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 Sarasota estate planning. Show all posts
Showing posts with label Sarasota estate planning. Show all posts

ARE YOUR ESTATE PLANNING DOCUMENTS SAFE?

♠ Posted by Marc J. Soss in ,,,
Many clients wonder whether it is best to leave their original estate planning documents with the attorney that drafted them or in their homes. The recent weather events and climate change, including hurricanes and tornadoes, has led to discussions on where would they best be protected? In many instances, people escape from their homes with only the clothes on their back, or even if they do have a bit of time to gather items to take, they may not think about their estate planning documents. In addition to paper copies, it is a good idea to preserve your estate planning documents electronically and store them either in a secure cloud back-up or a physical back-up to your computer housed in a different location. You should always create an electronic PDF copy of your documents as a further safeguard.
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2017 CHANGES TO THE REVERSE MORTGAGE PROGRAM

♠ Posted by Marc J. Soss in ,,,,,,,
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.
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GOVERNOR SCOTT SAYS NO TO ELECTRONIC WILLS IN FLORIDA

♠ Posted by Marc J. Soss in ,,,,,
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.
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THE IRS ISSUES MORE ESTATE TAX PORTABILITY RELIEF

♠ Posted by Marc J. Soss in ,,,
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.
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FLORIDA HOMESTEAD EXEMPTION INCREASE ON THE BALLOT IN 2018

♠ Posted by Marc J. Soss in ,,,,,
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...).
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PROTECTING YOUR HEIRS FROM YOUR DEBTS AT DEATH

♠ Posted by Marc J. Soss in ,,,,,,,
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.
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NEW STATE OF WASHINGTON POWER OF ATTORNEY STATUTE

♠ Posted by Marc J. Soss in ,,,,,,,
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.
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HOPING FOR AN INHERITANCE? YOU MAY NOT GET AS MUCH AS YOU EXPECT

♠ Posted by Marc J. Soss in ,,,,,,,
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.
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PLEASE BURY MY DOG WITH ME

♠ Posted by Marc J. Soss in ,,,,,
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.
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DOES YOUR FORMER STATE OF RESIDENCE STILL BELIEVE YOU ARE A RESIDENT?

♠ Posted by Marc J. Soss in ,,,,,,,
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..).
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FEDERAL ELDER ABUSE AND PREVENTION ACT ON THE HORIZON

♠ Posted by Marc J. Soss in ,,,,,,,
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.
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THE 2017 FEDERAL ESTATE AND GIFT TAX LIMITS

♠ Posted by Marc J. Soss in ,,,,,
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.
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IS A PAY-ON-DEATH OR TRANSFER-ON-DEATH ACCOUNT THE RIGHT CHOICE FOR THE ACCOUNT BENEFICIARY?

♠ Posted by Marc J. Soss in ,,,,,,
The benefits and negatives associated with establishing transfer on death (TOD) and pay on death (POD) accounts has been debated for a long-time. The main benefit of an account of this nature is that the account assets will pass directly to the beneficiary(s) named on the account without probate or being subject to the decedent’s creditor claims. This is a simple way to transfer assets at death to an individual not involved in any dispute or litigation (divorce, bankruptcy, judgment creditor, etc.). In contrast, if the individual is involved in a dispute or litigation the assets passing outright to them could be at risk to the dispute or litigants claims. Consideration must also be taken if the individual named as the account beneficiary is a “special needs” individual, as direct receipt of the account funds could result in them loosing eligibility for the government benefits they are receiving. In addition, a POD or TOD could alter the end result of the decedent's intended estate plan.
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SOCIAL SECURITY - NEW AGE FOR FULL RETIREMENT

♠ Posted by Marc J. Soss in ,,,,
Understanding social security can result in a happier retirement. January 1, 2017 brought in significant changes and the new age of 66 years and 2 months (it had been 65 years) for full retirement benefits (for those born between 01/02/1955 through 01/01/1956). It is expected to increase to age 67 for individuals born in the 1960’s. Individuals may receive permanently reduced retirement benefits when they turn 62 in 2017. As the full retirement age continues to increase, there are greater reductions in benefits for individuals who claim the benefits before they reach full retirement age. For example, if you apply for benefits in 2017 at age 62, your monthly benefit amount will be reduced nearly twenty-six (26%) percent. Your spouse’s benefits, if any, will also be significantly reduced if you claim benefits before reaching full retirement age. There are both advantages and disadvantages to receiving your social security benefit before full retirement age. An advantage is that you will collect benefits for a longer time period. In contrast, the amount you receive will be reduced based upon how early you elect to begin receiving them.
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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 funding needs, The death of the person named: as guardian for minor children, personal representative or successor trustee of your trust. Sizable changes in the value of assets you own. Sale or purchase of a principal residence or second home. Receipt of a large gift or inheritance. Sale of a business interest. Special Needs child or family member. Changes in federal or state income tax or estate tax laws. Don't put these changes off to the future because you may not have the ability to change them later.
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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. In essence, Social Security benefits are being decreased since you are required to wait longer to collect "full benefits." The change in the full retirement age dates back to a "deal" enacted in 1983.
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