RETAINING DOMICILE IN FLORIDA WHILE LIVING TEMPORARILY IN ANOTHER STATE
ZERO STATE INCOME TAX AND NO STATE ESTATE TAX MAKES FLORIDA THE IDEAL STATE TO LIVE IN. NO WONDER THE SNOWBIRDS FLOCK TO OUR SUNSHINE STATE- JUST LOOK AT FLORIDA’S HOMESTEAD EXEMPTION!
There is a difference between “residence” and “domicile.” A person can only have one domicile, but more than one residence in different states. So what is domicile? It is defined as actual residence within a particular state with the intention of making that state one’s permanent home. Its really comes down to a factual finding of the intent of a person to make a particular state his or her domicile.
Pursuant to Florida Statute §222.17, a person can show intent to maintain a Florida residence as a permanent home by filing a sworn Declaration of Domicile with the clerk of the circuit court. Florida Statutes also provide some factors that manifest intent to retain Florida as a primary residence.
Ways to retain or establish domicile in Florida and take advantage of all its benefits is to purchase real estate in the Sunshine State. One should register to vote in Florida and vote at the next possible election. One should keep his or her Florida driver’s license and plates. Having your will/trust drafted to comply with Florida law stating your domicile in Florida also evinces intent. It’s important to spend a significantly greater portion of each year in Florida by being physically present in the state.
Finally, one should also consider establishing certain relationships with the state of Florida. Banking, religious, social, professional and medical relationships are more than a few examples. Also, keep your personal mailing address as a Florida address.
Calling Florida your “home sweet home” allows you to take advantage of the state’s asset protection laws.
MAXIMIZE FINANCIAL AID THROUGH THE USE OF AN IRREVOCABLE TRUST
A strategic estate planning tool that you may want to consider is creating an irrevocable trust for child’s college fund. Funds transferred to an irrevocable trust remain subject to trust terms and conditions until the established time for distribution. A trust can protect your child’s college fund from creditor’s demands. Also, an irrevocable trust has its own tax ID number and is not considered an asset when calculating your taxes thus providing certain tax benefits. Trust property is excluded from the trustor’s gross estate for federal tax purposes.
Additionally, a trust does not go through probate. Therefore, if a child needs money for school, she can access the funds immediately in the event of your death without being subjected to a lengthy and costly court process. Furthermore, a trust can be set up with restrictions regarding how and when your money will be distributed to your child.
How your trust is drafted and reported on FAFSA dictates the eligibility of your child for need-based financial aid. A common error is reporting the full value of the trust fund when there are proportional shares of ownership in the trust. Also, a typical mistake families make is reporting trust fund amounts incorrectly when ownership of the income and principal from the trust fund are split.
You should consult with your qualified and experienced South Florida estate planning attorney to review the terms of your existing trust to advise you as to what your options are under your trust or draft one for you to meet your objectives concerning your child’s educational needs and goals.
COLLEGE BOUND KIDS- EXPECT THE UNEXPECTED!
So your child has officially become an adult and ready to embark on a new journey- college! Congratulations! This is a huge milestone in your teenager’s life as well as a time of pride and concern for you as a loving parent. Your child is about to spread his or her wings leaving the family nest of security and safety.
What you need are eyes of a hawk in establishing a solid plan that will safeguard your teenager against any unexpected event that could place them in medical or financial peril. There are legal documents that should be prepared by a professional South Florida estate planning attorney who is familiar with the goals you wish to accomplish for your family. Your legal eagle understands the importance of a healthcare surrogate, durable power of attorney, and a living will.
The designation of a health care surrogate authorizes you to get information from a hospital or a doctor about your child. You will not be able to obtain this information once your child is 18 years old unless you have a document permitting you to do so. In addition, your child may be unconscious and unable to give permission. Florida’s HIPPA laws prevent the dissemination of medical information to others unless there are written directives authorizing the permission.
A durable power of attorney is an agreement that allows you to control your child’s financial needs. It can be drafted to allow you to access your child’s bank account in case you need to pay his or her bills, restrict spending, or replenish the account.
A living will is a document that a person uses to make known her desires regarding life-sustaining treatments. Although not the most palatable of topics, it will give you peace of mind with medical decisions you may have to make for your child in the event of an untimely illness or accident.
ESTATE PLANNING UPDATES: NOT JUST “SET IT AND FORGET IT”
Over 70 percent of all Americans have no estate planning documents whatsoever. Of the 30 percent that do, most have only basic documents like a Last Will and Testament, with no regard to probate avoidance, estate tax reduction or asset protection. Of those people that do incorporate a Revocable Living Trust into their foundational estate plan, over 90 percent will leave the trust underfunded or unfunded at death, causing the unnecessary loss of assets and unnecessary delay of distribution. Some basic estate planning upkeep could alleviate all of these concerns.
Your estate plan should be reviewed with an attorney at least once every 3 to 5 years. I review my clients’ estate plans each year to determine if any changes need to be made due to a change in tax law (as happened in 2010), legal drafting requirements (as happened in 2005) or the Probate Code (as happens most years). However, the more pressing changes almost always occur on the personal side of the equation.
Over the course of every 5 year period, most families will see a birth, a death, a marriage or a divorce and this event could cause the need for an amendment to the estate plans of the individual members of that family. Additionally, the beneficiaries might be at different ages or competency levels and the Trustees, Personal Representatives and Guardians might be in different stages in life, areas of the country or financial levels than they were when you originally drafted your plan, which would cause the immediate need to revise and choose new role players.
Another consideration is the age of your attorney. Your estate planning attorney needs to be able to walk your children or other beneficiaries through the administration process. Is your attorney still alive? Is he still practicing? Will he still be practicing when you die? Does he practice in the state in which you currently live?
Any estate planning attorney should give you a free consultation for the review of your estate plan. An ounce of prevention is worth a pound of cure. A simple review and possible amendment to your estate plan today will save your family large amounts of money and time after you are gone
THE NEED FOR A PROPER BUSINESS STRUCTURE
There are a variety of business entities that can be incorporated into your wealth preservation plan. A Limited Liability Company (LLC) is a commonly used structure that provides its “members” (owners) with control over assets, without the risks associated with having title in their own personal names.
By owning your assets in an LLC, you are safeguarding them from being pulled into a lawsuit brought against you, as you do not “own” them. The LLC provides higher liability protection than a corporation and, if organized correctly, any potential creditor or litigant would be limited to gaining only a charging lien against the LLC. Your home and other assets (bank account, etc.) may not be touched, because you do not own the business directly, thus you are not personally liable. It’s like being a stockholder in a corporation.
Due to the fact that there are several requirements to properly forming an LLC, you will want to seek an attorney (that has a thorough understanding of such asset protection) to assist you in ensuring that the LLC is valid; otherwise, your safeguarding efforts will be futile. Also, keep in mind, the timing of the asset transfer cannot be done to actively avoid a present creditor, as it may be considered a “fraudulent conveyance.” Therefore, it is important to partake in these asset protection strategies prior to any legal or financial problems.
By utilizing estate-planning techniques, you can protect yourself and your family from unnecessary hassles, while safeguarding your assets. With the help of an estate-planning attorney, there are a variety of tools that can be customized to your goals, and implemented to ensure that you get to enjoy your assets and investments without that pesky law suit target that comes when you own them in your own name.
TAX DAY BE DAMNED: GIVE OR IT SHALL BE TAKEN
Tax day just passed and you may have made a commitment that you will make better tax decisions for 2016; just like you promised for 2015. The time has come to introduce this resolution to your inner humanitarian, as you can make donations to a good cause, while reducing your tax liability. This year, be sure to find an organization that is qualified by the IRS, so you can make an itemized deduction on your tax return. Use the following tips to ensure that you can receive a deduction for your charitable donation.
1. Itemized Deduction: First of all, you cannot make a qualified charitable deduction under the “standard deduction,” as they can only be reported through itemized deductions.
2. Determine whether your donation is qualified for a deduction: To receive a deduction for your donation, it must be made to a “qualified organization.” The “Exempt Organizations Select Check” is an online tool provided by the IRS to help you determine whether your donation was made to a qualified organization. If you don’t want to do the research, you can always count on larger charitable organizations like Red Cross.
3. Keep a record: When you make a charitable donation to a qualified organization, you must maintain a record in the form of a bank record or a written communication from the qualified organization containing name of the organization, the date and amount of the contribution. If your contribution has a value of $250 or more, you must get a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash, a description of any property contributed, and whether your received a benefit in return (if so, it must include the estimated value of the benefit received).
4. Submit a Form 8283: If your charitable donation deductions exceed $500, you must submit a Form 8283 with your return. It’s a Wild World, are you protected?
Thanks to the cautiousness that was brought on April Fool’s Day, we are more careful to decide what we take as fact and fiction. The same goes for estate planning: you want to dispel all those false truths, and learn the truth.
False: Estate Planning and Wealth Preservation Techniques are only for Millionaires.
If you are not bringing in at least eight figures, you simply have no possible use for a wealth preservation plan, right? Wrong. If you have anything to lose, it is worth protecting. In fact, if you have air in your lungs, you will benefit from standard health related estate planning documents. A wealth preservation plan can ensure that what large or little amount of wealth that you do have, is preserved in both life and death. Wealth preservation is not just about concerns associated with extreme wealth; but also with the human element. You have a legacy, and the property and relationships that you acquire throughout your life warrant protection. Furthermore, such techniques allow you to maintain control in situations where you would ordinarily have none.
False: Estate Planning is strictly for senior citizens.
If you still have to pay $12 at the movie theater, in stead of the discounted $8 reserved for senior citizens, you are not precluded from the benefits of an estate plan. In fact, the earlier you start planning, the better. Creating a cohesive estate plan earlier in life provides many benefits over those initiated later down the road; especially when it comes to shielding your assets from the claims of creditors. Florida has adopted the Uniform Fraudulent Transfer Act, meaning you cannot transfer your assets to intentionally avoid a creditor. Timing is among the many factors that the court will look at, as well as the purpose for your transfers. If you protect your property on the onset, for the purpose of achieving standard estate planning benefits, you will be effectively protecting your property from the claims of others. Furthermore, there are many strategies that are used to insulate income from unnecessary taxes; as a result, their benefits accrue through time.
False: Estate Plans are like the energizer bunny, they last forever.
While, technically, estate plans do last forever, the problem is that they may not “keep going & going” effectively. There are a variety of life events that warrant a reevaluation of your estate plan, especially those regarding relationships and property. Divorce and remarriage require alterations within your documents to ensure that your properties, and appointed persons, are in unison with your wishes. Changes in your wealth and property should also merit a second look at your documents, and whether they parallel with your goals. Thus, it is incredibly important to have your attorney look over your estate planning documents, following any significant changes in relationships or wealth.
April Fools is one week away and for some this means it’s time to brace yourself. Maybe you have children that scheme all year or perhaps you are married to the ultimate prankster – whatever your situation may be, it’s time to prepare for a possible heart attack and get your estate plan in place today.
A properly executed estate plan will allow you to remain in control, to some degree, either during times of incapacity or even after you’re long gone. By executing some important documents, you can rest easy knowing who will raise your children, how your children’s inheritance will be managed and where everything will be going. Some important documents to consider include:
- Revocable Living Trust – Whatever assets held in trust will avoid probate, saving your loved ones the money and hassle. The trust will also direct the trustee to manage and distribute your assets according to your terms.
- Last Will & Testament – Nominate your Personal Representative, choose a Guardian for any minor child, and add any burial or cremation requests.
- Durable Power of Attorney – Nominate an individual to make financial decisions on your behalf or qualify you for public benefits, should you not be able to do so yourself.
- Living Will – Advanced directive or “pull the plug” document. Allows your healthcare surrogate to give the doctor the “ok” to pull the plug if you are being kept alive by artificial means.
- Designation of Healthcare Surrogate & HIPAA Release – Designate the individual of your choosing to make important healthcare decisions on your behalf, in the event you cannot do so yourself.
Don’t just prepare for the anticipated pranks coming next week – prepare for your future and family today! Call (954) 944-2855 for your free consultation.
For more information on Estate Planning, Asset Protection, and Probate Administration visit our website at www.wfplaw.com.
It’s A Wild World. Are You Protected?
Every St. Patrick’s Day enthusiast is aware of the cardinal rule: spilling your green beer is a celebratory taboo, that of which can only be recovered through another round of green beer. In the world of wealth preservation, however, we encourage the act of spilling all of your property into a trust, through the use of a “pour-over” Last Will & Testament. The pour-over will effectively takes all of the property that passes through the will, and funnels it into a revocable living trust. That property is then distributed to the trust beneficiaries pursuant to the terms of the trust. “Separate share trusts” are used to provide that all of the property in your trust will preserve all of its protections, by requiring that all distributions continue in trust for your beneficiaries. Consider the pour over will to be a tap of green beer. The tap pours the contents into a pitcher, ordered by you, the Grantor. The pitcher is like a Living Trust. Once the pitcher makes it to your table of beneficiaries (aka, the Grantor is deceased), it is poured into separate glasses. These glasses are considered the separate share trusts, as they continue to hold the contents for the benefit of the beneficiaries. Whether it is green beer, or your wealth, be sure to take the necessary precautions to ensure maximum preservation. It’s a Wild World – is your Green Beer Protected?