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


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


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


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