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

FLORIDIANS NOW HAVE LESS TIME TO APPLY FOR RETROACTIVE MEDICAID COVERAGE

In December 2018, federal officials approved a state request that will provide Floridians less time to apply for Medicaid coverage if they want healthcare costs retroactively covered. The change means those who qualify for the safety-net program now have up to thirty (30) days of retroactive eligibility once they qualify for Medicaid, as opposed to the original ninety (90) days. After approval from the federal Centers for Medicare & Medicaid Services, which oversees the safety net program, the 30-day policy will go into effect Feb. 1 and remain in place until June 30 unless state lawmakers...

IRS REGULATIONS PROTECT LARGE GIFTS TODAY EVEN IF GIFT TAX EXEMPTION DECREASES LATER

On November 20, 2018, the IRS announced that individuals taking advantage of the 2018 through 2025 increased gift and estate tax exclusion amounts will not be adversely impacted if, after 2025, the exclusion amount reverts to pre-2018 levels. The Treasury Department and the IRS issued proposed regulations which implement this announcement so that individuals planning to make large gifts between 2018 and 2025 can do so without concern. To learn more please contact me directly. ...

THE CLOCK IS TICKING TO FINALIZE YOUR DIVORCE BEFORE JAN. 1, 2019

The Tax Cuts and Jobs Act of 2017 (the “Act”) that went into effect on January 1, 2018, made important changes to existing tax laws. In the family law area, the Act eliminated the ability to deduct alimony payments made pursuant to divorces that are finalized after December 31, 2018. Under current tax law, alimony is tax deductible by the payor and taxable to the payee. This means that if you are the person paying alimony, then you get a deduction for the amount you paid. However, for divorces finalized on or after January 1, 2019, all alimony payments will be tax-neutral (non-deductible by...

INTERNAL REVENUE SERVICE DOLLAR LIMITATIONS FOR RETIREMENT PLANS AND OTHER BENEFITS FOR 2019

The Internal Revenue Service dollar limitations for retirement plans and other benefits for 2019. 401(k)/403(b) Contributions $19,000 457(b) Limit $19,000 Catch-up Contributions $6,000 SIMPLE Contributions $13,000 SIMPLE Catch-up Contributions $3,000 Compensation Limit $280,000 Highly Compensated Employees $125,000 Key Employee Officer Compensation $180,000 Maximum Annual Benefit Defined Benefit Plan $225,000 Maximum Annual Contribution Defined Contribution Plan $56,000 ESOP Limits Dollar limit for determining lengthening of 5-year period $225,000 Dollar amount for determining max. amount...

US RESIDENTS WITH IRS TAX DELINQUENCIES BEWARE

The Internal Revenue Service (“IRS”) has a new collection tool for taxpayers with serious delinquent tax deficiencies and it was created under § 7345 of the Internal Revenue Code. The tax section authorizes the IRS to certify to the State Department individuals who have serious delinquent tax debt. Receipt of the certification allows the State Department to deny or revoke the individual’s passport or limit it to permit only a return travel to the U.S. For purposes of enforcement, a “seriously delinquent tax debt” is defined as a tax liability (tax, penalty and interest) of an individual which...

NEW DEPARTMENT OF VETERANS AFFAIRS (VA) RULES FOR NEEDS-BASED BENEFITS

On October 18, 2018, over three (3) years after the Department of Veterans Affairs (“VA”) originally proposed them, new regulations to qualify for needs based benefits go into effect. The new regulations contain “net worth” limitations, look-back periods, penalties and definitions for those applying for benefits. The new regulations are a substantial change from current regulations which do not contain a prohibition on transferring assets prior to applying for benefits. Net Worth Limitations: An eligible applicant must have a net worth equal to or less than the prevailing maximum community...

REVERSE MORTGAGE ISSUES OF CONCERN

CASE OF INTEREST FROM GEORGIA - Estate of Caldwell Jones, Jr. v. Live Well Financial (11th Cir., No. 17-14677, Sept. 5, 2018): A Federal Court of Appeal has ruled that federal law does not prevent an insurer from foreclosing on a reverse mortgage after the death of the borrower even though their widow still resides in the residence. In 2014, the decedent, who was married at the time, obtained a reverse mortgage on their Georgia home. The contract defined the "borrower" to be the decedent, a married man. After the borrower's death, the insurer asserted a right to immediate repayment of the mortgage....

IRS APPROVES STUDENT LOAN DEBT REPAYMENT FROM 401(K) PLANS

On August 17, 2018, at the request of a 401(k) plan sponsor, the IRS issued a private letter ruling 201833012 (the “Ruling”). The Ruling was requested with the intent of assisting individuals, currently around forty-four (44) million Americans with student loan debt of more than $1.3 trillion dollars. The Ruling provides a method for employers, under certain circumstances, to provide a student loan repayment benefit as part of their 401(k) plans and link the amount of employer contributions made on an employee’s behalf to the amount of student loan repayments made by the employee outside the...

2019 HEALTH SAVINGS ACCOUNT LIMITS

On May 10, 2018, the IRS released Revenue Procedure 2018-30 which sets forth the dollar limitations for health savings accounts (HSAs) in 2019. HSAs are subject to annual aggregate contribution limits and participants age fifty-five (55) or older can contribute additional catch-up contributions. In 2019, the maximum contribution amount will increase to $3,500 for an individual and $7,000 for a family. The catch-up contribution limit remains at $1,0...

MEN THAT HAVE CHILDREN LATER IN LIFE ARE ELIGIBLE FOR AN EXTRA SOCIAL SECURITY BENEFIT?

Under existing social security rules, men that have children later in life (it would be gender discrimination but biologically women can’t currently conceive a child after age 60) are eligible for an extra Social Security benefit. Under the rule, when a man files for his social security benefits, each of his children under the age of 18 years is entitled to one-half (1/2) of what he would receive at full retirement age (even if he collects social security benefits early). Eligibility for the child benefit requires them to be: (i) under the age of 18 years; (ii) 18-19 years old if a full-time...

STATES POSTURING TO CHANGE THEIR ESTATE TAX EXEMPTIONS

Effective January 1, 2019, residents of the state of Maryland will see their state estate tax exemption increased from $4 million to $5 million. The law went into effect on April 5, 2018, and is not be indexed for inflation. The maximum Maryland estate tax rate of 16% remains unchanged and the inheritance tax is unaltered (dependent upon how closely related the decedent was to the people who inherit from him or her, not on the size of the estate). Legislation is pending in the District of Columbia, where the estate tax exemption currently matches the federal exemption amount of $11.18 million,...

LEGAL LIMITATIONS ON EMOTIONAL SUPPORT ANIMALS

The Fair Housing Act (FHA) states that housing providers may not “discriminate against any person in the terms, conditions, or privileges of . . . rental of a dwelling . . . because of a handicap of any person associated with that person.” 42 U.S.C. § 3604(f)(2)(C). Prohibited discrimination includes “a refusal to make reasonable accommodations in rules, policies, practices, or services, when such accommodations may be necessary to afford such person equal opportunity to use and enjoy a dwelling.” Id. § 3604(f)(3)(B). “The reasonable accommodation inquiry is highly fact-specific, requiring case-by-case...

DID THE 2018 TAX LAW INCREASE MY CHARITABLE GIVING DEDUCTIONS

When the new tax law was signed by President Trump most experts viewed it as detrimental to future charitable donations and deductions. The significantly increased standard deduction meant fewer taxpayers needed to file an itemized income tax return and non-itemizers would not benefit from a charitable tax deduction. While the value of a charitable deduction may have decreased in value for individuals that reside in states without a state income tax it has increased in value for individuals that reside in states with a state income tax. Under the new tax law, the deduction for state income...

NEW 401-K RELAXED HARDSHIP RESTRICTIONS

The Budget Act of 2018, signed into law on February 9, 2018, provides individuals with 401K retirement plans relaxed hardship restrictions. The new relaxed restrictions include: (i) Rescission of the IRS rule that prohibits a participant from making an elective 401(k) deferral for six months after taking a hardship withdrawal; (ii) Allowing plan participants to take a hardship withdrawal from funds attributable to qualified non-elective contributions or qualified matching contributions made by employers under a safe harbor plan; and (iii) Allowing a hardship withdrawal to include not only the...

THE 2017 NEW TAX LAWS IMPACT ON HOME OWNERSHIP

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...

ESTATE PLANNING QUESTIONS FOR CONSIDERATION IN 2018

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...

EXPANDED 529 PLAN BENEFITS FOR ELEMENTARY AND SECONDARY SCHOOL EDUCATION

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...