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.

SPECIAL NEEDS TRUST FAIRNESS ACT

♠ Posted by Marc J. Soss in ,,,,,,
The Special Needs Trust Fairness Act (the “Act”) was signed into law on December 14, 2016. The Act amends federal law to enable disabled individuals to establish their own first-party payback Special Needs Trusts under 42 U.S.C. § 1396p(d)(4)(A). A first-party funded Special Needs Trust will enable a disabled individual, who receive assets outright, including through a gift, inheritance, personal injury settlement or child support, to protect such assets for their future use while remaining eligible for essential means-tested government benefits (Supplemental Security Income and Medicaid)....
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YEAR END ESTATE PLANNING ITEMS FOR REVIEW

♠ Posted by Marc J. Soss in ,,,,,
As our circumstances change with life events these changes should be reflected in your estate planning documents (your plan should be reviewed periodically anyway). The following list is meant to give you an idea of when changes should be made to your estate planning documents: Your marriage, divorce or remarriage. The birth or adoption of a child, grandchild or great-grandchild. The death of a spouse or another family member. The illness or disability of you, your spouse or another family member. When a child or grandchild reaches the age of majority. When a child or grandchild has education...
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SPECIAL NEEDS TRUST PLANNING

♠ Posted by Marc J. Soss in ,,,,,,,
Families with a special needs child/adult need more estate planning than families without. A Special Needs Trust (SNT) can play an important role in helping families plan. Issues to consider: Preserve public benefits while enhancing your child/adult's lifestyle. Many individuals with special needs obtain basic support from Supplemental Security Income (SSI) - a gateway to Medicaid and other critical programs. Since SSI covers only essential expenses, it is important to create a supplement for their lifestyle. But because SSI imposes limits on income and assets, gifts or an inheritance could...
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2016 YEAR END ESTATE PLANNING THOUGHTS

♠ Posted by Marc J. Soss in ,,,,,,
With December 31, 2016, right around the corner, it is important to look at your year end personal tax and estate planning situation. With a Trump administration and a Republican-controlled Congress, much attention has been paid to the tax proposals in the president-elect’s Contract with the American Voter and the House Republicans’ Task Force for A Better Way to see how they match up. The key points that both proposals have in common, as they affect our tax and estate planning clients, include: • Elimination of the estate tax, although the Trump proposal states that “capital gains held until...
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IRS GIFT TAX RULES

♠ Posted by Marc J. Soss in ,,,,,,,,
Under the Internal Revenue Service (IRS) rules, the service has a three (3) year statute of limitations after the filing of IRS Form 709 to assess gift taxes on a gift, so long as the gift is adequately disclosed on the return. If a gift is not disclosed on Form 709, the statute of limitations does not begin to run on that gift. Form 709 requires the disclosures of prior gifts, so that the tax on the current gifts can be properly calculated (since prior gifts can impact the rate of tax and available unified credit applicable to the current year computations). The question has arisen as to what...
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WHAT TRUMP'S FEDERAL INCOME TAX PLAN MAY LOOK LIKE

♠ Posted by Marc J. Soss in ,,,,,,
Most individuals expect significant changes to the US Tax Code once President (elect) Trump takes office. High on his agenda are the following: INDIVIDUALS: Cut the number of individual income tax brackets (from 6 to 3) and bring income tax rates down to 12%, 25% and 33% - that would benefit everyone who works across the board. Elimination of the 3.8% Obamacare tax - if Obama Care goes away this extra tax on the wealthy will go away with it. Tax carried interest gains as ordinary income. Retain 20% capital gains rate for non-corporations. Increase the standard deduction for joint filers to...
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2017 FEDERAL INCOME TAX FIGURES

♠ Posted by Marc J. Soss in ,,,,,,
Standard deduction - married filing jointly = $12,700 Standard deduction - single persons = $6,350 Standard deduction for a dependent = $1,050 Overall Limitation on itemized deductions (Section 68(b)) = $313,800 (Married person) Personal exemption = $4,050 Unified credit against estate tax and gift tax = $5,490,000 Gift tax annual exclusion = $14,000 (no change) Gift tax annual exclusion for gifts to noncitizen spouse = $149,0...
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IMPORTANT 2017 FEDERAL TAX AND EXEMPTION AMOUNTS

♠ Posted by Marc J. Soss in ,,,,,,
Federal Estate & Gift Tax: The Federal estate tax exemption amount will be $5,490,000 in 2017. The annual gift exclusion amount will remain at $14,000 Qualified Plans for 2017: 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 remains unchanged at $18,000. 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...
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MASSACHUSETTS ESTATE AND PROBATE TAX TRAP AVOIDANCE

♠ Posted by Marc J. Soss in ,,,,
Since 2001, the Massachusetts Department of Revenue ("DOR") has taken the position that Massachusetts resident who die owning real estate or tangible personal property in states which do not impose a state estate tax (New Hampshire, Florida, etc...)the Massachusetts estate tax is applied to the total net value (including the assets in other states). In effect, if another jurisdiction charges an estate tax on real estate or tangible items located within its borders, Massachusetts allows a credit for the tax paid to the other jurisdiction. If no tax is charged, Massachusetts collected the tax...
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NEW JERSEY ELIMINATES ITS ESTATE TAX IN 2018, BUT KEEPS ITS INHERITANCE TAX

♠ Posted by Marc J. Soss in ,,,,,,,
On October 14, 2016, Governor Chris Christie signed into law legislation which raises the New Jersey estate tax exemption to $2,000,000 in 2017 (up from $675,000) and eliminates it entirely in 2018. Until January 1, 2018, the New Jersey estate tax will continue to be applied based on a graduated rate table which begins at 4% for estates of $675,000 or more and increases to 16% for estates in excess of $10,100,000. While the New Jersey estate tax exemption is going away, the New Jersey inheritance tax will remain. The New Jersey inheritance tax only applies to transfers to other relatives and...
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2017 - SOCIAL SECURITY BENEFIT RATES

♠ Posted by Marc J. Soss in ,,,,,
The Social Security Administration has announced its changes for 2017. Social Security benefit payments will increase by .3% (3/10s of 1%) in 2017. The Social Security Wage Base, the amount of income subject to Social Security taxes, will increase to $127,200 (up from $118,500). In addition, the age for full retirement (which has been 66 for the past 12 years), will increase in 2017. You receive the full amount of your calculated benefits at full retirement age, but a reduced amount if you start receiving benefits earlier. For those born in 1955, full retirement age will be 66 years and 2 months....
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NEW JERSEY DISCUSSES ELIMINATION OF ITS ESTATE TAX

♠ Posted by Marc J. Soss in ,,
Recent reports indicate that the State of New Jersey will officially eliminate it's estate tax. The tax elimination will be offset by an increase in the both the gas and sales tax. The tax reform will also include a larger tax credit for the working poor, a tax cut on retirement income, and a tax exemption for veterans who have been honorably discharged. It is anticipated that the estate tax exemption will increase from $675,000 (its current exemption amount) to $2,000,000 effective January 1, 2017 and be phased out completely over the next few years....
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EXECUTORS MAY BE PERSONALLY LIABLE FOR A DECEDENT’S UNPAID TAXES

♠ Posted by Marc J. Soss in ,,,,,,
This is a reoccurring issue that Personal Representatives/Executors of a probate estate need to be educated on. The First Circuit recently ruled that the executor of an estate was personally liable for unpaid federal income tax when she knew, prior to distributing property from an insolvent estate, that there were outstanding tax deficiencies. The decedent owed $340,000 in unpaid federal income tax, which would have left his estate insolvent. The transfer took place right after the decedent's death and prior to their appointment as executor. The transfer was made despite IRC Section 3713(a)(1)(B)...
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SPOUSAL LIFETIME ACCESS TRUSTS

♠ Posted by Marc J. Soss in ,,,,,,,,
Is a Spousal Lifetime Access Trust (SLAT) part of your estate plan? Many families today, for both Florida estate planning and Florida estate protection planning purposes, are utilizing SLAT’s to protect their assets. When both spouses are living, one spouse can establish this type of trust for the other spouse through the use of their lifetime gift tax exemption. A SLAT will typically name the non-gifting spouse as the beneficiary, and allow the trustee to make distributions to them during their lifetime. Upon the non-gifting spouse’s death, the trust assets can then pass to the designated trust...
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WHERE THE PRESIDENTIAL CANDIDATES STAND ON THE ESTATE TAX!

♠ Posted by Marc J. Soss in ,,,,,
Both presidential candidates have proposed changes to the estate tax regime. Mr. Trump calls for a total repeal of the Federal estate tax. No matter how much wealth you accumulate during your life, under Mr. Trump’s plan, there will be no estate tax due on death. The Trump belief is that you have paid taxes your whole life; therefore, you shouldn’t be taxed again at death. However, the repeal of the estate tax comes with a caveat, even under this plan: capital gains held until death will be subject to tax, in some cases. Mr. Trump’s proposal eliminates stepped-up basis on death for estates...
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HILLARY CLINTON PROPOSES 65% TOP RATE FOR ESTATE TAX

♠ Posted by Marc J. Soss in ,,,,,,
Democratic presidential candidate Hillary Clinton would levy a 65% tax on the largest estates and make it harder for wealthy people to pass appreciated assets to their heirs without paying taxes, expanding the list of tax increases she would impose on the top sliver of America’s affluent. The estate-tax increase and other new proposals that Mrs. Clinton detailed on Thursday would generate $260 billion over the next decade, enough to pay for her plans to simplify small business taxes and expand the child tax credit, according to the nonpartisan Committee for a Responsible Federal Budget, which...
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IRS DENIES RETROACTIVE STATE COURT REFORMATION OF RETIREMENT ACCOUNT BENEFICIARY

♠ Posted by Marc J. Soss in ,,,,,,,,
The Internal Revenue Service (IRS) can easily take away what any state court giveth. Under the case facts, the decedent maintained 2 IRAs prior to his death. The IRAs listed his revocable trust as the death beneficiary. The trust qualified as a "look through" trusts, and provided each beneficiary the ability to stretch the payout period for the IRAs over their respective life expectancies. However, prior to death, the decedent moved the IRAs to a new investment firm which incorrectly listed his estate as the death beneficiary of each IRA account. This precluded the beneficiaries from stretching...
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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...
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IRS TAX RELIEF FOR LOUISIANA STORM VICTIMS

♠ Posted by Marc J. Soss in ,,
IRS Announcement 2016-30 provides relief to Louisiana taxpayers suffering hardships as a result of the storms and flooding which that began August 11, 2016. The relief comes in the form of impacted residents being able to obtain a loan or in-service distribution from their retirement plans. Retirement plan administrators may rely upon representations by an employee or former employee as to the need for a hardship distribution as a result of the Louisiana storms and the distribution will be treated as a hardship distribution for all purposes. The relief applies to a employee or former employee...
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ESTATE PLANNING DOCUMENTS - DONT LET YOUR CHILDREN LEAVE HOME WITHOUT THEIRS IN PLACE

♠ Posted by Marc J. Soss in ,,,,,,
Becoming an empty nester and watching your child(ren) leave the home (for school or a job) can be difficult emotionally. Reality is that when a child reaches the age of 18 they are a legal adult, even though they may still depend on you for financial and emotional support. Most parents are surprised to learn that once a child turns age 18 they are not legally permitted to make financial or medical decisions on their behalf, or even be notified if their child is in the hospital emergency room. To avoid this from happening, it is important to have your child(ren) create their own estate planning...
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WHAT IS “SEPARATE PROPERTY” IN A PRE-MARITAL AGREEMENT

♠ Posted by Marc J. Soss in ,,,,,,
The Fifth District Court of Appeals in the case of Colino v. Volino, 41 Fla. L. weekly D1990b (5th DCA, August 26, 2016) recently addressed what “constitutes separate property” for purposes of a pre-marital agreement. The agreement in dispute contained the standard “Separate Property” provision that provided “if a party acquires real property in his or her own name it shall be that party's Separate Property.” However, during the marriage, the husband gifted funds, which he was permitted to do under the agreement, from his personal account to his wife. The wife then utilized the funds to acquire...
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REASONS FOR LEAVING AN INHERITANCE IN TRUST

♠ Posted by Marc J. Soss in ,,,,,,,,
It is not uncommon today for a parent to leave a beneficiary’s inheritance in a trust for their benefit instead of an outright gift of the funds at death. Factors which must be considered are: (i) the size of the inheritance; (ii) financial savvy and sophistication of the anticipated beneficiary; (iii) high divorce rate; and (iv) desire to protect the beneficiary from themselves. To protect the beneficiary, the following provision may be included into a trust instrument: Creditor Protection: The establishment of an irrevocable trust for a beneficiary upon the parent’s death. To the extent...
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CAN MY REVOCABLE TRUST OWN S-CORPORATION STOCK

♠ Posted by Marc J. Soss in ,,,,,,,
A Florida Revocable Trust (“Trust”) is a common tool utilized by individuals when creating their Florida estate plans. A Trust is designed to hold assets during the Grantor (the individual who creates the Trust) lifetime and then dispose of those assets at their death (the terms of the Trust will contain the individual’s specific directions as to how the assets will be distributed). In order for a Trust to accomplish its objective it must be funded (assets retitled into the name of the Trust) with all of the Grantor’s assets during their lifetime. This will require the Grantor to retitle real...
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FLORIDA LLC TAX ISSUES

♠ Posted by Marc J. Soss in ,,,,,,
Under the IRS “check the box” regulations, a Florida Limited Liability Company with two or more members is automatically taxed for income tax purposes as a partnership. As a result, all income that passes through a partnership to a partner is classified as self-employment income subject to payroll taxes. The entity may alternatively elect to be taxed as an S corporation for income tax purposes. The election can be made by filing Form 2553 with the IRS. The benefits of an LLC electing to be taxed as an S corporation, for income tax purposes, include treating a substantial portion of earnings...
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DISCRIMINATION PROVISION IN WILL UPHELD AS VALID

♠ Posted by Marc J. Soss in ,,,,,,,,
In the New Jersey Appeals Court case of In re the Estate of Kenneth E. Jameson, (NJ App., Aug. 12, 2016), a New Jersey appeals court upheld NJ law which allows discrimination provisions in testamentary bequests. The law does not preclude an "individual from disinheriting his or her child for religiously discriminatory reasons." The Ohio Supreme Court previously upheld a similar provision. The court upheld the specific provision contained in the Will, which disinherited his daughter if she married someone of the Jewish faith, because "neither the New Jersey Law Against Discrimination nor New...
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NEW HOSPITAL NOTICE REQUIREMENT FOR MEDICARE BENEFITS

♠ Posted by Marc J. Soss in ,,,,,
On August 6, 2016, a new Medicare law went into effect that requires hospitals to notify patients, who receive observation services as an outpatient, that they may incur out-of-pocket costs if they stay more than twenty-four (24) hours in a hospital without being formally admitted. Most patients are unaware that any time spent in “observation status” will not count towards their three (3) day hospital requirement, even if it is spent in a hospital bed or they receive hospital services (tests, treatment and medications), and Medicare will not be obligated for their hospital bills and will not...
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INDIVIDUALS OVER 65 SHOULD NOT PUT OFF MEDICAL CARE UNTIL 2017

♠ Posted by Marc J. Soss in ,,,,,
Most taxpayers are aware that they can claim a medical and/or dental expense on their Federal Income Tax Return if they meet certain eligibility requirements. Eligibility for the deduction requires (i) the taxpayer to itemize their income tax deductions (medical expenses, charitable deductions, certain taxes paid and home-related costs) and not claim a standard deduction (itemized expenses must exceed the standard deduction amount); and (ii) medical costs that exceed a percentage of the taxpayer’s adjusted gross income (“AGI”). In tax year 2016, the medical expense deduction is available...
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GUN TRUSTS – A THING OF THE PAST?

♠ Posted by Marc J. Soss in ,,,,,,
Effective July 13, 2016, Final Rule 41-F (the “Rule”) of the National Firearms Act (“NFA”) eliminated the loophole which allowed the making or transferring of a firearm, without a background check, through a Gun Trust. The Rule now requires all individuals, including those utilizing a Gun Trust, to adhere to the same identification and background check requirements and obtain local police chief approval to purchase an NFA firearm (short barrel shotgun or a silencer, etc.). The Rule specifically provides that the “responsible person” of a Gun Trust must now file new forms and submit photographs...
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STABLE ACCOUNTS - AS A PART OF YOUR ESTATE PLANNING

♠ Posted by Marc J. Soss in ,,,,,
The Achieving a Better Life Experience (ABLE) Act of 2014 will soon allow individuals to incorporate STABLE accounts in their estate plans for disabled family members. The accounts will allow family members to save money to be used by the disabled family member throughout their life without losing eligibility for government benefit programs. The account earnings will grow tax-free as long as they are utilized for qualified expenses. In order to establish a STABLE account, the individual must have been disabled before 26 years old and entitled to benefits under the SSI or SSDI progra...
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FLORIDA ESTATE PLANNING CONSIDERATIONS WITH LARGE INHERITANCES

♠ Posted by Marc J. Soss in ,,,,,,,,,
Receiving a large inheritance can be an unexpected windfall or curse to a beneficiary. To avoid a negative outcome, it is not uncommon for individuals to evaluate alternative methods to transfer wealth to their beneficiaries. A recent survey found that only thirty-two (32%) percent of baby boomers are confident their beneficiaries are prepared both emotionally and financially to receive an inheritance. Their concern stems from the desire for their beneficiaries to learn about hard work, failure and the joys of success and concern over their ability to handle sudden wealth. In making these...
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NEW 2016 CONNECTICUT POWER OF ATTORNEY LAW

♠ Posted by Marc J. Soss in ,,,,,,
Effective October 1, 2016, the new Connecticut law governing “Powers of Attorney” (written designations of authority) will go into effect (a major update to the 1965 law. The new law, known as the Connecticut Uniform Power of Attorney Act imposes new obligations on banks to whom POA’s are presented by requiring them to either accept a notarized POA or request additional documentation within seven (7) business days. Once the documentation is presented, if the bank requests it from the agent, it will have five (5) days to either accept the POA or reject it (based upon suspected abuse or the...
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FLORIDA GUARDIAN CHARGES BIG BUCKS TO PROTECT WARD WITH ALZHEIMER'S LIVING IN HUNGARY

♠ Posted by Marc J. Soss in ,,,,,
www.abcactionnews.com A grieving daughter is fighting against a system that was designed to protect her dad SARASOTA, Fla. - A grieving daughter is fighting against a system that was designed to protect her dad. She regrets the decision of turning to Florida's professional guardian system for help. She says that decision cost her father's estate a million dollars, and as the I-Team found out, the guardian was racking up those bills, when her father was living thousands of miles away. “He was an immigrant, came here with one little suitcase and worked himself into millions of dollars,”...
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HOW YOU CAN PREPARE FOR YOUR ESTATE PLANNING MEETING

♠ Posted by Marc J. Soss in ,,,,,,,
While meeting with an estate planning attorney may not be on your bucket list of items to accomplish during your lifetime or among your New Year’s resolutions, it is not something that you should put off until you are on your death bed. Many individuals are intimidated by the prospect of planning their estate, however, in most cases it is much easier if you come prepared. A typical Florida estate plan consists of the following important documents: Last Will and Testament; Revocable Trust (for many individuals); Power of Attorney; Health Care Surrogate; Living Will; and Pre-Need Guardian...
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SAME -SEX COUPLES CONTEMPLATING MARRIAGE SHOULD NOT PUT IT OFF

♠ Posted by Marc J. Soss in ,,,,,
A recent New Jersey Tax Court ruling, unpublished opinion, emphasizes the importance for same-sex couples to not put-off marriage for estate planning purposes. New Jersey has both an estate tax and an inheritance tax, and taxpayers must pay the higher of the two taxes. The estate tax impacts estates of more than $675,000. Notwithstanding a 31-year relationship, registration as a same-sex domestic partner under New Jersey's Domestic Partnership Act (DPA), and a marriage scheduled to take place with 6 days of his death, the New Jersey Tax Court Judge ruled that the survivor did not qualify...
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THE IMPORTANCE OF A LAST WILL & TESTAMENT

♠ Posted by Marc J. Soss in ,,,,,,,
Prince's death puts living will discussion into the spotlight SARASOTA, Fla. -- It's something that experts say you don't want to have running away from you. If you pass away without a will in the state of Florida, the state statutes would decide where your assets go. "Everyone should have a will, because what it does, it shows the court and all the beneficiaries how you want your assets to pass," said Marc Soss, a Sarasota attorney. According to estate planning attorneys, around two-thirds of people don't have a living will. Many folks we talked with at Bayfront Park on Thursday are in...
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