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.

The IRS just released Notice 2011-76 that extends the filing deadline for Forms 706 and 8939 for estates of decedents dying in 2010.

The Notice provides that large estates of people who died in 2010 will have until early next year to file various required returns and pay any estate taxes due. In addition, the IRS is providing penalty relief to certain beneficiaries of these estates on their 2010 federal income tax returns. This relief is designed to give large estates, normally those over $5 million, more time to comply with key tax law changes enacted late last year. Specifically, the following relief is given:

Continue reading "IRS extends Filing Deadline for Form 706 and 8939 for Decedents dying in 2010" »

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)

The bonus days come thanks to Emancipation Day, a little-known Washington, D.C., holiday that celebrates the freeing of slaves in the district.

Emancipation Day falls on Sat., April 16, but it is observed in D.C. on Fri., April 15. That prompted the IRS to extend the tax filing deadline to April 18 this year. Under the tax code, filing deadlines can't fall on Saturdays, Sundays or holidays.

When creating Florida Estate Planning Lawyer it is important to remember that once you create the documents your job is not done.

If you create a Florida Revocable Trust it is important to fund the trust or it will not provide one of the typical benefits of avoiding a Florida Probate. There are several ways of funding the trust and you should discuss these with your Florida Estate Planning Lawyer to see what makes the most sense for you and your family.

In addition, another common mistake is forgetting to make proper beneficiary designations on life insurance or retirement accounts. This is also something that needs to be carefully considered and implemented with the advise of your CPA and Florida Estate Planning Lawyer.

Forgetting to make proper beneficiary designations on assets can subject your estate and beneficiaries to unnecessary taxes, expenses, and delays in the transfer of the assets. If you have a 401(k) you may consider moving the asset to an IRA for additional flexibility. This is something you should discuss with your financial planner as IRA distributions to a non-spouse can usually be spread over the lifetime of the oldest beneficiary instead of having to be taken within a year of your death. (Thanks to Jeff Goldstein a Financial Planner with New England Financial in Atlanta GA who is also licensed in Florida for making this recommendation).

If you have recently moved to Jacksonville or Florida and would like a complimentary review of your estate plan and your circumstances contact a Jacksonville Estate Planning Lawyer to discuss your options.

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.

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.

The 2009 IRS annual gift tax exclusion is increasing form $12,000 to $13,000 for 2009.

This increase means that more money can be given away for estate tax planning purposes. For example, a married couple with two married children will be able to give away up to $104,000 in 2009 with no gift tax implications.

To discuss other ways of moving funds to your family or friends in order to reduce the effects of estate taxes, Contact a Florida Estate Planning Lawyer

Florida DR-219 Form is Repealed as of 06/1/2008

Beginning June 1, 2008:

•The requirement to complete and file Form DR-219 is repealed. •The Department of Revenue will not process DR-219 forms received. •Destroy all blank DR-219 forms in your inventory.

The repeal of the requirement to complete and file Form DR-219 does not impact documentary stamp tax payment and filing requirements. Documentary stamp tax continues to be due on all documents that convey an interest in Florida real property. The tax must be paid at the time of recording with the Clerks of Court or County Recorders if the document is recorded prior to the 20th day of the month following the month the document is delivered. The tax must be paid directly to the Department of Revenue by the 20th day of the month following the month the document is delivered if the document is not recorded before. Delinquent payment of tax will continue to be subject to penalty and interest charges.

When one dies the value of their estate is subject to an Federal Estate Tax. This rate is currently 45%. In 2008 the Federal government has an exemption of the estate tax on the first 2 million dollars in value. In addition, many states have additional state taxes that are due when a resident of their state dies. Florida use to have an estate tax, but repealed it when the federal government stopped allowing you to deduct the amount of state estate tax paid from the federal estate tax due.

You should check on the estate tax in your state and consider costs and benefits of your state versus those with no estate tax. One of the reasons so many wealthy people move to Florida is the lack of income tax and estate tax.

How much are estate taxes?

Your estate will have to pay estate taxes if its net value when you die is more than the "exempt" amount set by Congress at that time. Here is the current schedule for the federal estate taxes:

Year of Death.........Estate Tax "Exemption"
2008................................$2 million
2009................................$3.5 million
2010................................N/A (repealed)
2011 and thereafter..........$1 million

In addition you may have to add your states taxes on top of the numbers above.
Although 2010 looks like 0, it really is higher, in 2010 the plan is tax on the increase in value of one's estate. Under the current plan, most assets are able to take advantage of a free stepped up value based upon the fair market value at the time of the decedents death.

A Florida Life Insurance Trust is an irrevocable trust that allows an individual to make the proceeds of a life insurance poliicy free from income taxes and estate taxes. Typical life insurance policies are income tax free, but many increase the value of one's estate to the point that the federal and or state income taxes are due. By using an ilit one can avoid these taxation issues.

In 2008 the Federal tax exemption is $2,000,000. Lets take a client with 1.5M in assets and a 1M life insurance policy.

If they were to die in 2008 their estate would be valued at 2.5M and 500,000 would be subject to estate taxes. The current estate tax rate is 45% so this estate would have to pay a tax of $225,000.

In 2011 the estate tax exemption is only $1M. With an estate valuation of $2.5M, 1.5M would be subject to estate taxes. Using the same tax rate, this estate would have to pay $675,000.

To find out if or how a Florida Life insurance trust can help you please Contact a Florida Estate Planning Lawyer.

The most common problem with Florida Estate Planning or estate planning in general is that those how are in the most need of the benefits a Florida Revocable Trust can offer are the ones who usually fail to fund their trust.

Creating a Florida Revocable Trust is only the beginning. No benefits are received by signing the documents. It is only when the Florida Revocable Trust is funded that the benefits of the trust can be used.

These benefits include avoiding delays in probate, reducing or eliminating the costs associated with a Florida Probate, and not having your assets or the distribution of your assets in the public record.

There are many other benefits that are specific to each Florida Revocable Trust .

If you have not funded your Florida Revocable Trust now is the time to do so. Don't forget to transfer your bank accounts, stocks, bonds, land, and other assets. Generally personal property can be assigned to the Florida Revocable Trust with a simple assignment. This is one type of asset that many people forget about and can often cause a Florida Probate to be necessary.

For more information on how to fund or create a Florida Revocable Trust Contact a Florida Estate Planning Lawyer.

With the recent rise in the popularity of the Florida Pet Trust many individuals are caught off guard with unexpected expenses associated with a Florida Pet Trust. These expenses are also associated with Florida Pet Trusts from other states as they are related to Federal issues.

The primary issue that a pet trust is subject to income tax reporting and required to pay taxes on the income the funds generate. Most Florida Pet Trusts have less than $50,000 in funds and the cost of maintianing them is relatively high. There are some Pet Trusts that pool the money and do master reporting. This can be a solution to smaller pet trusts. If you are interested in creating a Florida Pet Trust, Contact a Florida Pet Trust Lawyer for more information

A number of Texarkana residents have filed suit against sellers of living trust documents in a class action accusing the salesmen of exploiting senior citizens. This is similar to what I reported happening in California in December.

A Plaintiff says he purchased a living trust after attending a lunch presentation at a restaurant. He states the document was misrepresented and that if he dies with only these estate-planning documents, his estate will still need to be probated because the living trust failed to factor in his real property in Arkansas.

The living trust sellers are facing allegations of "masquerading as qualified financial advisers, estate planners, lawyers, and paralegals" to "exploit and prey" upon senior citizens with the creation and selling of "unnecessary and often useless" living trusts.

Defendants are accused of fraud, unauthorized practice of law, negligence, breach of fiduciary duty and conspiracy. The suit alleges that the defendants created and sold the living trusts as part of a scheme to gain access to senior citizens' financial information in order to sell annuities and other financial products.

According to the original complaint, the scheme begins with advertisements that persuade senior citizens to attend a free lunch or dinner. At these meetings, the "unlicensed" living trust defendants conduct presentations and distribute materials that misrepresent the impact of probate fees and estate taxes in order to create fear that the senior citizens need to buy a trust to prevent heirs from losing their estate.

These presentations include references to celebrities such as Elvis and describe the large amounts these celebrities have paid in estate taxes. The plaintiffs state these presentations do not include information about the federal estate tax exemption, the sliding scale of the exemption amount, or the possibility of the elimination of future estate taxes.

Further, the presentation does not tell senior citizens with estates larger than the exemption amount that the purchase of these living trusts will not automatically eliminate all estate taxes. The forms and decisions made by the defendants fail to take into account the entire senior's assets and ultimately and fail to serve the legal purpose as presented, argue the plaintiffs.

The plaintiffs claims the presentations convince the senior citizens to use their IRA accounts or other tax-exempt growth products to purchase variable annuities. However, according to the plaintiffs' accusations, the presentations and documents do not demonstrate the redundancy with regard to a variable annuity's tax deferral benefit when purchased in a qualified plan and also do not inform the consumer of the associated fees, surrender charges and commissions associated with these variable annuity products.

These types of programs are everywhere. It is important to use a lawyer who will look at your individual assets and who is not trying to sell you other financial products. To review your estate planning needs contact a Florida Estate Planning Lawyer.