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


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.


The May 15, 2017, U.S. Supreme Court ruling in Howell v. Howell is a unanimous victory for disabled U.S. veterans. The decision upheld federal law that military disability compensation is not divisible in divorce proceedings. The Court concluded a state court should not be permitted to “subsequently increase, pro rata, the amount the divorced spouse receives each month from the veteran’s retirement pay in order to indemnify the divorced spouse for the loss caused by the veteran’s waiver.” Justice Breyer reversed the Arizona Supreme Court and concluded that under federal law state courts lack the authority to divide up disability benefits and are not permitted to circumvent the restrictions imposed by federal law, by ordering one former spouse to reimburse the other for retirement compensation they no longer receive.


Effective January 1, 2018, the State of Connecticut will require certain pension and annuity payors to withhold Connecticut state income tax from distributions made from an employer retirement plan (pension, annuity, profit-sharing plan, stock bonus, deferred compensation plan, individual retirement arrangement, endowment, or life insurance contract). The withholding requirement applies to public and private entities that (1) maintain an office or transact business in Connecticut and (2) make taxable payments to resident individuals. No change in the law is made for nonresidents.


Federal legislation recently made permanent an individual taxpayer ability to make charitable contributions directly from his or her IRA. These contributions are made directly from the IRA to the public charity are not taxed as income to the taxpayer subject to the following requirements: (i) individual making the contribution must be at least 70 1/2 years of age on the date of the contribution; and (ii) contributions of up to $100,000 per individual per year (or $200,000 for married taxpayers filing a joint return ). Contributions in excess of the $100,000 ($200,000) amount are treated as taxed withdrawals which are then donated to charity. Individuals over age 70 1/2 with traditional IRAs or Roth IRAs will benefit the most if they (1) have already used (either directly or via carry-over) their entire charitable deduction allowed under Section 170 of the Internal Revenue Code during the taxable year; (2) want to make charitable contributions but do not itemize deductions; or (3) have income above the applicable threshold such that deductions under Section 170 of the Internal Revenue Code are not “dollar for dollar” deductions.


You can now add Connecticut, New York and New Jersey to the growing list of states trying to keep its retiring residents from fleeing to states with a lower or no state estate tax bill at death. Effective April 1, 2017, New York state increased their exclusion amount, the amount of property that could pass free of any New York state estate tax, from $1.00 million to $5.25 million. On January 1, 2019, the New York state exclusion amount will increase again and equal the federal exemption amount. Not to be left behind, in the fall of 2017, the states of Connecticut and New Jersey also made significant changes to their state estate tax exemptions. In 2018, the Connecticut estate tax exemption amount will rise from $2 million per person to $2.60 million and will match the federal exemption amount on January 1, 2020. In New Jersey, retroactive to January 1, 2017, the New Jersey estate tax exemption rose from $675,000 per person to $2.00 million. The New Jersey estate tax will be eliminated entirely on January 1, 2018. It is important to note that the New Jersey inheritance tax, a tax levied on inheritances passing to siblings, nieces, nephews and other unrelated individuals, is not impacted by this change in the law. As a result, bequests to certain beneficiaries may still be subject to inheritance tax.


The Internal Revenue Service (“IRS”) announced on October 19, 2017, the following dollar limits applicable to tax-qualified plans for 2018: • The limit on the maximum amount of elective contributions that a person may make to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan is increased from $18,000 to $18,500. • The limit on “catch-up contributions” to a §401(k) plan, a §403(b) tax-sheltered annuity, or a §457(b) eligible deferred compensation plan for persons age 50 and older remains unchanged at $6,000. • The dollar limit on the maximum permissible allocation under a defined contribution plan is increased from $54,000 to $55,000. • The maximum annual benefit under a defined benefit plan is increased from $215,000 to $220,000. • The maximum amount of annual compensation that may be taken into account on behalf of any participant under a qualified plan will go from $270,000 to $275,000. • The dollar amount used to identify “highly compensated employees” remains unchanged at $120,000.


Effective October 2, 2017, new rules go into effect for federally backed HECM (Home Equity Conversion Mortgage) reverse mortgages. The good news is that the new rules will only impact new borrowers. A reverse mortgage allows an individual over age 62 to borrow against the equity in their home without being required to pay back the loan until they either move, sell the property or die. For many seniors, a reverse mortgage provides them a means to generate funds in retirement. The new rules will increase the upfront cost of the reverse mortgage to 2.0% (it previously was 0.5% for those receiving less than 60% of their home equity and 2.5% for those borrowing more than 60%). The new rule will also decrease the annual premium from 1.25% to 0.5% of the outstanding mortgage balance. The amount that may be borrowed will remain linked to the age of the borrower and prevailing interest rate. At current interest rates, the average borrower is able to borrow approximately 58% of the value of the home, down from 64%. The new rules are necessitated by the continuing deficits in the federal reverse mortgage program.


For most, the release of the Consumer Price Index by the Department of Labor goes unnoticed. However, this information allows for the prediction of the 2018 estate, gift, and generation-skipping transfer tax amounts. Estate Tax Exemption – Under current federal tax law, a U.S. citizen may pass tax-free (by gift or at their death) the total sum of $5,490,000 to their heirs and beneficiaries (excluding their spouse). This amount is projected to increase to $5,600,000 in 2018. As a result, in 2018 a couple (U.S. citizens) will be able to collectively transfer $11,200,000.00 without incurring a federal estate or gift tax. This amount will also be applicable to gifts made to grandchildren and future generations (the generation-skipping transfer tax (GST)). Annual Gift Tax Exclusion –A U.S. citizen is entitled to gift a sum certain each year to an unlimited number of individuals (the “annual gift tax exclusion”) without any tax consequences. In 2018, the annual gift tax exclusion amount is projected to increase from $14,000 to $15,000 per individual recipient. The exclusion amount for gifts to a spouse who is not a U.S. citizen (the so-called “super-annual exclusion”) is also projected to increase from $149,000 to $152,000.


The devastation of Hurricane Harvey will be felt for years to come. While relief efforts are underway to assist victims of the storm the Internal Revenue Service has also established procedures, via announcement or news relief, to assist those adversely impacted. Retirement Plan Hardship Distributions: IRS Announcement 2017-11 (the “Announcement”) allows participants and beneficiaries of 401(k) plans or 403(b) plans, subject to restrictions, hardship access to or loans from their retirement funds until January 31, 2018. Eligibility requires you to have lived or worked in a county designated by FEMA to receive funds on account of Hurricane Harvey or have family (including parents, grandparents, children or grandchildren) or dependents with a principal residence in an affected county. The hardship distribution or loan must be made no later than January 31, 2018. The Announcement permits distributions without application of the safe harbor rules (medical expenses or expenses to repair a principal residence) and does not require plans to suspend employee contributions for six (6) months following the hardship distribution. Plans that do not provide for hardship relief can be amended by the end of the first plan year beginning after December 31, 2017. It is important to note that any hardship distribution will still be includible in gross income and subject to the 10% additional tax on early distributions for those under age 59-1/2. Extended Tax Return Deadlines: The IRS has announced in a news release that individuals and businesses impacted by Hurricane Harvey will receive, as needed, extended filing tax deadlines. Individuals, under valid extensions until September 15, will now have until January 31, 2018 to file their returns and pay their taxes. Any business, under a valid extension until October 16, will now have until January 31, 2018 to file their returns and pay their taxes. The tax relief only applies to taxpayers located in areas designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance and those outside the areas but have necessary records needed to meet deadlines located in a designated area. The extensions also apply to the September 15, 2017 and January 16, 2018 deadlines for making quarterly estimated tax payments and the October 31, 2017 deadline for quarterly payroll and excise tax returns. Employer Provided Tax-Free Disaster Relief: Internal Revenue Code section 139 permits employers to provide tax-free disaster relief to their employees. To qualify the amount paid must be to (i) reimburse or pay reasonable and necessary personal, family, living or funeral expenses incurred as a result of a qualified disaster; or (ii) reimburse or pay reasonable and necessary expenses incurred for the repair or rehabilitation of a rented or owned personal residence (or to repair, rehabilitate or replace its contents) damaged by a qualified disaster. The qualified disaster relief payments may not be income replacement payments, lost business income or unemployment benefits. An employer may only exclude such payments from the employee’s income to the extent that insurance does not otherwise compensate the employee.


The creation of a Health Care Surrogate is a vital part of every Florida estate plan. However, the individual appointed to serve in this capacity typically has no idea what the job may entail. The following is a brief synopsis of their expected responsibilities on your behalf: approving medical treatments, medications, diagnostic tests; requesting and approving the release of medical records; determining where medical treatment will be provided (hospital, rehab facility, nursing home, Hospice, etc.); obtaining a second medical opinion; handling insurance carriers and claims; and most importantly communicating with family members. To be an effective Health Care Surrogate the appointee should become familiar with your specific values (religious and spiritual), medical history, end-of-life desires and legal documents. This information will make for an easier transition when you can no longer make decisions for yourself.


The ability to transfer up to $100,000 each year from your IRA to charity tax-free, have it count as your Required Minimum Distribution (RMD) and have it not included in your adjusted gross income is now a permanent part of federal tax law. As a result it is important to understand how a Qualified Charitable Distribution should be reported to the IRS. The gift should be reported on IRS Form 1099-R, which you should receive from the IRA administrator. The gift should also be listed on line 15a of your Form 1040 as a gross distribution from your IRA. On line 15b, write $0 for the taxable amount (if you don’t have any taxable distributions from your IRAs for the year). Add “QCD,” for “qualified charitable distribution,” next to that line to show why the distribution is tax-free. If only part of your distribution was a QCD, put the taxable portion on line 15b and still add “QCD” to explain the difference between line 15a and 15b. It is recommended that you keep an acknowledgement of the gift from the charity in your tax files. If you do not receive one you’ll need to let the charity know to send you the receipt. Keep the 1099-R form and the acknowledgement of the gift from the charity in your tax files.


You have created a Revocable Trust (aka Revocable Living Trust) as a part of your estate plan and wonder what do you need to do next? The first, and most important thing, that you need to do is ensure that it is properly funded by transferring or assigning ownership of your assets and real property to the Trust. The benefit of properly funding your Trust is that you will not lose any control over or enjoyment of the assets. While you are handling the funding process it is important to recognize why you are doing it: Avoidance of Probate Proceedings. The most common reason individuals create a Revocable Trust is to avoid probate. Probate is the court-supervised transfer of assets from the estate of a deceased person to his or her beneficiaries. However, if all of the decedent’s assets are held in a Revocable Trust at his or her death, they are not subject to probate proceedings in either their state of domicile and any other in which they may own real property. The successor trustee can distribute the assets to each beneficiary without supervision by the court. Management During Incapacity and at Death. Should you become incapacitated the assets maintained in your Revocable Trust can be utilized by your successor trustee, without the necessity of guardianship court intervention, to handle your financial affairs. Similarly, upon your death, the assets can be seamlessly assumed by your successor Trustee, without the need to wait for probate proceedings, and distributed to your beneficiaries. Privacy and Confidentiality. Unlike a Last Will & Testament that will be filed with the probate court, a Revocable Trust is not a matter of public record. Information is reported privately to the beneficiaries and the public will have no access to this information. Every time a new asset is acquired or account opened by you it should be titled in the name of your Trust.


Is your child ready for college? While you may have purchased for them new clothing, linens, towels, etc. the question becomes whether they have executed an estate plan? Most families fail to recognize that once their child (young adult) reaches age 18 years they are considered an adult under most state laws and their parents can no longer make all financial and health care decisions for them or have access to their medical records. As a result, estate planning is not only for the old or the wealthy and every individual over age 18 should have, at a minimum, a Power of Attorney and Health Care Directive. A Durable Power of Attorney designates another individual to act for the young adult in legal and financial matters. It is mainly used in the event of an accident or incapacity rendering the young adult unable to effectively manage legal and financial matters. Having such a document in place would avoid the necessity of having a guardian or conservator appointed should an accident or incapacity happen. The Health Care Directive empowers another to make health care decisions in the event of incapacity, articulate their wishes and directions in the event health should deteriorate and designates another to act as “personal representative” for purposes of HIPAA to authorize the release of medical records if necessary to obtain medical treatment. Make sure they have these documents in place prior to dropping them off in college.


Effective January 1, 2018, Delaware residents will no longer be subject to a state estate tax. Delaware becomes one of the thirty-three (33) states that do not impose either estate or inheritance taxes or both. The repeal is the result of Democratic Governor John Carney Jr. signing a stand-alone estate tax repeal bill. One estate lawyer commented “[t]he very wealthy don’t have to move down to Florida.” The Governor and legislature recognized that that if wealthy folks stay in Delaware, instead of changing their residency to avoid the state estate tax, the state will generate more revenue from personal income tax than estate taxes (high of $16.2 million in 2011, and a low of $1.3 million in 2014).


Regardless of your state of residency it is important to have your estate planning documents in order. The following is a list of essential documents and how they will benefit you. Last Will & Testament: a legal document in which you express your wishes as to how your estate (assets, accounts, real estate, etc.) is to be distributed at your death, and nominates the individual(s) or entity to manage the estate until its final distribution. Without this document the state statutes will control who administers your estate and to whom does it pass. ​ Power of Attorney: a written document in which you give another individual (they can reside anywhere) the power to act in your place in managing your assets, pay bills, handle insurance claims, sell real estate, file a tax return, to make gifts, create revocable trusts, invest assets and do anything you can do with your assets personally. You may name one or more agents under a power of attorney, and direct that one may act alone without the other, or that they must act jointly. You can also appoint a successor agent to act in the event the first person(s) you’ve named cannot act. A “durable” power of attorney does not become inoperative upon your incapacity. However, upon your death it is no longer effective. Health Care Surrogate Directive:​ a written instrument in which you appoint someone or multiple individuals you trust to make decisions about your medical treatment in the event you are unable to give instructions at the time the decisions must be made (ex., you are in a coma). Living Will: a document in which you state your wishes regarding medical treatment if you are unable to give instructions at the time the decisions for medical treatment need to be made. The living will can include instructions about the termination of life support and artificial nutrition and hydration (i.e., food & water intravenously). Pre-Need Guardian Declaration: a document that specifically nominates the individual(s) to serve on your behalf if it is necessary to appoint a guardian for you. A Florida Court must consider the individual(s) nominated if he/she is capable of serving. ​Without a power of attorney and health care surrogate in place your family will have to commence guardianship proceedings (petition the court to step in on your behalf) to make these decisions on your behalf. Guardianship proceedings is a very public process and makes the world aware that your family thinks you can’t take care of your own finances or medical decisions.


On Monday, June 26, 2017, Florida Governor Rick Scott vetoed the "Florida Electronic Wills Act" (the "Act")." The Act would have authorized the creation of electronic wills, and for their execution to be witnessed and notarized through the use of remote technology. The bill also provided for the probate of an electronic will in Florida. The Act raised concerns over safeguards to exploitation and fraud. The Governor determined that the remote notarization provisions in the Act did not adequately ensure authentication of the identity of the parties to the transaction and were not cohesive with the notary provisions in the Florida Statutes. Additionally of concern was the fact that other states would not recognize electronic wills as a valid declaration of intent and their heirs with an intestate estate.


In 2011, Congress raised the estate tax exclusion amount to $5 million per person (indexed for inflation) and added portability to the estate tax laws. The portability provision is an election that allows a surviving spouse to carry over any unused portion of their deceased spouse’s estate tax exclusion and shield an increased amount of assets from the estate tax. Under the portability provision a surviving spouse had nine (9) months to make the election or it was lost. In 2014, the IRS issued Revenue Procedure 2014-18 that provided a simplified method for obtaining an extension of time to make a portability election for estates of decedents dying after 2010, if the estate was not required to file an estate tax return and if the decedent was survived by a spouse. However, the simplified method was available only on or before December 31, 2014. Subsequently, the IRS issued private letter rulings which granted an extension of time to elect portability when the decedent’s estate was not required to file an estate tax return. To address the tremendous amount of private letter ruling requests, on June 9, 2017, the Internal Revenue Service issued Revenue Procedure 2017-34 (the “Procedure”). The Procedure, which is effective immediately, provides a new simplified method to obtain permission for an extension of time to file Form 706 (Federal Estate Tax Return) and elect portability. The Procedure is available to all eligible estates through January 2, 2018, or the second anniversary of the decedent’s date of death. If an estate misses the new two (2) year deadline it may still file for a private letter ruling asking for relief to elect portability.


With the number of retirees moving to states which do not access an income, estate or inheritance tax many states are trying to find ways to recoup the lost revenue. The Minnesota Department of Revenue previously took the position that the location of a person’s attorney, CPA, financial adviser or bank account determined where an individual is domiciled for income tax purposes. This was in addition to Minnesota law which found that an individual is a resident of Minnesota for income tax purposes if he or she is either: (1) domiciled outside Minnesota, but maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota (the “183-day test”), or (2) domiciled in Minnesota. The Minnesota tax bill signed into law on May 30, 2017, included a legislative amendment specifically removing from consideration in a domicile dispute the location of an individual’s attorneys, CPAs, financial advisers and banking relationships. The new law is effective for tax years beginning after December 31, 2016. This creates one less hurdle to overcome when becoming a resident of another state.


Maintaining an offshore bank account is not illegal, however, failing to report income and interest earned is tax evasion. Effective January 1, 2017, IRS Revenue Procedure 2017-31 added Belgium, Columbia and Portugal to the list of countries that participate in the automatic exchange of information on bank interest paid to nonresident alien individuals. This addition means there are now 43 countries participating in the automatic exchange program. The IRS only shares information with countries that have entered into this mutual information exchange agreement. The IRS is statutorily barred from sharing information with another country without such an agreement in place. All U.S. information exchange agreements require that the information exchanged under the agreement be treated and protected as secret by the foreign government. This is one of the most effective tools the U.S. Government has to combat tax evasion.


The State of Minnesota's recent budget brings it closer to joining the thirty-two (32) states that do not impose a state inheritance or estate tax in addition to the federal estate tax. The state budget increases the estate tax exemption amount to $2.1 million for 2017 (from the current $1.8 million level). The change is retroactive to January 1, 2017, and includes incremental increases in the exemption amount to $2.4 million in 2018, $2.7 million in 2019, and $3 million by 2020. The Minnesota estate tax doesn’t have a portability provision and tops out at 16%.


Tax reform dating back to 2014 has resulted in an increase in the District of Columbia's 2017 estate tax exemption amount to $2 million. In 2018 the exemption amount is anticipated to be equal to the 2017 federal exemption amount of $5.49 million. Currently, eighteen (18) states and the District of Columbia impose an estate or inheritance tax—separate from the federal estate tax. However, neighboring states have been repeal their estate and inheritance tax by raising the exemption amount to the federal level. For example, Maryland increased its 2018 exemption to $4 million in 2018, and the federal exemption amount in 2019. The Commonwealth of Virginia does not impose an estate tax on decedent estates.


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.


Although a challenge to a Last Will and Testament (“Will”) or Revocable Trust (“Trust”) (an inheritance dispute) are a sad reality there is no guarantee that even with proper planning a contest may be avoided. Will and Trust contests are typically the result of a disgruntled family member or friend challenging the validity of the documents. The have a higher probability of occurring in in blended families, when a child is disinherited or when the children are not treated equally. The following are some proactive steps that can be taken: • Create your estate plan early in life and update it regularly. Many inheritance disputes result from estate planning documents being signed shortly before the death of the testator. • Keep copies of your old estate planning documents. Your old estate planning documents may be reinstated or serve as evidence of your intent if a newer document is successfully challenged after your death. It makes it difficult for Nephew John to challenge your estate planning documents when all your prior documents also excluded him as a beneficiary. • Explain a disinheritance or inequity in distributions. Make sure your estate planning documents include specific language as to why an individual who might be expecting an inheritance is not receiving one, or why your estate will not be equally divided between your children (prior gifts to one child). • Establish your competence with regular medical visits and notes. Have disinterested individuals witness the executed of your estate planning documents to diminish the ability of a challenge of undue influence. • Discussing the general contents of your estate plan with your family. If nephew John knows years in advance that he will not be a beneficiary, it may decrease his motivation to challenge your estate plan.


Family inheritance disputes have become common place throughout the world. The recent case of Edwards and Kuiper v. Maxwell, 42 Fla.L.Weekly D742a (1st DCA, March 31, 2017) evidences that it know impacts adopted siblings. In this case, an adult son was a discretionary beneficiary (distributions to him were at the sole discretion of the trustee) of his great-grandparents Trust. His father later adopted another child (which also made him a beneficiary of the Trust). After the adopted son was dispersed thousands of dollars from the Trust, the adult son challenged the adoption since he was never provided with notice of the adoption or the opportunity to challenge it. In reversing the lower court, the 1st DCA found that the adult son's "interest as a beneficiary was only “contingent” since subject to the discretion of the trustee," and he did not possess a direct, financial and immediate interest in the trusts.


The United States Supreme Court ruling in Obergefell v. Hodges in 2015 has brought many changes, protections and complications for same-sex couples. In 2015, after the historic court ruling, a gay widow asked the state of Florida to correct his deceased spouse’s death certificate to reflect their prior marriage in New York. The state of Florida refused since the couple were not legally married, under Florida law, at his date of death. The widower then sued the state to correct the inaccuracy. On March 23, 2017, a U.S. District Court Judge ruled in his favor and ordered the state to correct his spouse’s death certificate to reflect their marriage. As a result, the state of Florida must now re-issue an accurate death certificate for all individuals who were incorrectly designated unmarried at time of death because their spouses were of the same sex.


Everyone reads about the huge transfer of wealth occurring from one generation to the next, however, it is estimated that 73% of decedents have outstanding debt at their death. According to, the decedents carried an average total balance of $61,554, including mortgage debt, and $12,875, without. Approximately 68% had credit card balances, 37% was mortgage debt, 25% had auto loans (25%), 12% had personal loans, and 6% had student loans. Fortunately, the “[d]ebt belongs to the deceased person or that person’s estate.” Only if the decedents estate has sufficient assets to cover their debts will their creditors be paid. Family members are not personally responsible for the unpaid debt. It is important to discuss with your probate attorney what assets will be exempt from creditor claims upon a decedent’s death.


FICA taxes, which originate from the Federal Insurance Contributions Act, is a United States federal payroll (or employment) tax imposed on both employees and employers. This payroll tax is withheld from employee paychecks and paid by employees and employers for (1) Social Security (OASDI) and (2) Medicare. The tax helps to fund benefits for retirees, disabled people and children. Your tax contribution helps your parents and grandparents have a secure retirement while securing today and tomorrow for you and your future family. Here is the breakdown of these taxes are paid: The employer and employee each pays 7.65% (Social Security portion is 6.2%, and the Medicare portion is 1.45%). The Social Security portion is capped each year at a set amount; while the Medicare portion is not capped.


Everyone should be grateful to receive an inheritance, and no parent wants to leave their offspring with nothing. But just 21 percent of those who plan to bequeath money to their children tell them how much money they'll get. When kids do find out the size of their inheritance after a loved one passes away, it's often less then expected. It can add an unwanted feeling—disappointment—into an already-volatile emotional stew. More than half of 2,700 adults surveyed for Ameriprise Financial late last year expect to get an inheritance of more than $100,000. Among those who had already received an inheritance, about the same percentage (52 percent) got less than $100,000. The survey focused on Americans between the ages of 25 and 70 with at least $25,000 in assets. Some 83 percent plan to leave money to loved ones. If those heirs have unrealistic expectations, it can lead to family tension later, said Marcy Keckler, vice president for financial advice strategy at Ameriprise. Half of the boomers surveyed plan to leave at least $500,000 to their kids. Forty-seven percent of Gen Xers and 33 percent of millennials wanted to leave that much as well. While the survey found that the majority of those who had already inherited got less than $100,000, perhaps the portfolios of those benefactors hadn't lived through an eight-year bull market. Family conflicts often arise when money mixes with grief. Almost a quarter of those surveyed expect family members will have disagreements after they learn the terms of the will. That proved true for 25 percent of those in the survey who were left money.For parents, sometimes the issue is whether to leave amounts to children that are fair, or that are equal. That can become an issue if one child is wildly successful, while another struggles financially. There's no way to eliminate these conflicts, but you can minimize them, said Eric Reich, a certified financial planner with Reich Asset Management in Marmora, N.J. His clients create what's called an "ethical will," which is a letter, document, or video that explains to kids why their parents divided assets the way they did.Addressing potential conflicts while everyone is still alive is an even better strategy. Reich asks parents to get feedback from their children on what each one really wants from the estate. Usually "it's not money, but items of sentimental and/or intrinsic value," he said. "Most often the things that a particular child values most, the parents had no idea they even wanted to inherit." Jewelry usually causes the most problems, Reich said, especially pieces that have been passed down generations. And siblings can hold grudges for a long time. "I've actually seen two very close siblings who have not spoken for the past 15 years over a piece of furniture, an antique breakfront cabinet valued at $10,000 in an estate valued at $3 million," he said. It may be less anxiety-inducing if parents give children an estimation of what they hope to leave them. "I recommend parents give children some frame of reference," said Keckler. By setting proper expectations, the inheritance will be "less of a source of tension later," she said. Beloved animals may also receive money if an owner dies. Some 5 percent of the people surveyed said they wanted to leave money behind for care of a pet. Whatever the intent, few will match what is perhaps the largest inheritance left to a pet ever: $12 million, from New York hotel heiress Leona Helmsley to her maltese, Trouble. She left her two grandsons out of the will. This article was provided by Bloomberg News.


While the life expectancy at birth for residents of industrialized nations will continue to increase in the future the same is not expected in the United States. The life expectancy for US residents is expected to be on par with those in Mexico (women) and the Czech Republic (men). In contrast, South Korean women and Hungarian men are projected to make the largest overall gains (with South Koreans second among males). It is anticipated that South Korean women will live to an average of 90 years old by 2030 (the first time a population will break the 90-year barrier). While US residents are anticipated to gain a couple of years of life expectancy between 2010 and 2030, predicted lifespans will remain in the early 80's for women and late 70's for men (83.3 for women and 79.5 for men in 2030, up from 81.2 for women and 76.5 for men in 2010). The reasons for the small growth are the highest infant and maternal mortality rates, the highest obesity rate, and the “largest share of unmet health-care needs due to financial costs.” In December, the U.S. government reported that life expectancy had declined in 2015 for the first time since 1993 as death rates for eight of the 10 leading causes of death, including heart disease, rose.


Delaware has promoted itself as the top jurisdiction for creating an asset protection trust. However, a 2014 court decision, Kloiber v. Kloiber, has put the creators of Delaware Asset Protection Trusts on notice of possibly choppy waters ahead. The case involved a Delaware Dynasty Trust (DDT) which had been established for a son, who later became embrioled in a divorce, his son’s spouse, and their descendants. At the time of the divorce, the trust’s assets totaled around $310 million. The settlement forced the trust to be severed, creating a separate trust for the wife which was funded with some of the original trust assets, and rendered the asset protection plan useless when the now ex-wife received assets intended solely for the son, his spouse, and his descendants. Individuals are now considering creating asset protection trusts in Nevada over Delaware because Nevada does not allow for claims from “exception creditors” (claims for alimony and spousal support from an ex-spouse).


The IRS is planning to focus its attention in 2017 on the "Rich." That means individuals and companies who are likeliest to hide money or under-report their tax burden. While the IRS launches fewer full-blown audits, the agency is sending out more “mass notices” addressing specific issues (especially large charitable contribution, large losses, mortgage interest deductions, and 529 college savings plans). So-called “hobby losses” are a frequent IRS target. To combat these audits, be prepared to produce extensive records and documentation to substantiate each and every loss and charitable donation.


The Holocaust Expropriated Art Recovery Act was enacted to help Holocaust heirs recover art stolen from their families during World War II. The Act will finally be put to the test in a New York court, as the heirs of Fritz Grunbaum are looking to claim two valuable drawings by Egon Schiele. The heirs claim that Grunbaum’s collection, which included eighty-one Schieles, was confiscated by the Nazis. Countering that argument, collectors, dealers, and some museums argue that the Nazis did not steal it and that Grunbaum’s sister-in-law sold fifty-three of the Schieles to an art dealer in 1956. Further, the opponents argue that previous courts have found that they were not stolen. Ultimately, the heirs hope the Act will help them prove they are victims of Nazi art looting. (NY Times Feb 27, 2017)


Our beloved pets (dogs, cats, pigs, birds, etc..) are typically buried in a pet cemetery. However, there is a growing movement today to allow pet owners to be buried (or their cremated ashes) with their pets in a human cemetery. New York is just one of a few states to pass laws allowing such burials (in cemeteries that are willing to handle them, as Church cemeteries may opt out). Similar bills are pending in Louisiana, Indiana, Massachusetts, and elsewhere. In Pennsylvania, cemeteries can offer one section for people, another for pets, and a third area for both. Virginia permits pets and owners to lie in a designated area of a cemetery, as long as they’re in separate caskets. The issue impacts over half of the households in the U.S. On an international level, Germany has allowed owner-pet cemeteries for several years. While the idea may seem strange to none pet owners, individuals devoted to their pets consider them members of the family and grieve their deaths deeply.


The term “Snowbird” refers to an individual who spends their winters in one of the sunshine states (Florida, Arizona, etc..) and their summers in one of the cooler weather states (Northeast, Northwest, etc..). Most Snowbirds claim one of the sunshine states, without or a limited state income tax, as their permanent residence. Problems can arise for a Snowbird when their former state of residence still deems them to be a resident of that state and subject to its states taxing authority. For example, a New York resident is subject to both state and federal income taxes on all income earned. In contrast, a Florida resident is only subject to New York income taxes on income derived from “New York sources” (rental income, etc.). When challenged, a former New York state resident will be forced to show by “clear and convincing evidence” that they intended to moving to Florida or another one of the sunshine states permanently and not just a rouse to avoid their former state of residences income tax burden. While “intent” can be a very subjective test, states with income taxes and estate taxes use written audit guidelines to help them determine a taxpayer intent (where is your permanent place of abode). They will examine and look at where you spend more than one hundred eighty-three days a year, business involvement, family connections, your driver’s license registration, where you are registered to vote, where you maintain your family heirlooms, works of art, books, antiques, family photo albums and receive your mail. It is important, to avoid this dilemma, that if you intend to make Florida your permanent residence you: (i) obtain the homestead exemption on your Florida residence; (ii) register to vote in Florida (even if you are renting a home or condominium); (iii) register your vehicles in Florida; (iv) update your estate planning documents to reflect Florida as your state of residency; and (v) affiliate with a Florida house of worship (church, temple, mosque, etc..).


The Elder Abuse and Prevention Act has a high chance of becoming law this year. The legislation has received substantial support among elderly advocacy groups because of its promise to make the world a safer place for seniors. Additionally, the Act will increase penalties for marketing fraud schemes targeting seniors and expand data collection of elder abuse to help create more reliable statistics highlighting the prevalence of this problem. The Act is also aiming to enlist the Justice Department to become a greater protector of seniors.


In a 2016 study, 26% out of 3,105 wealthy individuals surveyed had a complete estate-planning strategy to transfer their wealth to the next generation. Further, only 54% had created a will, but most had not updated them. As a result, $1.5 trillion of the $3.2 trillion is without direction as it falls into the hands of the next generation. Perhaps, the reason why people avoid preparing an estate plan is because they are not sure what they want to do with their wealth at some distant point in the future and a clearer picture of what heirs should receive will present itself at a later date. Another part of a solid estate plan is to communicate important facts so that the heirs are able to prepare for an inheritance. The sooner in life these conversations are expressed, the smoother the wealth transfers. Don’t Delay Planning Your Estate, Barron’s, February 10, 2017.


In December 2015, legislation went into effect that requires the IRS to provide a list of names to the State Department of individuals with “seriously delinquent tax debt” (more than $50,000 in unpaid federal taxes, including interest and penalties). These individuals, if their tax debt is not resolved (pays the tax in full, enters into an installment agreement, an offer in compromise with the IRS or a timely request for collection due process hearing), are at risk of having their U.S. passports revoked within the next few months. The legislation requires that the State Department to refuse to issue new passports and provides them with discretion to revoke currently issued passports. The IRS recently announced that it would begin sending IRS Letters 508C, notice of certification of seriously delinquent federal tax debt to the State Department, to the taxpayer’s last-known address. The letter will inform the taxpayer that the IRS has certified him/her as owing “seriously delinquent tax debt.” At that time, the IRS will also send the certification to the State Department. The IRS reports that the State Department will take action within 90 days.


The IRS has published Rev. Proc. 2016-55 and the federal estate and gift tax limits for 2017. For 2017, the credit against federal estate tax (federal exclusion amount) is increased to $5,490,000. For an individual who passes away during 2017, no federal estate tax will be imposed if his or her gross estate is less than $5,490,000. For a married couple (including a same-sex couple) the federal exclusion amount is $10,980,000. For 2017, the federal gift tax limit of $14,000 remains in place. This allows an individual to gift up to $14,000 in 2017, to any individual without being required to report the gift to the IRS or utilizing a portion of their lifetime gift tax exemption (also $5,490,000). Spouses can make a joint gift of $28,000 without being required to report the gift to the IRS or utilizing a portion of their lifetime gift tax exemption. The federal gift tax limit does not apply to gifts between spouses. However, if the gift is made to a spouse who is not a United States citizen, the first $149,000 of gifts are not included in the total amount of taxable gifts that must be reported to the IRS. In addition, the federal gift tax limitation does not apply to qualified gifts paid on behalf of another individual directly to a college or university or for medical purposes.


Congress is considering making it more difficult for a community spouse to utilize an annuity to qualify for Medicaid. The proposed bill would prevent married couples from using assets to purchase an annuity for the community spouse, so that the institutionalized spouse can apply for Medicaid. The bill would count half of the income from a community spouse's annuity as income available to the institutionalized spouse for purposes of Medicaid eligibility. Savings from the legislation would be utilized to reduce waiting lists for home health care waivers. In addition, Congress is reviewing legislation that would: count lottery winnings as income; and require Medicaid applicants to prove U.S. citizenship or residency before receiving benefits.


The IRS has issued Notice 2017-15 which provides same-sex spouses with federal estate, gift and generation-skipping transfer (GST) tax relief. The Notice allows same-sex spouses to recalculate taxes that were incurred or paid prior to the repeal of the Defense of Marriage Act (DOMA). Prior to the repeal of DOMA, for purposes of federal law the terms “marriage” and “spouse” were defined to exclude same-sex couples. This resulted in same-sex marriages not being treated as a legal marriage under Federal law. This precluded same-sex couples from being able to claim a marital deduction for gifts or bequests made to each other and required them to allocate limited exclusion amounts to (or pay gift or estate taxes on) gifts and bequests to each other. That all changed in 2013 with the U.S. Supreme Court’s ruling in Windsor and subsequently IRS Rev. Ruling 2013-17 (which only applied prospectively). Notice 2017-15 provides administrative procedures to allow taxpayers in same-sex marriages (or, if the taxpayer is deceased, the executor of his or her estate) to recalculate the transfer tax treatment of prior gifts or bequests (before 2013) made to each other. When filing for the relief, the taxpayer should include a statement at the top of the form stating “FILED PURSUANT TO NOTICE 2017-15” and attach a statement supporting the recalculation of the taxpayer’s remaining applicable exclusion amount for purposes of federal estate and gift taxes and/or the taxpayer’s remaining GST exemption for purposes of federal GST taxes.