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.

REASONS TO FUND YOUR REVOCABLE TRUST

♠ Posted by Marc J. Soss in ,,,,
You have created a Revocable Trust (aka Revocable Living Trust) as a part of your estate plan and wonder what do you need to do next? The first, and most important thing, that you need to do is ensure that it is properly funded by transferring or assigning ownership of your assets and real property to the Trust. The benefit of properly funding your Trust is that you will not lose any control over or enjoyment of the assets. While you are handling the funding process it is important to recognize why you are doing it: Avoidance of Probate Proceedings. The most common reason individuals create a Revocable Trust is to avoid probate. Probate is the court-supervised transfer of assets from the estate of a deceased person to his or her beneficiaries. However, if all of the decedent’s assets are held in a Revocable Trust at his or her death, they are not subject to probate proceedings in either their state of domicile and any other in which they may own real property. The successor trustee can distribute the assets to each beneficiary without supervision by the court. Management During Incapacity and at Death. Should you become incapacitated the assets maintained in your Revocable Trust can be utilized by your successor trustee, without the necessity of guardianship court intervention, to handle your financial affairs. Similarly, upon your death, the assets can be seamlessly assumed by your successor Trustee, without the need to wait for probate proceedings, and distributed to your beneficiaries. Privacy and Confidentiality. Unlike a Last Will & Testament that will be filed with the probate court, a Revocable Trust is not a matter of public record. Information is reported privately to the beneficiaries and the public will have no access to this information. Every time a new asset is acquired or account opened by you it should be titled in the name of your Trust.
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ESTATE PLANNING IS NOT JUST FOR THE OLD AND WEALTHY

♠ Posted by Marc J. Soss in ,,,,,
Is your child ready for college? While you may have purchased for them new clothing, linens, towels, etc. the question becomes whether they have executed an estate plan? Most families fail to recognize that once their child (young adult) reaches age 18 years they are considered an adult under most state laws and their parents can no longer make all financial and health care decisions for them or have access to their medical records. As a result, estate planning is not only for the old or the wealthy and every individual over age 18 should have, at a minimum, a Power of Attorney and Health Care Directive. A Durable Power of Attorney designates another individual to act for the young adult in legal and financial matters. It is mainly used in the event of an accident or incapacity rendering the young adult unable to effectively manage legal and financial matters. Having such a document in place would avoid the necessity of having a guardian or conservator appointed should an accident or incapacity happen. The Health Care Directive empowers another to make health care decisions in the event of incapacity, articulate their wishes and directions in the event health should deteriorate and designates another to act as “personal representative” for purposes of HIPAA to authorize the release of medical records if necessary to obtain medical treatment. Make sure they have these documents in place prior to dropping them off in college.
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DELAWARE REPEALS ITS ESTATE TAX EFFECTIVE JAN. 1, 2018

♠ Posted by Marc J. Soss in ,,,,,,
Effective January 1, 2018, Delaware residents will no longer be subject to a state estate tax. Delaware becomes one of the thirty-three (33) states that do not impose either estate or inheritance taxes or both. The repeal is the result of Democratic Governor John Carney Jr. signing a stand-alone estate tax repeal bill. One estate lawyer commented “[t]he very wealthy don’t have to move down to Florida.” The Governor and legislature recognized that that if wealthy folks stay in Delaware, instead of changing their residency to avoid the state estate tax, the state will generate more revenue from personal income tax than estate taxes (high of $16.2 million in 2011, and a low of $1.3 million in 2014).
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ESSENTIAL ESTATE PLANNING DOCUMENTS

♠ Posted by Marc J. Soss in ,,,,,,
Regardless of your state of residency it is important to have your estate planning documents in order. The following is a list of essential documents and how they will benefit you. Last Will & Testament: a legal document in which you express your wishes as to how your estate (assets, accounts, real estate, etc.) is to be distributed at your death, and nominates the individual(s) or entity to manage the estate until its final distribution. Without this document the state statutes will control who administers your estate and to whom does it pass. ​ Power of Attorney: a written document in which you give another individual (they can reside anywhere) the power to act in your place in managing your assets, pay bills, handle insurance claims, sell real estate, file a tax return, to make gifts, create revocable trusts, invest assets and do anything you can do with your assets personally. You may name one or more agents under a power of attorney, and direct that one may act alone without the other, or that they must act jointly. You can also appoint a successor agent to act in the event the first person(s) you’ve named cannot act. A “durable” power of attorney does not become inoperative upon your incapacity. However, upon your death it is no longer effective. Health Care Surrogate Directive:​ a written instrument in which you appoint someone or multiple individuals you trust to make decisions about your medical treatment in the event you are unable to give instructions at the time the decisions must be made (ex., you are in a coma). Living Will: a document in which you state your wishes regarding medical treatment if you are unable to give instructions at the time the decisions for medical treatment need to be made. The living will can include instructions about the termination of life support and artificial nutrition and hydration (i.e., food & water intravenously). Pre-Need Guardian Declaration: a document that specifically nominates the individual(s) to serve on your behalf if it is necessary to appoint a guardian for you. A Florida Court must consider the individual(s) nominated if he/she is capable of serving. ​Without a power of attorney and health care surrogate in place your family will have to commence guardianship proceedings (petition the court to step in on your behalf) to make these decisions on your behalf. Guardianship proceedings is a very public process and makes the world aware that your family thinks you can’t take care of your own finances or medical decisions.
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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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MINNESOTA TAX LAW CHANGE AS TO RESIDENCY REQUIREMENTS

♠ Posted by Marc J. Soss in ,,,,,,
With the number of retirees moving to states which do not access an income, estate or inheritance tax many states are trying to find ways to recoup the lost revenue. The Minnesota Department of Revenue previously took the position that the location of a person’s attorney, CPA, financial adviser or bank account determined where an individual is domiciled for income tax purposes. This was in addition to Minnesota law which found that an individual is a resident of Minnesota for income tax purposes if he or she is either: (1) domiciled outside Minnesota, but maintains a place of abode in the state and spends in the aggregate more than one-half of the tax year in Minnesota (the “183-day test”), or (2) domiciled in Minnesota. The Minnesota tax bill signed into law on May 30, 2017, included a legislative amendment specifically removing from consideration in a domicile dispute the location of an individual’s attorneys, CPAs, financial advisers and banking relationships. The new law is effective for tax years beginning after December 31, 2016. This creates one less hurdle to overcome when becoming a resident of another state.
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INCOME TAX EVASION - BELGIUM, COLUMBIA AND PORTUGAL JOIN THE FIGHT

♠ Posted by Marc J. Soss in ,,,,,,,
Maintaining an offshore bank account is not illegal, however, failing to report income and interest earned is tax evasion. Effective January 1, 2017, IRS Revenue Procedure 2017-31 added Belgium, Columbia and Portugal to the list of countries that participate in the automatic exchange of information on bank interest paid to nonresident alien individuals. This addition means there are now 43 countries participating in the automatic exchange program. The IRS only shares information with countries that have entered into this mutual information exchange agreement. The IRS is statutorily barred from sharing information with another country without such an agreement in place. All U.S. information exchange agreements require that the information exchanged under the agreement be treated and protected as secret by the foreign government. This is one of the most effective tools the U.S. Government has to combat tax evasion.
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MINNESOTA RAISES ITS ESTATE TAX EXEMPTION FOR 2017 AND BEYOND

♠ Posted by Marc J. Soss in ,,,,,
The State of Minnesota's recent budget brings it closer to joining the thirty-two (32) states that do not impose a state inheritance or estate tax in addition to the federal estate tax. The state budget increases the estate tax exemption amount to $2.1 million for 2017 (from the current $1.8 million level). The change is retroactive to January 1, 2017, and includes incremental increases in the exemption amount to $2.4 million in 2018, $2.7 million in 2019, and $3 million by 2020. The Minnesota estate tax doesn’t have a portability provision and tops out at 16%.
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DISTRICT OF COLUMBIA INCREASES ITS ESTATE TAX EXEMPTION

♠ Posted by Marc J. Soss in ,,,,,
Tax reform dating back to 2014 has resulted in an increase in the District of Columbia's 2017 estate tax exemption amount to $2 million. In 2018 the exemption amount is anticipated to be equal to the 2017 federal exemption amount of $5.49 million. Currently, eighteen (18) states and the District of Columbia impose an estate or inheritance tax—separate from the federal estate tax. However, neighboring states have been repeal their estate and inheritance tax by raising the exemption amount to the federal level. For example, Maryland increased its 2018 exemption to $4 million in 2018, and the federal exemption amount in 2019. The Commonwealth of Virginia does not impose an estate tax on decedent estates.
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