Florida Estate Planning Lawyer Blog

While many of you may be thinking that fewer Florida Probate cases will involve federal estate tax returns in 2011, the opposite is actually true. It seems with the new $5 Million estate tax exemption that most estates will not need to file a tax return. What most people do not realize is that by failing to file an estate tax return in 2010 (Form 706) the spouse of a decedent will lose the portability of the unused portion of the estate tax exemption that is available to the surviving spouse. Form 706 was just released by the IRS and if you know someone who passed away in 2011, you should have them ask their CPA or Tax Attorney about the benefits of filing a Form 706 and the risks and potential tax liabilities if one is not filed.

According to a Market Watch article by Bill Bischoff, on the Worst Places to Die, New Jersey Tops the list with a combined effective estate and inheritance tax rate of 54.1 %.

Estate tax is bad enough but several states have an inheritance tax. Yes you could actually leave money to a family member and they could be charged a percentage of your assets by the state they live in. Florida residents are not subject to either a state inheritance tax or a state estate tax.

While 16 states have a state estate tax only 6 have inheritance taxes and two states have both (New Jersey and Maryland)

Forbes.com has reported that no price has been set for the Astros, but Drayton McClane Jr., has decided to sell the team for estate planning purposes. The team is worth a reported 455 Million and could create a tax bill of more than 200 Million dollars.

While the proposed changes to the estate taxes will help many people, it will still create major problems for larger estates. If you want to discuss your estate and what options you may have to reduce estate taxes or probate costs and delays, you should contact a Jacksonville Estate Planning Lawyer to discuss your circumstances and goals.

Forbes has an article about contemplation of death in 2010 to avoid estate taxes. As 2010 comes to an end, there may not be time for many to make the decision. The article quotes Rep. Cynthia Lummis in saying that some of her Wyoming constituents are planning to discontinue dialysis and other life-extending treatments so they can die before December 31st.

In many cases, the stories of this seem to be overblown as many can have the same results with good estate planning. To discuss your options contact a Jacksonville Estate Planning Lawyer.

The Bush tax cuts are set to expire on 12/31/2010. Many feel the the first face-off between Republicans and Democrats could be over the estate tax and income tax issues. If nothing is done we will see significantly higher estate taxes and income taxes in 2011.

To plan for these higher estate taxes and see hot to reduce the effects of a Florida Probate contact a Jacksonville Estate Planning Lawyer to discuss how planning can give your family advantages over the typical Florida Probate process.

The Napa Valley Register has a story of how a family vineyard was hurt by not planning properly for estate and death taxes. While this has not been a major concern this year with few states having death taxes and none at the federal level, this is about to change January 1st unless there is a legislative change. The federal estate taxes are set to resume January 1, 2011 with rates as high as 55% on estates in excess of 1 million dollars.

It is important to plan for estate taxes and have the liquidity necessary to pay them or your family business could be devastated and forced to liquidate to pay the IRS. To discuss how you can plan for the higher estate taxes contact a Florida Estate Planning Lawyer to discuss your options.

Ashlea Ebeling with Forbes is reporting that next years estate taxes could be as high as 60% for some. This title is misleading because the maximum estate tax will be 55%. She gets 60 percent by adding the max rate of 55% plus the 5% surcharge for assets between 10 million and 17.184 million dollars. This surcharge only makes the overall rate closer to 55% and the full 55% rate is not achieved until the estate is in excess of the $17.184.
So while there is a 60% estate tax, it is only a marginal tax rate and the rate is never higher than 55%.

Please do not think I am ok with a 55% tax rate, but I did want to clarify the issue. If your estate is greater than 1 Million dollars, you should consider meeting with a Jacksonville Estate Planning Lawyer to discuss ways you can increase your exemptions or hedge against the taxes that would be due upon your death.

Recently, I have written several blogs concerning the possible federal estate tax increase from zero to 55% in 2011. If Congress's left and right representatives cannot come to an agreement, the exemption will end at $1 million. This means that for every individual who passes away, up to $1 million in assets may pass to their heirs free from estate taxes. While having one million dollars is a significant amount of money, $1 million in assets is something considerably different. Numerous small and family owned businesses that fall into the class above the $1 million limit would be hit hard by the estate tax.

Over the past few years many businesses have been split up and sold to pay the estate taxes. Much of this could have been avoided with proper estate planning. If nothing changes many businesses that are family-owned will most likely have to sell off the business because of a 55% federal estate tax rate. Many states have additional estate taxes that will be due which could raise the total tax to around 70%. Luckily Florida residents will not be subject to additional state estate taxes. For instance, suppose a family owned business has a net worth of $10 million. When the current owner dies the $10 million net worth of the company will pass to the estate and be taxed at 55% + any state estate taxes that may be due. This means that the heirs will have to pay the millions of dollars out of their own pocket or sell off the company. The same rationale is true for farm and ranch owners as well. A one thousand acre farm that has been in a family for many years could be worth millions of dollars. When the current owner dies, the farm will be subject to the same 55% estate tax requiring the heirs to sell off the property to pay the taxes.

With serious tax consequences on the horizon, estate planning has never been more important. The showdown between Republicans and Democrats on Capitol Hill on estate taxation does not show strong signs of reconciliation. If you are a small business owner or farm owner who would like more information on protecting your company contact a Florida Estate Planning Lawyer today. An attorney can help you reach your goal of keeping the business in the family and reducing the taxes through estate planning techniques.

According to Forbes Magazine the United States has over four hundred billionaires. Currently, three Liberal members of the Senate are working on a plan that calls for a 10% estate "billionaire surtax" that would go into effect retroactively. This would raise the tax rate to 65% on all estates that have accumulated more than $1 billion in assets. These lawmakers believe that billionaires should be required to pay more in estate taxes due to the increasing federal budget deficit and national debt.

This harsh tax proposal may have been spurred by the death of Texas billionaire Dan L. Duncan who passed away in March with a net worth of $9.8 billion. Since Duncan died this year, his entire estate passes to his heirs tax-free. If these Senators' proposal is enacted, it will hit Duncan's estate retroactively, immediately prompting a court challenge to its constitutionality.

Republican Senators and some less liberal Democrats are opposed to any retroactive plan. Seeing that the only way to come up with a legitimate plan is through bipartisan cooperation, two other Senators have been working on a compromise. This would impose estate taxes on estates above $5 million at a maximum tax rate of 35%. If Liberals have their way they would also seek to eliminate or restrict the use of GRATs because those trusts are popular tax breaks for the wealthy. If you have any questions or concerns about how these new laws may effect you contact a Florida Estate Planning Lawyer or Jacksonville Estate Planning Lawyer for assistance.

Most people in today’s society would be happy to discover that they were being left an inheritance in a Florida Will . However, since inherited property under the estate laws of Florida is a gift, the beneficiary does not have to accept the inheritance. Although declining to accept a gift would seem odd to some people, there are a few reasons why it would be beneficial not to claim inherited property.

One reason why a person may not want to accept an estate gift is because the property may be undesirable. Property may become undesirable when there is a large debt owed on the property or significant maintenance would be required to sell the property. For example, an old abandoned gas station that was given to you in a will would probably not be worth taking because of the significant costs to modify the property and the taxes that could come with it.

Other reasons why someone would disclaim property are to prevent your creditors from taking the property, a feeling that it is wrong to benefit from someone’s death, and to reduce your tax burden, or it will only create additional estate taxes upon your death. While it may not be permissible to disclaim the property in all situations to avoid creditors, you should discuss your specific goals with a Jacksonville Estate Planning Lawyer as soon as possible because there are time limits on when a properly filed disclaimer can be done. Whatever your reason may be for not wanting the gift it is important to know a disclaimer must comply with federal law. Contact a Florida Estate Planning Lawyer who can assist you in the process and insure that the disclaimer is done correctly and complies with the appropriate laws of the jurisdiction.

Florida has no Estate Taxes, but there may still be Federal Estate taxes due. Before the distribution of assets of the deceased’s estate can occur, the federal government has the ability to take their share of the estate. The Federal Estate tax has been repealed for the year 2010 but in past years the tax has been applied to every U.S. citizen who died leaving assets to be distributed to their heirs. - This does not mean no taxes will be due for individuals who die in 2010. Remember the law does not allow an unlimited amount of capital gains like in previous years. There is not an unlimited amount of capital gains like in 2009. This means even with an unlimited estate tax exemption, some people will pay more in estate taxes under 2010 than under previous years.

In past years the estate tax was applied only on funds that exceeded the net estate amount set by Congress. For example, if an individual died in 2009 leaving a net estate of $3.5 million then the federal government would not have taxed the estate because the net estate did not exceed the amount exempted by Congress. However, if the net estate would have been $4 million instead, the estate would be taxed at a rate of 45% on the amount over $3.5 million. So in this case the Federal Estate tax liability would be ($500,000 x 45%) which comes out to $225,000.

Currently, there is no plan to repeal the Estate Tax exemption for 2011. Before the 2010 repeal, Congress had increased the tax exemption given to individuals who died and whose net estate was distributed to $3.5 million. However, the current plan for 2011 is to have a tax exemption of $1 million and a tax rate of 55%. If the current plan remains in effect it will place a much greater tax liability on assets and funds that are distributed out of the net estate of those who die next year.

Thus, it is important to discuss the estate tax process and what tax liability your estate may be subject to in future years with an Florida Estate Planning Lawyer. Some assets are exempt from tax liability and with proper planning your federal estate tax liability in future years could be significantly reduced.

Yesterday, the House of Representatives voted 225-200 in favor of H.R. 4154. The bill will make the 2009 Estate Tax Level Permanent.

Currently (for 2009) the estate tax exemption is $3.5 million and the maximum tax rate on estates is 45%. The Bill referred to as the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, would permanently extend this estate tax exemption amount and tax rate.

The Bill still needs the Senate and President's approval.

The following states will have an inheritance tax in 2009
Estates in excess of

$3,500,000: NC, VT
$3,000,000: OK (tax expires after 2009)
$2,000,000: CT, IL (tax expires after 2009), WA
$1,000,000: DC, KS (tax expires after 2009), ME, MD, MA, MN, NY, OR, TN
$ 675,000: NJ, RI
$ 338,333 OH
$ 0: IA, IN, KY, PA.

Florida has no estate tax for individuals who die in 2009.

Individuals may consider transferring assets though gifts prior to death to avoid estate taxes as most states do not have gift taxes.

Life insurance is counted as part of your taxable estate. Many people understand that life insurance is income tax free to the beneficiaries, but the do not know that the proceeds of a life insurance policy are usually counted as part of the decedent's estate for Federal Estate Tax purposes.

This increase in the taxable estate can often lead to estate tax or a death tax being due. 1,000,000 in life insurance can create as much as a $450,000 tax bill for the estate. To avoid this many individual create an Irrevocable Life Insurance Trust or ILIT. An Irrevocable Life Insurance Trust is a type of Florida Revocable Trust that is designed to hold and own life insurance policies. Once the ILIT is created you transfer ownership of your life insurance policies or purchase new policies in the Irrevocable Life Insurance Trust. By giving up all "incidents of ownership" over the policies the benefits of the policies are not part of your taxable estate when you die.

To find out how an Irrevocable Life Insurance Trust can benefit you Contact a Florida Estate Planning Lawyer to discuss your situation.

Short Answer: A Summary Administration probate usually takes just over 3 months but can take 6 or more depending on the circumstances.

Long Answer: It depends on the facts and circumstances of each situation. In some areas of Florida the Judges require or allow for differing procedures this causes some probate administrations to take longer than others.

In Florida, the personal representative may need to sell real estate prior to settling the estate. As you can imagine the market conditions can determine how long it will take to sell property. I have been involved in some Jacksonville Probate Litigation where the creditors dispute every claim and as a result lawsuits are filed to resolve those claims. This procedure or settling a disputed claim in a Florida probate can extend the time to compete the probate.

Other Jacksonville cases have involved a disputed prenuptial agreement or Florida WIll. Again when there is extended litigation the process will take longer to resolve., or to resolve a disputed claim filed by a creditor, or a lawsuit filed to challenge the validity of the will.

Even the simplest of estates must be open for at least the three-month creditor claim period. If there are no assets that are subject to claims of creditors in some counties the Judges like to give notice to creditors and an opportunity to dispute homestead status to preserve the creditor's due process rights. With these issues in mind, it is reasonable to expect that a simple estate will take at least three months and typically five or six months to properly handle.

If the estate does not have to file a federal estate tax return, the final accounting and other documents necessary to close the estate are first due within 12 months after the Court issues Letters of Administration to the personal representative. This period can be extended if necessary and is often extended in cases involving Florida personal Injury Claims.

If the estate is required to file a federal estate tax return, the return is initially due nine months after the date of the decedent’s death, however, the time for filing the return can be extended for another six months. Remember that the Personal Representative is personally responsible for the estate taxes if they are unpaid. If a federal estate tax return is required, the final accounting and other documents to close the probate administration are due within 12 months from the date the estate tax return, as extended, is due. This date can also be extended if necessary.

If you need help from a Florida probate lawyer or are looking to file a claim a Florida Probate case and would like a Jacksonville Probate Attorney to review your claim or the probate administration Contact a Florida Probate Lawyer.

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.