Florida estate planning is the creation of legal documents that direct what happens to your property after your death. Basic Florida estate planning includes the following documents:
- Will. Directs the disposition of your property after your death and appoints your personal representative.
- Power of attorney. Grants someone the legal authority to act in your place.
- Health care directive. Allows someone to make medical decisions for you if you are incapacitated.
- Living will. States your desire to end life-sustaining treatment.
- Declaration of pre-need guardian. Designates who should be your legal guardian if a Court determines that you need one.
Often estate planning in Florida also includes a living trust and estate tax planning.
Estate Planning Package Cost
In Florida, the cost of a typical estate planning package is between $1,000 and $4,000. An estate planning package costs less if the package does not include a living trust. Packages with a trust and estate tax planning will be more expensive.
Property Subject to Estate Tax
A decedent’s property may be subject to federal estate tax. The decedent’s taxable property interests comprise what is referred to as the “gross estate.” The gross estate can be loosely defined as the value of all property in which the decedent had an interest at the time of death (plus certain other statutorily mandated items).
Gross estate assets are usually valued at fair market value on the date of death. Some of the rules regarding the inclusion of property in a decedent’s gross estate are as follows:
Property Owned Outright. All property that a decedent owned individually and outright is part of the decedent’s gross estate.
Jointly-Held Property. Many people die owning property jointly rights of survivorship. The most common joint ownership is property owned jointly by husband and wife. For tax purposes, one-half of the value of such joint property is included in the gross estate of the first joint tenant to die, and the other one-half is excluded from the gross estate. Suppose joint property is held with the right of survivorship between persons who are not husband and wife (such as parent-child or brother-sister). In that case, the entire value of any joint property will be included in the estate of the first joint tenant to die unless the estate can affirmatively prove that the surviving joint tenant supplied some, or all, of the money used to purchase the joint property.
Life Insurance: The proceeds of any life insurance on the decedent’s life are included in the gross estate if (a) the policy proceeds are payable directly or indirectly to the decedent’s estate; or (b) the decedent held any incident of ownership in the policy, such as the right to change the beneficiary, surrender or cancel the policy, or borrow against the property.
Deductions from Gross Estate
The federal estate tax law permits several deductions from the taxable value of a decedent’s gross estate. The most significant estate tax deduction is the unlimited marital deduction which provides an estate tax deduction for property left to a surviving spouse. There are two basic prerequisites of the unlimited marital deduction:
An Interest Must Pass to the Surviving Spouse. A marital bequest must be to a legally recognized spouse. A bequest to a divorced or deceased spouse will not warrant a marital deduction. The surviving spouse must also be a citizen of the United States.
The Interest Must be a Deductible Property Interest. A decedent’s property interest is deductible only to the extent such interest is included in determining the value of the gross estate. If a property interest is not included in the gross estate, its passing to a surviving spouse does not qualify for a deduction.
Frequently Asked Questions
Below are answers to frequently asked questions about estate planning in Florida.
What is probate?
Probate is the legal process of administering the property of a deceased person (decedent). The primary objectives of the probate court are (i) determining the rightful heirs to property (whether such heirs are designated in a will or by laws of intestacy); (ii) making sure the financial obligations of the decedent are paid; and (iii) transferring legal title of the property to the heirs. Probate proceedings are administered through the probate courts which are a division of circuit courts in each of Florida’s counties.
What is a personal representative?
In Florida estate planning, the person who represents the decedent in probate and other legal proceedings is called a “personal representative.” A formal probate begins with the appointment of a personal representative. Most wills nominate a qualified person to serve as the personal representative.
What is the estate tax?
The estate tax is imposed on the transfer of wealth at death. The calculation of the estate tax is based on the value of a decedent’s “gross estate.” The gross estate is the value of all property in which the decedent had an interest at the time of death (plus certain other statutorily mandated items).