I decided to clean out some of the closets in my home last weekend. I found old soccer shin guards and cleats that no longer fit my now teenage daughters, VCRs that no longer work and a bunch of other stuff we don’t need any more. I enjoy the feeling of accomplishment whenever I am able to spend time getting things like this done around the house.
This encouraged me to make a list of the top five estate planning cleanup items that you may want to consider for the New Year. As always, 2012 brings many changes, and it’s always good to ensure that your “estate planning closet” is organized and up to date. Here’s my suggested list of top five clean up items for you to consider:
1. Update Your Durable Power of Attorney. Florida’s power of attorney statute changed significantly on October 1, 2011. The new law requires that durable powers of attorney contain more specific language about the scope and types of powers that we grant to the recipient of the power (referred to as the “attorney-in-fact) named in the document. The new law also requires that the grantor initial next to certain powers contained in the document, indicating that he or she is fully aware of the powers that are being granted to the attorney-in-fact. For those interested, if you look in the video learning center of my firm’s web site I have posted a tutorial on the new durable power of attorney act. Scroll down to the heading “Annual Maintenance Workshops” in the video gallery to find it.
2. Review the Title to Your Financial Accounts. Many of you have revocable living trusts. In order for many of your financial accounts to avoid the probate process it is important that the accounts be properly titled in the name of your trust. Over time, it has been my experience that people tend to get lazy with this, and begin opening accounts in joint name with others or in individual name. If this is the case and you have a trust, it’s time to review the title to those accounts and make sure that they are owned by your trust.
3. Review Your IRA and 401(k) Beneficiary Designations. In contrast to your regular financial and investment accounts, IRA and 401(k) accounts normally should not be titled into the name of your revocable living trust. Instead, you want to ensure that the beneficiary designations are proper and up to date. This task may be more complicated than it sounds. Take a look at my blog on my web site where I wrote about IRAs and the second marriage dilemma. That article first appeared on these pages in the Island Sun a few weeks ago. I would suggest that you include your estate planning attorney in your decisions regarding your IRA and 401(k) accounts.
4. Update Your Trust and Will. If you have recently made Florida your residence, then it is a good idea to update your will and trust that may have been drafted and signed up north. Each state’s law is different, and Florida law has some peculiar twists that can result in unintended consequences if you haven’t considered them in your estate plan. You can find a video on this topic at www.sbshlaw.com/floridaestateplan/
5. Consider Declaring Florida Residency. If you are one of the many residents who maintain two homes, one up north and one down here in sunny Florida, declaring Florida residency may save you tax dollars. Florida residents enjoy a homestead tax exemption as well as a cap on the increase to our home’s annual assessed value. Over time this assessment cap might mean hundreds or thousands of dollars of tax savings. Moreover, Florida has no personal state income tax. Depending upon your personal circumstances, declaring Florida residency could save you a lot of money annually. If you decide to declare Florida residency as of January 1st, you are eligible to homestead your home, but you must do so before March 1st. Information on these issues can be found at the Lee Country Property Appraiser’s web site: www.leepa.org/Exemption/GeneralExemptionInfo.aspx
I hope that I gave you some valuable ideas to start off 2012. May you and yours have a happy and healthy New Year.
©2011 Craig R. Hersch

