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Asset Protection Planning

In 2018, Floridians will vote on whether to raise the Homestead Exemption

By Asset Protection Planning, Real Estate, Tax Law

As of May 2017, the Florida Senate has voted to put a proposal on next year’s ballot that will increase the Florida homestead property tax exemption from its current value of $50,000 to a value of $75,000. This exemption applies to homesteads worth $100,000 or more and this new bill will give Florida voters the opportunity to lower property taxes. According to estimates regarding the effect of this legislation, it has the potential to save 4.3 million Florida residents a total of $644 million and the average home owner would save approximately $170 annually.

If 60% of voters approve this legislation, this new exemption rate will take effect on the first of January in 2019. Though this bill has its fair share of opponents and supporters, it will now be up to Florida voters to decide if cutting property taxes is the right decision for the state.

June 26, 2018
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What is the Florida Homestead Exemption?

By Asset Protection Planning, Real Estate, Tax Law

The Florida homestead exemption is an asset protection tool implemented to protect homestead property. Your Florida homestead will be designated to procure certain exemptions from real estate taxes.

In order for you home to be considered your “homestead” in Florida, you must have a legal title to the home, the home must be your permanent residence and you must apply for the homestead exemption at the property appraiser’s office in the county where your home is located. A second home or property cannot be considered a homestead in Florida and properties that are titled in the name of irrevocable trusts, limited liability corporation companies, corporations or partnerships are also unable to qualify as homestead properties. However, property owned by a living trust or a land trust may qualify as homestead property in certain situations.

Currently, the Florida homestead exemption reduces the value of a home for assessment of property taxes by $50,000 for homes that are worth $100,000 or more. This means that, if a home is worth $100,000, it will be taxed as if it is only worth $50,000.

June 22, 2018
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What is a Roth IRA?

By Asset Protection Planning, Tax Law

A Roth IRA is a retirement savings account that is funded with earnings that have already been taxed. The earnings placed in a Roth IRA are, therefore, allowed to grow without being taxed further. This type of account allows an individual to set aside a specified amount of their after-tax income each year, while keeping it from being taxed further while it remains in the account. Additionally, when these funds are withdrawn upon retirement, you do not have to pay any taxes. You can contribute to a Roth IRA at any age, as long as you have earned income from a job. It makes the most sense to open a Roth IRA if you expect your tax rate to be higher by the time you retire than it is currently. The attorneys at Bach & Jacobs, P.A. have been trained with regard to the transfer of retirement accounts at death and can advise you about this, both in planning your estate and administering a probate or trust after the account holder has died.

June 12, 2018
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What is a Qualified Domestic Trust (QDOT)?

By Asset Protection Planning, Estate Planning, Tax Law

A qualified domestic trust (QDOT) is a marital trust utilized for the benefit of a spouse that is not a U.S. citizen. This type of trust allows a non-U.S. citizen who is married to a U.S. citizen to qualify for the unlimited marital deduction, which keeps the estate from being subject to federal income taxes upon the death of the first spouse. Without a QDOT, these estate taxes would have to be paid at the first death. With a QDOT, however, the taxes are delayed until the surviving spouse passes. This is an estate planning tool implemented to allow the assets within the trust to provide for the non-citizen spouse after the citizen-spouse has passed away, without being heavily taxed first. If you are married to a non-U.S. citizen, Bach & Jacobs, P.A. attorneys can discuss a QDOT with you as part of your estate planning.

June 8, 2018
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What is a Payable-on-Death Account (POD)?

By Asset Protection Planning, Estate Planning

A payable-on-death account is a bank account that is titled to the original owner but that directs distribution of its funds to a beneficiary upon the owner’s death. As long as the creator of the account is alive, the beneficiary of the account has no access to the funds within it. This way, if someone ever needs the money in the account or changes their mind, they can spend the money, choose a different beneficiary or close the account. Individuals often opt for payable-on-death accounts because they are fairly easy to create, there is no limit on the amount you can leave to the beneficiary of the account, it is free to designate a beneficiary and it allows the asset to transfer to the designated beneficiary at the account holder’s death without first going through probate court.

June 5, 2018
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What is Decanting a Trust?

By Asset Protection Planning, Estate Planning

A trust is an entity created by an individual (the settlor) to hold assets for the benefit of the trust’s beneficiaries, while a trustee is appointed to manage the trust. Decanting a trust is the act of distributing assets from an old trust to a new trust that has more amicable terms. It gets its name from the process of decanting wine from its original bottle to a new one in order to eliminate any sediment residue; decanting a trust allows you to pour the assets from one trust into another while getting rid of any terms that aren’t amenable. Decanting is a powerful tool, as it allows the trustee of an irrevocable trust (one that cannot be modified or terminated after it has been signed) to essentially re-write an irrevocable trust without having to go to court, so long as the trustee complies with the motive and consent requirements of the Florida Trust Code.

 

March 20, 2018
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What is a Spendthrift Trust and Should I Consider Implementing One for My Troubled Child?

By Asset Protection Planning, Estate Planning

A spendthrift trust is a trust created for an individual that gives an independent trustee full authority regarding how the trust funds may be spent to meet the needs of the beneficiary (the individual receiving assets from the trust). In this situation, the beneficiary of the trust is not allowed to spend the money until they receive distributions and the trustee has determined what payments are necessary according to the trust agreement. A spendthrift trust can be a powerful estate planning tool if you have a troubled child who you still want to provide for after you pass away, but who you do not believe has the capability to make sound financial decisions. A spendthrift trust is generally used in situations where a child is troubled, has an addiction problem, is irresponsible with spending, or has credit problems. A spendthrift trust is a way to control an individual’s spending of the money you have left them and alleviates the stress or worry you may feel about a having the assets you worked so hard to obtain being wasted. It also allows you to avoid going through the uncomfortable process of having to disinherit a child whom you don’t trust with money because you know, if given free reign, they will waste it or spend it on unsavory items.

 

March 6, 2018
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Beware of Marriage Scams

By Asset Protection Planning, Elder Law

If you have an elderly loved one that is newly involved with a significantly younger partner, this may arouse some suspicion. Do not ignore these feelings; it is not uncommon for individuals to prey on vulnerable elderly people in order to gain access to their finances or personal assets. As much as it is difficult to believe anyone would want to manipulate your loved one in this manner, it is important to address this issue and ensure their safety as well as financial security. A way to do this is to look for warning signs, which come in a variety of different forms.

First off, look out for an individual that seems too interested too quickly, especially if your loved one met this person online. If you think they are acting a little too eager, advise your loved one to let their relationship develop slowly and not to rush into anything.  If they don’t listen to your concerns and express a desire to marry or get engaged to this individual after only a brief amount of time, insist that they at least have their partner sign a prenuptial agreement. This may help prevent the younger partner from taking a large portion of your loved ones assets and leaving them in a financially desolate situation.

Another warning sign is any form of deceptive behavior or perceived feigning of emotions. Although you may think it will be easy for your older loved one to recognize that their potential life partner is not being genuine, they may not always see the same signs that you do. The risk of them not realizing their partner’s true intentions is increased if they have memory problems or any debilitating disorders, as these can affect their ability to think clearly. If you believe that your loved one’s partner is hiding their true intentions, express this clearly to your loved one. If they don’t listen, talk to other family members or trusted friends of theirs who may be able to get the point across. If you need to further convince your loved one, you can research their partner online and look for anything that demonstrates a questionable pattern of behavior. If you present them with findings that support your argument, it will make your points more difficult to refute.

Marrying for money is a form of elder exploitation, and can be extremely detrimental to individuals that fall victim to it. To help stop this form of elder abuse, recognize the signs and know what to look for.

January 16, 2018
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5 Tips for Retirees Who Want to Live Well Without Breaking the Bank

By Asset Protection Planning

If you are retired, you may be living on a fairly strict budget. At Bach & Jacobs, we recognize the challenges seniors face in adapting to a fixed income. Here’s a short list of tips to help you stick to your budget.

 

  1. Use your age to your advantage.

Ask for senior discounts whenever you go out to eat, see a movie, or shop at a retail location.

 

  1. Try to only make one trip to the grocery store a week.

This allows you to get everything you need for the week all at once, which saves time and gas money. If you create a budget for this one weekly shopping trip rather than trying to piece together the cost of several smaller weekly trips, it is easier to manage your money and make sure that you don’t overspend. This also helps ensure that you focus more on buying the essentials and less on extra items that are unnecessary.

 

  1. Unplug electronic devices when you aren’t using them.

Most electronic devices use power while they are charging, even if they aren’t in use. A laptop, smartphone, or ipad that is often left plugged in for long periods of time may cause your monthly power bill to be much higher than it should be. Additionally, unplugging your electronic devices once they are charged helps them maintain a longer battery life so that you won’t have to replace them as often.

 

  1. Sell or donate the items that you don’t use anymore.

Getting rid of clutter can help you save on storage costs, and selling your old items gives you a new stream of revenue.  Additionally, donating unwanted items allows you to get rid of things  that you don’t have space for, while also helping those in need.

 

  1. Consider down-grading or renting out rooms in your house

Purchasing a spacious, four-bedroom house to raise your children in may have been the perfect idea 20 or 30 years ago, but now you might find yourself with too much extra space. Consider down-grading to a one or two bedroom home; this could save you a substantial amount of money over the years. However, if you want to stay in your current home, try renting out an extra room or two. This is a way to generate extra money, while also gaining another individual to help around the house or buy extra groceries when needed. However, make sure that the individual(s) you select are trustworthy, honest people that you are comfortable sharing your space with.

December 26, 2017
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Tired of TSA Employees Confiscating Your Valuables?

By Asset Protection Planning, Elder Law

You may have seen recent news coverage of airport officials confiscating individuals’ precious metals, valuable coins, or even currency by alleging that these assets may have been obtained via criminal activity. In many of these situations, though no charges end up being filed, an individual’s belongings are never returned to them. If you plan on traveling soon with any of these items in tow and want reduce the risk of your assets being confiscated, familiarize yourself with the TSA’s webpage regarding Currency, Coins, Precious Metals or Valuable jewelry. If you have documentation that demonstrates where your assets originally came from and that states that you are the rightful owner of said belongings, bring it with you to the airport and keep it handy in the event that officials ask you to present it. If you want to be extremely cautious, it is a good idea to call the TSA office in advance before your flight and make them aware of what you will be bringing on-board. You can also ask for a private room for a bag search to be conducted and, once there, explain what you are carrying and why. Finally, do not try to put these valuables in checked luggage or attempt to sneak them through security in any fashion, as this increases the likelihood that they will be confiscated.

December 8, 2017
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