Much of our work for clients consists of what is commonly referred to as "estate planning." Estate planning is the process of implementing the proper legal and tax documents, coupled with appropriate asset postures and ownership, so that one's affairs are in order in the event of illness or death.
Our representation of an estate planning client typically begins with an initial meeting to collect information about the client's family situation, assets and goals. In this meeting, we advise clients about many important issues and options that pertain to the client's unique situation, such as inheritance structures and death taxes.
Generally, by the end of the initial meeting, we are able to propose an estate plan that is tailored to meet the client's specific goals and needs.
Once the client approves the proposed estate plan, we draft the necessary legal documents, such as a Will, Revocable Trust, Powers of Attorney, and Health Care Directive, which serve to legally formalize the estate plan.
As the years progress, we often provide a number of supplementary functions for clients, such as providing tax updates and making necessary adjustments to the estate plan as the law changes and the client's personal circumstances dictate.
Southwest Florida is a fantastic retirement destination – plus it comes with Florida’s many tax benefits!
FLORIDA’S TAX BENEFITS
Florida is one of only a handful of states that impose no income tax. For many retirees, a Florida tax residency completely eliminates northern state taxation on IRA distributions and investment income.
Also, Florida does not have a death tax. However, many states do impose significant death taxes.
Further, Florida offers the “Save Our Homes” property tax exemption. This exemption provides that the assessed value of a resident’s homestead may not be increased by more than 3% annually.
ESTABLISHING A FLORIDA TAX RESIDENCY
A number of steps are useful for establishing a Florida tax residency, such as obtaining a Florida driver’s license. However, for one who also owns a non-Florida residence, it is critical to establish Florida as the “primary” home to obtain Florida’s tax benefits.
For the seasonal resident, becoming a Florida tax resident is essentially a matter of qualifying as a non-resident of the northern state under that state’s law.
Many northern states apply “day-counting” tests to determine residency, but also have complicated “intent” tests even if the day-counting test is avoided.
FLAWED TAX RESIDENCY CONSEQUENCES
As a result of state budget situations, many northern states are escalating their efforts to tax Florida persons as residents. For example, Massachusetts has a “Residency Tax Unit” for the purpose of auditing persons who claim Florida residency but also own a Massachusetts residence.
If one fails to establish a Florida residency, the northern state will have jurisdiction to tax the person’s entire income or estate, including retroactively.
Establishing a Florida tax residency is the right decision for most. However, it should be carefully implemented with legal counsel to ensure that one’s tax benefits are secure. Please let us know if we may be of assistance to you in establishing a secure Florida tax residency.
"Elder law" is typically divided into 3 parts, which are (i) estate and tax planning, (ii) Medicaid, disability and end-of-life planning, and (iii) planning for diminished capacity and/or incapacity.
The primary focus of our elder law practice is to position the client's care, assets, legal representatives and affairs to be aligned with client's wishes - in the event that the client becomes unable to attend to financial and personal matters - and all outside of the supervision of a court guardianship.
A court guardianship is intended to be a humane mechanism to protect the well-being of persons who lack full mental capacity. However, a guardianship often can unnecessarily bring one’s private matters into the public arena and may place undesirable persons in position of great authority as Guardian.
Fortunately, the risk of guardianship can be limited by the use of proper advance planning. Although no silver-bullet exists to prevent a guardianship, a number of techniques (such as the funded Revocable Trust, a Durable General Power of Attorney, a current Living Will with HIPAA provisions, and a designated statutory Pre-Need Guardian) can render a guardianship highly improbable.
Also, guardianships often occur because a person simply lacks a sufficient, coordinated network of family members and professional advisors who are able to fill the gaps in the person’s life caused by aging or disease. This network should include the "lead" family members, the financial advisor, the CPA and the attorney. Consequently, comprehensive elder law counsel often involves working with the client to assemble an advance team of caring family members and attentive professionals to be ready to attend to all financial and physical needs if incapacity occurs.
Upon a loved one's death, the family and friends left behind will face many challenges and difficulties - not to mention the complexities of attending to estate affairs. In our experience, the number and size of "estate" tasks passing to one's family often seem overwhelming to them.
Fortunately, the family need not shoulder alone the multiple estate responsibilities that must be handled.
During a client's declining years, and then upon a client's passing, we work closely with the client's family to provide them the comprehensive and timely legal assistance and tax counsel that will be required in the challenging process of attending to the client's legal affairs - and then eventually administering and settling the estate or Revocable Trust.
Although every situation is unique, we strive to carefully guide the client's family members and representatives through the varied facets of the applicable legal and taxation systems, from the beginning of the declining years, until death occurs, and through the final transfer of assets to the heirs in accordance with the client's wishes.
A well-known statistic is that one in every two marriages ends in divorce. Other marriages endure until death. However, in either situation the newly single person often remarries and step-children come into the “blended” family picture.
Not surprisingly, in a second marriage contemplated between seniors, each spouse usually desires that his or her own estate and property be inherited by his or her children. However, Florida law can significantly disrupt this desire by ultimately diverting a large portion of a deceased spouse’s estate and property to step-children or other beneficiaries. This occurs because, under Florida law, a surviving spouse is entitled to a “statutory inheritance” of 30% of the deceased spouse’s estate – regardless of the terms of the deceased spouse’s estate plan or of the surviving spouse’s own economic needs.
Although there are several options to address spousal inheritance rights, often the best option is for the spouses to legally adjust or waive all spousal inheritance rights by means of a prenuptial or postnuptial agreement. In such a case, both partners are then at liberty to fashion their estate plans as they desire and unconstrained by Florida inheritance laws.