FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG

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

Showing posts with label Elective Share Trust. Show all posts
Showing posts with label Elective Share Trust. Show all posts

THE NEW 2016 IRS DEFINIATION OF HUSBAND AND WIFE

♠ Posted by Marc J. Soss in ,,,,,,,
The Internal Revenue Service (IRS) has formally put into place, effective September 2, 2016, amendments to the regulations that define “who is married for tax purposes.” The new regulations state that it will interpret the term “husband and wife” as any two people who are married to each other, even if they are a same-sex couple. The IRS is addressing this issue as a result of the 2013 U.S. Supreme Court ruling in United States v. Windsor (which struck down the section of the Defense of Marriage Act (DOMA) prohibiting recognition of same-sex marriages for federal purposes) and the 2015 Supreme Court ruling in Obergefell v. Hodges (that made same-sex marriage legal throughout the nation).
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I AM A RESIDENT OF WHAT STATE?

♠ Posted by Marc J. Soss in ,,,,,,,,
The criteria for determining whether a deceased individual's estate is subject to probate or estate taxes in a state is based upon their state of domicile at death. Reaching that determination can be complex.

For income tax purposes, the residency requirement is based on the number of days you reside in a particular state in a given year. If an individual does not spend more than 183 days in any one state during the year, more than one state may claim that individual as a resident, causing them to potentially owe tax in two or more states. However, for purposes of determining whether an individual is subject to probate or to estate or inheritance tax in a state the individual’s domicile will be scrutinized at the time of their  death. A domicile is where one intends to make his or her home for a permanent or indefinite period. A taxpayer can have only one domicile. Once domicile is established, it continues until it is established elsewhere.


Many factors can be utilized to determine an individual's domicile: the location of your principal residence; mailing address; where you applied for a homestead or veterans property tax exemption or other comparable benefit; whether you can be claimed as a dependent on another person’s federal income tax return and where that person is domiciled; where your spouse or close family members reside; where you are registered to vote; the state which issued your driver’s license; vehicle registration; professional licenses; location of active bank accounts; unemployment insurance; resident tax returns; the state where you earn your wages; address recorded for insurance policies, deeds, mortgages or other legal documents; state in which you hold fraternal, social or athletic memberships; location of house of worship; etc...

Add to this equation the fact that states are looking for tax revenues and may attempt to claim you as a resident based upon past behavior. This can result in multiple states claiming a decedent as a resident. In addition, even if an individual is domiciled in one state, his or her heirs may still need to pay estate or inheritance taxes or probate a will in another state if they owned real property in a state that is not his or her state of domicile. Proper planning may avoid the need for a separate probate in those other jurisdictions.
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THE IMPORTANCE OF SELECTING THE RIGHT ESTATE PLANNING DOCUMENTS

♠ Posted by Marc J. Soss in ,,,,,,,,,
When creating a Trust it is important to understand the differences between the different types. Similar to a Power of Attorney or Health Care Surrogate they can range from simple to extremely complex.  Most individuals are familiar with the terms "Family Trust" or "Marital Trust," but there are many different types that can be utilized as a part of your estate plan. The only rule is that if the trust benefits a spouse, “you must cause the trust to be included in the second spouse’s estate, for estate-tax purposes.”  If it is not included in the second spouse’s estate, the assets would have the same basis as at the first spouse’s death. 

Trust options include, a Credit Shelter Trust, Special Needs Trust, Elective Share Trust, Trust for non-US spouse, Life Insurance Trust and Charitable Trusts.

Credit Shelter Trust.  A Trust created upon the first spouse's death to shelter a portion or all of their estate tax exemption amount.  This makes certain the estate-tax exemption is in place.

Special Needs Trust. A Trust established for a special needs child or adult to protect the assets from government attachment and allow the individual to maintain all of their government benefits.

Elective Share Trust.  A Trust established, upon the death of the first spouse, which provides the surviving spouse with the required 30% share of the deceased spouse's estate and ensures the assets pass, upon the death of the surviving spouse, to their designated beneficiaries of the predeceased spouse. Typically utilized in the case of second marriages.

Trust for Non-US Spouse. A non-US citizen spouse is not entitled to the unlimited marital deduction. As a result, to protect the assets that would pass to them upon the death of the first spouse, the funds would pass into this Trust. The assets would then be held for their lifetime or distributed to them should they become a US citizen.  

Irrevocable Life Insurance Trust.  Life insurance can help beneficiaries pay estate taxes. The death benefit is paid to a Trust instead of an estate or individual and stays outside the estate’s taxable value. 

Charitable Remainder Trusts.  “Assets can pay to a client for life, to children for life, and to grandchildren for a period of time, and then go to a charity.”
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