Florida Estate Planning Lawyer Blog

The IRS recently announced that the gift tax annual exclusion will remain unchanged in 2010 at $13,000

The yearly amount of the exclusion is based on the Consumer Price Index and has increased from $10,000 in 1997 to $13,000 in 2009 and 2010. As long as your gifts to an individual are less than the exclusion amount, there is no gift tax return that is required to be filed and no gift taxes are due. Each spouse gets an exclusion so a married couple can actually gift $26000 to each individual without creating a tax liability or necessity for reporting.

With proper gift planning a family can transfer a significant amount of money to their children and grandchildren. Take a family who has 3 kids, each married and each with 2 grandchildren.
This creates 3 kids + 3 spouses + 6 Grandchildren. A gift of $13,000 to each by each parent could remove 312,000 a year from your estate. Do this for 10 years and you could remove over 3.1 Million dollars. Given that the current tax rate is 45%, this could save $1.4 Million in estate taxes.

There are other ways of reducing your estate taxes and you should discuss your objectives and goals with a Florida Estate Planning Lawyer or Florida Asset Protection Lawyer who will review your individual circumstances and make recommendations based on them.

Remember that gifting is not for everyone and as you get older and your chance of needing Medicaid increased, gifting can disqualify you from certain government benefits. If there are issues or concerns you should discuss them with your Florida Estate Planning Lawyer

Florida Asset Protection Attorneys can help structure the ownership of assets to protect from liabilities and creditors. Often individuals own a bulk of their assets individually or in a Florida Revocable Trust, or in a corporation. The assets and businesses held in these entities can be subject to the claims of creditors if a judgment is obtained against the individual. In touch economic times like these it is more important than ever to protect your assets from the claims of creditors. You should discuss your assets and potential liabilities with a Florida Asset Protection Lawyer who also knows about Florida Estate Planning to make sure they are protected to the extent possible from claims that could cause you to lose the assets or income you have worked hard to create.

In Florida all sorts of clerks, customer service people, insurance sales people, brokers, account managers, and other employees of financial institutions give customers advice about how to title accounts and name beneficiaries. In an effort to avoid probate, these seemingly harmless changes can cause many problems with estate plans.

Most new account forms at financial institutions ask you to name a beneficiary. This does not have to be completed and sometimes you are better off to leave it blank than to fill in a name or attempt to name a proper beneficiary.

Often when filling out beneficiary designations people do not understand how a share of the assets will be treated if that person predeceases them. Will the share go to their descendants or to other named beneficiaries and is that what was intended.

Other problem can happen when there are future children born who were not contemplated at the time the account was created or if all of the beneficiaries do not agree.

There are good ways of avoid Florida Probate , and it can often be dealt with through proper beneficiary designations, use of a will, or use of a Florida Revocable Trust.

Often a Florida Revocable Trust or Florida Will can simplify the need to change designations in the event of changes in your life such as a divorce, marriage, or birth or death of a family member. With a Florida Revocable Trust or Florida Will you can simply modify one document and it will take care of all of the accounts that are under it. Sometimes it is difficult or impossible to make changes when a spouse becomes incapacitated.

If you would like to review your Florida Estate Planning you should Contact an attorney familiar with Florida Estate Planning

Update:
Jacksonville Probate Lawyer, David Goldman has put together a Florida Probate Handbook that is being offered free to readers and visitors of his websites. If you would like a copy, visit the Free Florida Probate Handbook web page, fill out the form, and one will be sent to you within 24 hours by email.

A retirement plan distribution is not taxed in the year received if it is “rolled over”
to the same or a different retirement plan or IRA, if various requirements are met.
§ 402(c)(1). A rollover means either:

A. 60-day rollover. A distribution from one plan or IRA to the participant (or his surviving spouse), followed by the participant’s (or spouse’s) redepositing the distribution in the same or another plan or IRA; or

B. Direct rollover. The transfer of assets from the participant’s account in a qualified retirement plan (QRP) to an IRA in the name of the participant or of his surviving spouse.

NOTE: You cannot role over money from one IRA to another within 12 months of another roll over with the same IRAs. There are two ways this can be fixed

1. You can roll the money over into a 401K plan or another qualified plan.

2. Roll it into a Roth IRA even if you are not eligible. You can then re characterize the IRA back to a traditional IRA. This is not subject to the same limitation as a traditional IRA.

You cannot retroactively elect to make the first transaction a distribution

NOTE: Plan to Plan transfers do not have the limitations of 1 roll over transfer per year.

NOTE You must roll over the same property as received. You cannot exchange money or another asset of the same value unless you sell the asset.

There are some special issues with naming your spouse or leaving retirement accounts for participants spouse.

1) Can delay distributions until spouse reaches 70 1/2.

2) If the spouse dies prior to reaching 70 1/2 the distributions will have to be made within 5 years.

3) Spousal role over. Surviving spouse can roll over money to her own IRA. This is the best option. If the participant leaves it to the trust it will be distributed by the time she reaches her life expectancy. But as owner of the IRA, the IRA will e worth more each year. The retirement plan will typically be depleted when she is in her 90's.

There is no deadline for a spousal roll over but it must occur during the life of the beneficiary.. The longer you wait the less the account will be worth because of AMTs. The executor of a spouse cannot exercise the option to roll over the retirement account.

Some of the common issues with naming beneficiaries on retirement accounts:
1) Make sure you name a beneficiary on a retirement account or estate will become beneficiary.
2) Multiple Beneficiaries on accounts can cause problems because all Beneficiaries must take the ADP of the oldest beneficiary
3) Lump sum distribution requirements- can be transfered to IRA.
4) If the beneficiary is a see through trust, then each beneficiary of the oldest beneficiary.
5) if the beneficiary is older than the participant, the life expectancy of the participant is used.

We previously reported that there were no RMD (required minimum distribution) in 2009. This turns out not to be trust in at least one case. If you turned 70.5 in 2008 and did not make your RMS in 2009 as required. You must still make your RMD by April 1, 2009