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Reducing Capital Gains from the Grave

When property is inherited, the person inheriting gets a step up in basis. If the decedent bought a piece of property for $25,000 in 1970 and its worth $200,000 now, the owner would have to pay capital gains tax on $175,000 upon the sale of the property. If the owner gifted the property during his/her lifetime, the person receiving the property would get the basis of what the owner paid. In this case $50,000. If the person inherits the property, they will get a step up and basis and have no capital gains tax to pay.

Scenario 1

Wife is 80. Husband is 65. They own a summer home in North Carolina. They paid $50,000 for it 25 years ago. The present value is $250,000. They know that when one of them passes, they will sell home. Husband can transfer his half of the home to his wife. To avoid probate, the home is put in a trust that leaves property to Husband. She must live for a year and a day. When husband inherits the home from his wife, he will have a basis of $250,000. Potential tax savings = $30,000-$40,000. If the spouse doesn’t survive a year, the inheriting spouse keeps the original basis.

Scenario 2

Mom is 90, children have assets that have significant capital gains. Children can transfer property mom or put it into trust for mom’s benefit that would be includable in her estate. Mom leaves property to children. Children get the property back with a step up in basis to the current value. No requirement that they live for a year.

The scenarios don’t have to involve family members, but there is a level of trust necessary in planning like this. Gifts must be made to the person directly or they must be given the ability to give to anyone at death.

You can schedule an appointment @ www.parrilaw.com or by calling 727-586-4224 if you’d like to know more.

How to switch Power of attorney to some one else?

Question:

My boyfriend put his sister as his Power of attorney . his whole family thinks it was a mistake, that it should be me his girl friend. How can he go about and getting it switched before he is unable.

Answer:

As long as your boyfriend has capacity he can sign a new POA and/or revoke the previous POA.

What does Proposed order appointing commissioner mean ?

Question:

My sister passed away in Pensacola, Florida. She was never married and had no kids. Probate has been started. There seems to be a problem with her will and also with the probate process. In the probate now it says - proposed order appointing a commissioner. Can I become PR somehow?

Answer:

here could be other circumstances, but in my experience it has come up because of the following: In Florida a Will only needs to be witnessed by two witnesses to be valid. If that is all you have, one of those witnesses or someone familiar with the signing of the Will, will have to "prove" the Will. If drafted by a Florida attorney, the Will will usually include a "Self-Proving Affidavit." In that affidavit, the witnesses are saying that they swear that the Will they witnesses was in-fact the signed in front of both witnesses. If you have the Self-Proving Affidavit, a witness or someone familiar with the signing doesn't have to prove the Will later. In the case that a Witness to the Will is in another state or cannot come down to the local court house, the court will appoint a Commissioner. The commissioner's job is essentially the same as a notary in that they are verifying the witnesses ID and taking a written statement that the witness witnessed the testator sign the Will in the presence of both witnesses. As far as becoming PR. Your sister would have nominated a personal representative in her Will. That person must be a blood relative or a Florida resident and not have been adjudicated of committing a felony. If the person your sister nominated is qualified to act, the court will likely appoint the person named. If you were named first, but someone else filed for probate, you have an opportunity to object to that person being name as the PR. Depending on the circumstances, you may have a right to object even if you weren't named first. You should find a probate attorney familiar with the local court and discuss your situation and concerns with them. The attorney who filed the probate is the attorney for the PR. They are not the attorney for the beneficiaries. You as a beneficiary or interested party have the right to have your own attorney. It is not always necessary, but it would be in your best interest to at least have a consultation with someone and discuss things in more detail.

An order determining homestead status of real property was done when my mother died.

Situation:

I'm the one that resided with my mother. I paid the mortgage. Bills in house are under my name. She left no will. I filed for homestead since none live there. My brothers and sisters filed this petition

Answer:

Florida law says that when a person dies without a Will that their property shall be distributed intestate.

In this case, your mom died without a Will so her estate would be distributed to all of her children. Unfortunately, unless your siblings are willing to work something different with you, you all own an equal share of the house.

How can I get my Irrevocable special needs trust transferred to the state I now live in or get it dissolved?

Situation:

My mother passed away unexpectedly and I was told I needed a SNT to keep my disability benefits. I have an Irrevocable SNT and live in FL, it was created in CT. The Probate Court turned my trust over to an outside company because my trustee was stealing money from the trust and it is costing me lots of money. How can I get the SNT dissolved? I called SS & they told me I would have never lost my benefits even though I inherited money from my mother's passing I wouldn't have lost my benefits. Please help me.

Answer:

If you are collecting SSI (Supplemental Security Income) or you are Medicaid, then you would likely need a SNT or do some other sort of planning to keep your benefits. If you worked enough during your lifetime and are collecting SSD (Social Security Disability) and Medicare, then you may not need a SNT. I would not take the word of a representative of Social Security representative as to whether a SNT is right for you. You can be on SSD and still be receiving assistance through a State Medicaid program that may have asset caps. First step is to determine if you need a SNT. If you don't need it, you have to check and see if Medicaid has paid anything out on your behalf. Before a first party SNT can be dissolved, the state must first be paid back prior to any funds being turned over to you. If your mother's estate needs to be probated, there are some things we can do to prevent her assets from counting against you without them having to be contributed to the current irrevocable trust. Please contact or EMAIL an elder law attorney before doing anything else. This is not something that should be attempted on your own. Many including myself offer free consultations to discuss matters such as yours.

Is it against the law to rent out property of the deceased?

Question:

Aunt died 5 years ago. Property appraiser site for county lists it as "The estate of...." Her daughter is "renting" the property to some friends. There was no will. There is a handicap child of my Aunts in state custody with disabilities, so I thought any profit from estate would go to support him, not into her daughters purse?

Answer:

From the sounds of it, no probate was ever opened and the property is still in the name of your aunt. There are a couple of other possibilities. Sometimes probates are opened, property distributed but property appraiser wasn't notified to update records. It is also possible that aunt deeded house to daughter and daughter didn't record deed (not generally a good idea or likely). Assuming the property is still in the name of the deceased. While things might be going along smoothly now, an unpaid utility bill can triggers panic when water or power can't be re-established because proof of ownership cannot be shown. If your aunt had a Will, the property would be distributed to those entitled to it in the Will. If there is no Will and your aunt wasn't married, the house would typically be distributed to your aunt's children. If she had only two, it would be the son and daughter. If the son is disabled and receiving government benefits, ownership and the proceeds from renting the property could be problematic without legal assistance. In short, it sounds like son should have an interest in the home and should share in the proceeds from the rental of the property, but it is impossible to be sure without knowing all of the details. If the son has a guardian or legal representative, they could and probably pursue some sort of legal action to make sure his rights to the property are protected.

Federal Medicaid Law Preempts Florida's Reimbursement Statute, U.S. Court Rules

Shared from Elder Law Answers.

A federal district court rules that federal law prohibits the state of Florida from seeking reimbursement for Medicaid payments it made on a recipient’s behalf from portions of the recipient’s personal injury settlement that are allocated to future medical expenses. Gallardo v. Dudek (N.D. Fla., No. 4:16-cv-116-MW/CAS, April 18, 2017).

In 2008, then 13-year-old Gianinna Gallardo was struck by a vehicle after getting off of a school bus, leaving her in a persistent vegetative state and unable to care for herself in any manner. Her parents filed a lawsuit against the driver of the vehicle, the school bus driver and the school district. The case eventually settled for $800,000, or about 4 percent of the case’s $20 million value. Because Medicaid had provided $862,688.77 in medical payments on Gianinna’s behalf, her attorney advised the Agency for Health Care Administration (AHCA), Florida’s Medicaid agency, of the settlement. The attorney also advised the agency that $35,367.52 of the settlement represented past medical expenses that were recoverable by AHCA.

Florida’s reimbursement statute uses a uniform formula in which the recipient’s gross settlement is first reduced by 25 percent to account for attorney fees, the remainder is divided in half, and AHCA is then entitled to recover the lesser of its total medical payments or one half. Under this formula, AHCA would recover $323,508.29 in medical payments from Gianinna's settlement.

Gianinna’s parents filed suit against the agency in federal court seeking an injunction and a declaration that Florida’s reimbursement statute violates federal law inasmuch as it allows the state to recover from the portion of her settlement beyond that allocable to past medical expenses. AHCA countered that it was entitled to satisfy its lien from the portion of the settlement representing compensation for both past and future medical expenses. The parties filed cross motions for summary judgment.

The U.S. District Court, N.D. Florida, grants the Gallardos’ motion for summary judgment and denies AHCA’s motion. The court finds that, consistent with the U.S. Supreme Court’s decision in Arkansas Department of Health and Human Services, et al. v. Ahlborn (547 U.S. 268 (2006)), AHCA is entitled to recover for past medical payments it made on Gianinna’s behalf only from that portion of the settlement allocated to past medical expenses. The court rules that where, as here, the state reimbursement law explicitly allows for recovery from the portion of the settlement attributable to future medical care, that portion of the state law violates, and is preempted by, federal Medicaid law.

For the full text of this opinion, click here.

#personal injury #florida medicaid #medicaid recovery #car accident

In the state of Florida, does the surviving spouse automatically get the house??

Question:

My wife and I have separate wills and mine states my house will go to my children from a different marriage. She will be able to stay here and pay all the bills until she dies. Will my children own the house according to my trust?

Answer:

Florida has pretty strong homestead protections that favor spouses. You and your spouse can waive these protections, but it must be done in writing and it is a good idea that both parties have independent legal counsel to prevent claims of undue influence/coercion later.

Generally, you are required to leave your homestead to your spouse. If you do not, your spouse would get her choice of a life estate or a 1/2 interest in the property. The The remainder or other half would go to your siblings.

The above information assumes that this house is your homestead. If your house is not your homestead then you can leave it to whom ever you wish. Just be aware of a spouses elective share. It is about 30% of the elective estate. The elective estate may contain much more than a probate estate. The elective estate may include things such as revocable trusts, joint bank accounts, retirement accounts and others that are not generally part of a probate estate.

Does a last will and testament have to be notarized in the state of Florida?

Situation:

Father in law passed away. In the hospital he drew up a last Will and Testament which he signed (signature does not look like his, he was very ill) and he had 2 witnesses sign the Will. Need to know if if legally valid in Florida.

Answer:

The short answer is that it sounds as though your father-in-law's Will was validly executed. In addition to being witnessed, Florida allows a Will to be self-proved. A self-proof affidavit is usually apart of most Wills that are prepared by attorneys. In a self-proof affidavit, the witnesses are swearing that they witnessed the testator (father-in-law) sign the Will. The self-proof affidavit is notarized. Without a self-proof affidavit, someone will be required to "prove" the Will if it is ever probated. A Will is usually proved by one of the Witnesses, but can be done by other parties. The Witness would need to sign an Oath of Witness at the courthouse in front of a judge, deputy or clerk swearing that they did witness the testator signing the Will. Just because the Will was validly executed does not mean that it cannot be challenged in court. Common challenges include undue influence, fraud or lack of testamentary capacity. If you are concerned about the validity of the Will or that someone might challenge the Will's validity, I would advise sitting down with an attorney and discussing your situation in detail.

#probate #florida #Will #affidavit #hand written will

Do I need a new Will and POA?

Question:

I recently moved to Florida. While living in North Carolina i had a Will and POA drafted naming my daughter as executor. She has since remarried and has a new name. Do I have to make out a new Will and POA?

Answer:

The answer is most likely not. Your daughter can easily prove her previous name and that she is in fact your daughter for the purpose of the Will. As for the POA. I don't think it is necessary, but your daughter may have to use your POA at multiple places, banks, retirement plan holder, title company, and/or insurance company. It may become a hassle for her to prove each time that she is the same person in the document. Again, I don't think it would be required, but you may make things easier on your daughter by updating it.

Can we get reimbursed for paying for father’s funeral?

Question:

My brother and I paid all of the funeral expenses for my father’s funeral. My other two siblings refused to pay anything. Can we be reimbursed in probate?

Answer:

The short answer is yes. You and your brother will need to submit a creditor’s claim in the probate. Florida Statute 733.707 lays out the priority of different types of claims. Funeral expenses up to $6,000 are considered a class 2 claim. If there are any probate assets after the payment of attorney and personal representative fees, you will be reimbursed before other creditor claims (if any) are paid and before distributions are made to estate beneficiaries.

#probate #funeral expenses #florida

Can a probated estate be changed if a legal heir is identified 5 years after distribution of assets?

Situation:

I was adopted and found my birth father 5 days ago. I was just told that he had no spouse and no other children and his estate was probated and distributed to his cousins 5 years ago. Is there any legal recourse to this?

Answer:

Probably not. In Florida, if you are adopted, your rights to inherit from the natural parents ends when adopted by new parents. Here are a few examples.

a. Your birth parents Jeff & Jane put you up for adoption and Leo and Lisa adopt you. You are no longer an heir of Jeff or Jane or anyone related to them. You are now an heir of Leo and Lisa and are treated as a natural heir to the rest of the family.

b. Birth parents are Jeff & Jane. They divorce. Jane marries Mark. Mark wants to adopt you. Jeff signs off on adoption. You are no longer Jeff’s heir. You remain an heir of Jane and are now an heir of Mark.

c. Birth parents are Jeff & Jane. Jeff dies in car accident. Jane marries Mark and Mark adopts you. You remain an heir of Jeff and Jane and are also an heir of Mark.

d. Birth parents are Jeff & Jane. Both Jeff & Jane die in a car accident. Jeff’s sister Bonnie adopts you. You are still an heir of Jeff & Jane as well as Bonnie. As long as adopter is close family member (brother, sister, grandparent, aunt or uncle you are still an heir of your birth parents.

If you do fit one of the exceptions you should sit down and speak to a probate attorney. There may be a statute of limitations that prevent you from re-opening the probate. It may also be difficult to collect funds from the cousins who received the distributions. If the court required a bond, you might be able to receive a portion of the inheritance.

Bank Account - Do I need a Will?

Question:

My mom has a bank account and she wants to do a Will stating that when she passes, she wants her account divided between her kids. Does she need a Will?

Answer:

The short answer is she probably does not need a Will to accomplish this goal. The easiest and least costly way to handle this is to go to the bank and name the children as beneficiaries of the account. If she adds someone to the account as a joint owner, they will be the sole owner of the account when she dies.

If your mom wants all of her property to go to all of her children equally she may not need a Will. If she has no property in her name only, nothing would go through probate and the Will would be meaningless. It is generally a good idea to have a Will in place just in case you end up with property in your name at your death. It also allows for the creation of trust for beneficiaries who may not be able to manage funds or for beneficiaries on SSI or Medicaid.

Will my mom lose her Medicare or Social Security benefits if she sells her home and moves in with me

Question:

My dad has passed away my mom is in her 80s and does not drive. she would like to sell her home that's worth around 150,000 and put it on my home. However I do not want her to do that if she is going to lose any benefits. She does not have much money at her home and has no other assets. Also don't know what tax penalties comes with that. What is the best way to handle the situation?

Answer:

The short answer to your question is no. Your mother will not lose either her Medicare or Social Security Retirement benefit. For the most part those benefits are not means tested, meaning your mother's income and assets are not factored into the eligibility for those benefits. Extremely high income could cause an increase in Medicare part B premiums, but that wouldn't happen here. If for instance your mother sold a vacation home and she had to report a capital gain of $100,000, that may cause those premiums to go up for the next year. In your case, your mother's home would likely be exempt from any capital gains taxation and not cause a problem. While I wouldn't be overly concerned about disrupting Medicare or SSR, because of your mother's age, you should be concerned about future Medicaid eligibility. Medicaid is the program that picks up the unaffordable portion for nursing home care in Florida. In order to be eligible, you may have $2,000 of non-exempt assets. Exempt assets include a vehicle, a house and several other things but you have not mentioned any of them in your facts. Your mother's house is exempt as an asset. If you sell the home, those proceeds will become a countable asset. Medicaid has a 5 year look back period. If your mother gives assets away during the 5 year period, she could be denied eligibility for Medicaid. If your mother buys into your home, that would be an allowable transfer, because she is getting something of value for her money. The transaction must be for equal value. She can't purchase 1/2 of your house for $150,000 if the 1/2 value is only $100,000. Any funds not used in the purchase would be a countable asset. Which is not necessarily a bad thing. Your mother may never need a nursing home and she may spend the remaining funds on joint living expenses or other things during her lifetime. If your mother buys into your home, the home is both joint property and her homestead if she is living in it. Both types of property are exempt for Medicaid purposes. Special care should be taken on how the property should be deeded. You may consider a revocable living trust to hold the house, especially if you are married or have children. Many properties are held with rights of survivorship. If something were to happen to you first, the property would then be owned by your mother and it would pass to her beneficiaries or heir. I've tried to give you some information to consider, but in the end, you should sit down and talk to an elder law attorney about your plans. There may be other factors that can only be known by having a conversation. Your plan sounds like something that should be ok and have minimal impact on current or future benefits. As your mother's health declines you and she will be going through a lot together. Now is a good time to find a good elder law attorney and put a plan in place. They can be an invaluable resource as you and your mother's situation and needs change.

Is this claim of "Life Estate" valid?

Question:

My brother, who lived in Lee County Florida, passed away recently. He owned a home free and clear. After acquiring the home he got married. She was never put on the deed. After 2 years she left him. That was 10 years ago and there was no contact for that entire time. My brother had a will and left his house to his 5 siblings. He had no children. He specifically said in the will that his wife (they never got a divorce) was to get nothing. She has come forward now and is trying to claim a life estate status on the home. Can she succeed? This was our parents home and we are all greatly troubled by it as it was the last thing our brother would want.

Answer:

The short answer unfortunately is probably yes. First we have to assume that the house we are talking about was the house he lived in at the time of his passing. If so, this constituted his homestead for Florida probate purposes. If you have a spouse (separated or not) you can only leave your house to your spouse. If you don’t, the spouse will have the option to a life estate in the house or to take 1/2 interest in the home. Usually the house is sold when the 1/2 interest is taken. The only way to prevent this from happening is to prove somehow that the property was not his homestead for for the spouse to sign a post nuptial agreement that she waives homestead protections.

If she elects to take the life estate, she would be responsible for all of the upkeep on the house as well as paying the taxes and any insurance. This can and usually becomes a sore spot in situations such as this or in second marriages where the children do not get along with the inheriting spouse.

Florida law also says that the surviving spouse is entitled to an “Elective Share” of the deceased spouse’s estate. It is more complicated than just a percent, but it is generally about 30% of the estate, but could also include property given away recently or bank accounts owned jointly with other parties or have alternative beneficiaries.

Unfortunately, since your brother did not get divorced, his spouse still has these rights thats she appears to be exercising. Hopefully this will show others that if you have no intent on getting back together, you really should consider getting a divorce or at least having some sort of post nuptial agreement in place if there are other reasons for continuing the marriage.

What form do i need to file a will to probate?

Question:

There are 3 different forms under probate on the local county court website, which are Instructions for disposition of personal property, disposition affidavit, and Statement of claim. Are any of these the forms I need?

Answer:

The first two forms are essentially the same thing. The purpose of the Disposition without Administration is to reimburse someone for payments of funeral and last medical expenses if the the non-exempt assets in the estate are less than the expenses paid. Ex. You paid $5,000 for funeral and there is a bank account with $4,000 in it.

Exempt assets include automobiles used for transportation, household furnishings not to exceed $10,000 and other items of personal property not to exceed $1,000. Most personal property does not have registration and therefore is usually not evaluated for practical purposes.

Non-exempt assets would be bank accounts, stocks, bonds, recreational vehicles, etc.

The Statement of Claim form is if you are a creditor of an estate and want to make a claim against the estate.

Technically all Wills are to be deposited at the court house within 10 days of the death oft he decedent. Unless a probate is needed, the Will does not usually get deposited with the court. There is no fee to deposit a Will.

If the decedent died and did not own anything in his/her name, no further action would be necessary. If the decedent qualified for a Disposition without administration, you would follow those instructions on the forms.

If the decedent had a home and/or less than $75,000 in his/her name an no creditors, a summary administration would be appropriate. You are not required to have an attorney file for summary administration but it is highly recommended. Can be accomplished within a couple months.

If the value of the estate is greater than $75,000 a formal administration would have to be opened. An Florida attorney would be required to file this. Will likely take six months to a year or longer if complicated.

Power of attorney

Situation:

I need to know if i can get a Power of Attorney. My husband is in the hospital with stage 4 lung cancer. He also had a brain tumor and had surgery to remove. He is unable to sign anything and most of the time his in confused. I need to liquidate some assets (2.7 acres of land in Pensacola Fl and house in Meridian MS).

Answer:

I'm sorry you are having to deal with these issues at a time like this. Please find an attorney in your area as quickly as you can. If he has lucid moments he may be permitted to sign a Power of Attorney. This is a fairly subjective state of mind. One attorney may feel that he is lucid enough to understand what he is signing. Another attorney may disagree. It could be a matter of minutes or hours that determine if he is lucid or not. Florida's POA statute was re-written several years ago and Super-Powers were added. Each supper power must be initialed by the person signing the document so it has made it a little more difficult to have a completely comprehensive POA signed by someone who may have some diminishment in there capacity. Family dynamics also play a roll in situations like this as do current estate plans. For instance if your spouse has a Will leaving everything to you and he has no children upset with you or him an attorney may feel more comfortable with the situation since you would inherit if your husband did make it. Most attorneys in estate planning and especially elder law deal with diminished capacity clients all the time. Please sit down with one. Discuss your husband's condition and the circumstances involving the sale of the property. If your husband cannot sign a POA, a guardianship may be necessary. A guardianship usually takes several months to establish, but the courts do allow for establishments of emergency temporary guardianships. Each jurisdiction has it own set of factors whether to establish the ETG. Not all estate planning or elder law attorneys do guardianships so I would recommend sitting down with an attorney who can help with the POA and the guardianship so you don't have to meet with more than one attorney. I hope this provided you with some useful information. I hope your family's situation improves.

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