iii) otherwise.

United: Neither accrued mileage nor certificates are transferable (i) upon death, (ii) as part of a domestic relations matter, or (iii) otherwise by operation of law.

Southwest: Their frequent flyer program rules have nothing to say about the subject one way or the other.

Even the airlines that allow transfer are pretty specific about who can claim the miles. You must be either a "surviving spouse" or mentioned as an heir in the deceased member's Will.


The “Great Wealth Transfer” (the wave of wealth, estimated to be in the trillions, which will flow from the oldest generation in the coming decades) will land in the hands of many Americans ill prepared to handle an inheritance. Multiple studies indicate that the majority of these recipients will quickly dispose of their inheritance. One study found that one third of people who received an inheritance had negative savings within two years of the event.
The problem stems from the fact that those inheriting the funds tend to view it as “fun money” and do not utilize it to shore up their retirement savings. The 2015 Retirement Confidence Survey by the Employee Benefit Research Institute found that 57% of workers have less than $25,000 in savings and investments.  In addition, when you factor in inflation, even a $1 million inheritance will not guarantee a couple’s comfortable retirement.
The following is a list of expert’s guidance:
A decision-free time period where no big decisions (large investments or expenditures) are made. This includes evaluating funds put away for retirement and anticipated cost, the cost of a child’s education through graduate school, annual trips with the extended family, or the purchase of a second home for the whole family to use. 
The payment of oppressive debt should also top the list of considerations. Why would you maintain a credit/debit card with a 20% interest rate when you could not invest the funds and earn a financial return even close to that amount annually. 
The next consideration should be the creation of an emergency fund in case of unemployment, a medical emergency, or a big-ticket home repair. The funds can help you weather the unexpected expense while still maintaining your lifestyle. 
Do not make family members aware of your windfall. If you do, you will quickly learn about multiple “get rich quick” ideas that distant relatives have for your money or loans that you will need to pay on someone else’s behalf. 
Funds which remain, after allocating for each of the above items, should then be spent with caution. What may have initially sounded like a great idea (a second home by the lake) could result in the purchase of an item that family and friends will use more than you.