Assisted Suicide Machine Lets You Kill Yourself Anywhere

As an estate planning attorney, end of life decisions are part of the process of creating legal documents such as the living will. But the living will only goes so far, as it legally allows the process of dying to take place uninhibited by otherwise life-prolonging procedures. The legal document does not call or allow for euthanasia. Many, however, assert that the right to die should go beyond refusing medical care and allow for assisted suicide.

Dr. Philip Nitschke considers himself the Elon Musk of assisted suicide and his latest death machine, the Sarco, is his Tesla. Nitschke performed his first assisted death in 1996 in Australia–when it was briefly legal–only to be outlawed for two decades before recently becoming legal there again.

As a young medical school graduate, Nitschke found himself drawn to the world of euthanasia and the work of Dr. Jack Kevorkian, the most famous euthanasia proponent in the United States. Inspired by Kevorkian’s death machine, Nitschke set out to create an updated version that he called “The Deliverance”. The machine was rudimentary, comprising only of a laptop hooked into an IV system, but it worked. A computer program would confirm a patient’s intent to die and then trigger a lethal injection of barbiturates. It successfully ended four lives before Australia repealed the euthanasia bill in 1997.

The repeal of the euthanasia bill didn’t dissuade Nitschke. He has aided in hundreds of what he refers to as “rational suicides”. He founded a non-profit in 1997 by the name of Exit International, and in 2006 he published The Peaceful Pill Handbook, which instructs on the most painless and efficient ways to commit suicide.

Meanwhile, Nitschke continued to invent death devices. He created an “exit bag”–a breathing mask that replaced oxygen with carbon monoxide. The bag was highly effective but unappealing, as it was akin to dying in a plastic bag. People didn’t want to leave the world in such an aesthetically displeasing way.

His latest machine, the Sarco, is the answer to the problem. It is sleek and appears luxurious. It resembles a spaceship and is intended to convince its user that he or she is journeying to the great beyond. Its base contains canisters of liquid nitrogen and a removable capsule compartment that can be repurposed as a casket. The whole operation can be 3-D printed anywhere in the world.

Potential users fill out an online test of mental fitness, and if they pass, they receive an access code that works for 24 hours. After the code is entered and additional information is provided, the Sarco capsule will replace the oxygen with the liquid nitrogen. The user passes out once the oxygen level falls to 5 percent or below, and a few minutes later, death occurs.

The machine cannot be operated from the outside. The canisters are activated by a button from the inside. A user who has second thoughts can also hit an escape button opening the machine and allowing oxygen to take over all the way up to the time that he or she passes out.

Nitschke indicates that the user feels a sensation similar to being drunk or high before passing out and that the death is relatively painless. There is no asphyxiation as the user breathes easily, comparing it to an airplane cabin depressurizing. Suicide clinics in Switzerland are expected to license the machine sometime in 2018.

Nitschke believes that the right to die is a human right and not a medical or legal privilege. He states that no one should be subject to rules about whether a person is sick enough to choose to die. Not everyone agrees. “I think it is bad medicine, ethics, and bad public policy,” Dr. Daniel Sulmasy, a Georgetown University professor of biomedical ethics says. “It converts killing into a form of healing and doesn’t acknowledge that we can now do more for symptoms through palliative care than ever before.”

Sulmasy believes that assisted suicide violates the bedrock of all ethical thinking, which is that people have value simply by being human. He argues that assisted suicide sends a message to disabled and dying individuals that society urges them to choose death if they become too much of a burden. He also worries about the contagious effect that suicide can have on a population, pointing to various episodes in human history.

Sulmasky also points to the process called the double rule effect, which allows doctors to ethically help patients find the ultimate relief in their final days. The rules says that if a patient agrees to the risks, a physician is allowed to keep increasing the dosage of pain medication until the pain is completely under control, which may mean administering enough to render the patient unconscious or kill them.

The counter argument to this, Nitschke says, is that palliative care isn’t for everybody, and that some can’t direct more morphine be administered because of their end-of-life condition. He also says that even healthy individuals should have the option of ending life when they believe the time is right, so long as they are old enough to make that choice.

The ethical issues are numerous. I know many, myself included, who struggle with these issues after watching someone die a particularly painful end. As medical advances allow for longer life, we also have to think about how medical technology also brings into question the end of life. I don’t know what the answers are, but it appears that we now have more questions to consider.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

When You Don’t Avoid Probate with a Trust

A couple of years ago, a very nice couple visited with me in my office. They had moved from Wisconsin, where their attorney was also licensed in Florida and had just completed a revision of their revocable trusts and related pour-over will, durable powers of attorney, health care surrogates and living wills.

They wanted me to represent them now that they had become permanent Florida residents, but they were quick to say that they had the utmost of confidence in their Wisconsin attorney who they assured me had taken the necessary steps to update their documents to Florida law. This couple merely wanted to meet with me and to seek my assistance when something happened to either of them.

“Normally, I would review your documents and your assets to ensure that your plan is up to date and congruent with your intent now that you live here,” I said.

“No, thank you. We’ll call you when we need you,” the husband replied.

That was the last I heard until recently, when the wife called me to tell me of her husband’s passing.  I asked her to provide me current deeds and financial statements so that we could implement the testamentary trusts found within their revocable trusts.

That’s when we discovered that nothing had ever actually been transferred into either her trust or his trust. “The assets in your husband’s name alone will be subject to a probate proceeding in order to get them into the trust for you,” I advised.

“But we were told that our trust avoids the probate process,” she said.

“It does.  But only when the accounts and properties are actually titled into the trust name,” I continued.  “Here, there are accounts in your husband’s name. So his pour-over will catches those assets and deposits them into his revocable trust, but only through a probate process.”

Looking through the trust instrument carefully, I noticed another problem. “The disposition of your home inside of your husband’s trust is an invalid devise,” I counseled.

“What does that mean?” wife asked.

“Well, Florida law contains unique and peculiar homestead provisions.  This doesn’t really have anything to do with your homestead property tax exemption nor your ‘Save Our Homes’ property tax assessment cap. Instead, the law centers on to whom you can leave your primary residence. When you are survived by a spouse, you need to leave it outright to him or her, or else you have an invalid devise.”

“Well, isn’t his trust mine now?”

“Yes and no.  You are the trustee of his trust and you are the primary beneficiary of the credit-shelter trust created for estate tax purposes. But despite these facts, the home as a part of his trust creates an invalid devise.”

“So what happens?” she asked.

“Well, you get to share the home with the children. You can either choose a one-half interest in the home or you could choose a life estate and they would get a current vested remainder interest.” I said.

“That doesn’t sound so bad.” She said.

“It might not be, unless you go to sell the home and you need the children’s permission, their agreement on the sales price, and they get a portion of the sales proceeds. Hopefully none of the children have any divorces or creditor problems going on now as that might affect the title as well.”

Needless to say, the wife wasn’t very happy with all of the obstacles that appeared before her in a most difficult time – after the loss of her husband. All of these problems could have been avoided with a review of the trust and the assets and corresponding action taken before anything happened to the husband.

While you might point out that the Wisconsin attorney could have done more, one doesn’t know the extent and scope of his representation. Perhaps he wasn’t engaged to also help transfer the assets to the trusts that he created. As far as the homestead laws, those are very particular to Florida. While the Wisconsin attorney indicated that he was licensed to practice law in Florida, he may not have had many clients here and may have been unaware as to the issues involved in the disposition of Florida homestead. Or it could have been that the clients assured him that the home was owned differently than it really was. It all could have been an innocent misunderstanding or a lack of depth of the engagement itself.

In any event, the morale of the story is clear. Even if you have a trust you might not avoid the probate process if all of your assets were never actually transferred into the trust, and when moving to a new state, beware of how your new home state’s laws affect your estate planning.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Son Using Father’s Trust for Son’s Personal Advantage?

When you’re named as a trustee to a trust, especially a trust in which you are also a beneficiary, you are subjecting yourself to several legal responsibilities of which you need to be keenly aware. The foremost of those responsibilities is the potential conflict of interest that you may have in conducting any aspect of trust business.

Suppose, for example, that Son is the trustee of Father’s trust, as Father has become incompetent.  Son was named as the successor trustee.  Father went so far as to tell his estate attorney that he named son to fill that role because of Son’s business acumen. When Father dies, Son and Daughter are the beneficiaries of the trust.

Assume further that Son is a real estate developer working on a project that needs a cash infusion. The project could result in millions of dollars in profits, but it could also go bust.  Son is the confident sort who never expects one of his ventures to fail. Upon examination, the trustee powers contained in the trust document include the power to invest in stocks, bonds, mutual funds, real estate and business ventures.

So is that enough for Son to take Dad’s trust assets and invest in the venture? Does it matter if Son invests Father’s trust as an equity partner – buying shares in the venture or if Son loans money from Father’s trust, effectively making it a creditor of the venture?

What should Son do?  Or should Son just keep Father’s trust’s existing asset mix?

It’s not such a simple question, right or wrong. Son was correct by first determining whether the trust instrument to determine if he even had the power to act as trustee to make such an investment. But the power alone is not enough.

Assume, for example, that Son intends to invest $750,000 of Father’s trust into the real estate venture. If the total value of Father’s trust approximates $1.5 million, then Son would be investing an unusually large percentage of the whole into a risky venture. This would probably fall outside of the “prudent investor rules” that Son should follow as trustee.

The “prudent investor rules” (Chapter 518 of the Florida Statutes) indicate that a Trustee should act reasonably given the risk tolerance of the beneficiaries, the investment portfolio mix and the goals of the trust. To take such a large amount of Father’s trust to put into a risky real estate venture would likely fall outside of the prudent investor rules.

Assume, instead, that Father’s Trust is worth $5 million and that Father made his money in real estate ventures before turning the family business over to Son.  Now it would appear that a $750,000 venture may not fall so blatantly outside of the prudent investor statutes.

But what if Daughter is uncomfortable with the decision to so invest? Could that change our conclusion?  As trustee, Son not only has a duty to Father to ensure that the trust is properly used for Father’s benefit for the rest of his life, but Son also has a duty to the remainder beneficiaries – including Daughter.  Daughter’s risk tolerance should also be considered when making trust and investment decisions.

In addition to the prudent investor rules, Son has the obligation to account to all “qualified beneficiaries” of the Trust. In my example, Son himself and Daughter are “qualified beneficiaries” even though they are not vested, meaning that their interest in the trust property is not certain until Father’s death. The accounting not only must report the income, capital gains, losses and expenses of the trust, but must also report material transactions. The material transaction would likely include the real estate venture.

What if Daughter objects to the transaction? Can she block it?  Since Son is the trustee, he is the one who decides where to invest the trust assets. If Daughter has enough lead time she could conceivably file a Court action to stop the investment. Usually, however, the trustee has already made the investment. In this case, if the deal doesn’t work out then Son would likely have personal liability to Daughter should she sue based on breach of fiduciary responsibilities.

Finally, let’s take the worst case scenario where Son simply takes Father’s trust money for his own use and never reports it to Daughter.  When a beneficiary suspects that the Trustee is using the Trust property and assets for his own use and not for the express purposes of the trust, the proper course of action is to file an action to remove the trustee.

From time to time I’ll receive a call from a beneficiary of a trust complaining that they don’t have enough information to even determine whether their suspicions of improper activity are taking place. In these instances the beneficiary should demand an accounting, as is their right under Florida law and most other state’s laws. The accounting should indicate whether the beneficiary’s suspicions are true or not. If true, then the next steps of removing the trustee and seeking retribution payments back to the trust would be appropriate.

One can now see how important the selection of a trustee is.  Don’t take this choice lightly, as a high degree of wisdom, integrity and judgment is constantly necessary when making daily decisions. I’ve written a book entitled Selecting Your Trustee addressing this and a host of other issues that you want to consider when naming someone to follow you in your estate plan. You can have the best plan in the world drafted, but if you select the wrong individual or entity to serve as your trustee then your plan could fail. If you’re interested in obtaining a complimentary copy call my office at 239.334.1141.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Rings in Peanut Butter and Buried Treasures

Children of a recently deceased client learned an expensive lesson not too long ago after their mother’s passing. To prepare mother’s residence for sale, her adult children spent the better part of a day throwing freezer-burned food in the dumpster and cleaning out perishables from the pantry. It was late in the day when a granddaughter decided to make herself a peanut butter and jelly sandwich.

“Oh my God!” she exclaimed. “There’s a diamond ring here in the peanut butter!” Obviously this was not at all like the surprise that one finds in a box of Cracker Jacks at the ballgame.

Apparently the dearly departed decided to fool potential burglars by hiding expensive jewelry inside of foodstuffs and containers. At this point in the day several industrial size garbage bags had been thrown into the complex’s dumpster bin. The children had no choice but to climb into the dumpster to retrieve the trash, go through all of the old flour bags (complete with hatching insects), Ziploc bags of frozen perishables and a host of jars and other items to search for valuable keepsakes.

It’s my understanding they found several other items (care for a gold bracelet in a bag of frozen peas anyone?). But they also wondered how many were missed.

I would hope that most people choose not to hide valuables within real food packaging, but I’ve also seen online retailers offer containers for valuables that look like insect repellant, window cleaner and the like with the idea that you can place your jewelry (or even cash) inside of what appears to be an every-day household item, going completely unnoticed by thieves.

It isn’t therefore unreasonable to assume that those same household items might be considered valueless junk to be disposed of following your death by unknowing relatives. It was lucky in my client’s case that the granddaughter got hungry and decided to make a snack or else all of those valuables would have been lost.

Which brings to my mind another true account about a man that ran a largely cash business. This was not a client of mine, but was of another family member so I take his word on the veracity of this account. This particular business owner did not deposit all of the day’s cash proceeds into a bank account for reasons one can only conjecture. Instead, he buried it in and around his home.

Whenever he would have a carpenter, painter, plumber or other serviceman work in his house, his wife would sit in the room with the individual to make sure that no stash was uncovered and stolen. They had so much cash around the house that he said he forgot where it all was. Some of it was buried in the backyard.

When a sinkhole opened up in a neighbor’s backyard one evening, he panicked. He spent the better part of the next day and deep into that night digging up his cash in order to save it in case the sinkhole spread.

In so doing he suffered a heart attack.

The good news was that he survived the heart attack. The obvious bad news is that he had a real “cash flow” problem that had to be addressed.

I instructed my family member that if this individual ever died and the house went up for sale to buy it no matter the price! This was an asset that could very well “pay for itself”!

So if you’re engaging in similar clever activities such as hiding valuables in perishables or in what appear to be every day household containers, or should you act like Blackbeard burying hidden treasures in the yard, at least leave a map behind for those that follow you.

And a bottle of rum.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

World’s Oldest Man

On August 11, 2017 the world’s oldest man passed away, just a month short of his 114th birthday – making him one of the ten longest-lived men since modern record keeping began. If you knew nothing else about him than this fact, you would be justified in believing that he had led a peaceful life, spared of fear, grief and danger.

How else could such a man live so long?

The actual truth, however, is enlightening. The man in question was Yisrael Kristal, a Holocaust survivor. Born in 1903 Poland, he survived four years in the Lodz ghetto, and was then transported to Auschwitz. His two children died in the ghetto. In Auschwitz, his wife was killed. When Auschwitz was liberated, he was a walking skeleton weighing a mere 82 pounds. He was the only member of his family to survive.

Raised a religious Jew he kept the faith his entire life. When the war concluded and after his entire life was destroyed, he married again, this time to another Holocaust survivor. They had children. They moved to Israel, making “aliyah” it is called which means “the act of going up” which Jews say they accomplish when they move from diaspora lands to Israel.

In Haifa he began again in the confectionary business, as he had done in Poland before the war. He made chocolate and sweets, but he was also an innovator. If you have ever had an Israeli orange peel covered in chocolate, or liqueur chocolates shaped like little bottles covered with silver foil, you enjoyed one of the products he originated.

Those who knew him said he was a man with no bitterness in his soul. He wanted people to taste sweetness.

In 2016 at the age of 113 he celebrated his bar mitzvah, 100 years past the time when most young men (boys) accomplish the feat. When he was only 13 having a bar mitzvah couldn’t occur since his mother was dead and his father was fighting in the First World War.

So during his bar mitzvah service he gathered his children, grandchildren and great-grandchildren under his tallit (prayer shawl) and said, “Here’s one person, and look how many people he brought to life. As we’re all standing here under my tallit, I’m thinking of six million people. Imagine the world they would have built.”

His life stands to remind all of us that no matter our age or lot in life, there is always good that we can accomplish. Yisrael Kristal died in the week that in synagogues around the world the portion of the Torah (otherwise known as the Old Testament – the Five Books of Moses) that is read relates to God’s commandment in Deuteronomy to wear teffilin (parchment scrolls in leather boxes bound on the hands and arms during prayer) and to teach Torah to your children “so that you and your children may live long in the land that the Lord swore to your ancestors.”

How fitting was that portion for this man’s life event?

Whether or not you’re are Jewish or even religious, I hope that this world’s oldest man’s life story gives you hope for our future and for your personal future.

If you’ve ever spoken to a Holocaust survivor, you probably found as I did that many are among the strongest, life-affirming people that you’ll ever meet. Victor Frankl, a Jewish psychologist who survived Auschwitz and wrote “Man’s Search for Meaning,” is another whose work became an affirmation of all things good in life after enduring what can only be described as a living hell.

Too often I listen to retirees lament that their life’s work is complete and that they no longer have much to contribute to society. While it’s true that our society tends to accentuate the young, men such as Yisrael Kristal show us that living so deep into old age that there are none other like you offer opportunities to affirm life and to make a difference.

Once you run out of goals you no longer have a future.

Don’t give up on your goals, no matter what they are or what your age might be.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Homebrewed Amendments

What happens when a man dies with a will or a revocable trust that was originally created by an attorney, but later that man apparently removed some of the pages and replaced them with new pages containing different provisions? Those pages have handwritten changes scratched through them in several places, and were not witnessed in accordance with the statutory requirements.

I’ll tell you what happens. The estate becomes a bloody mess.

Believe it or not, I’ve seen this scenario play out several times. I can only guess that when people try to self-amend their legal documents, they think that it’s easy to do and that there’s no reason to pay a qualified lawyer to get it done properly.

In order for a will or trust (or an amendment to a will or trust) to be legal, the testator must sign it at the end, and the testator’s signature must be witnessed by two individuals who sign in the presence of the testator and in each other’s presence. So when a man rips out a page of his trust, and types a new page to insert instead, he has not complied with the statutory legal requirements to properly amend his trust.

This makes sense when you think about it. How does anyone know whether the pages that were removed and replaced really those of the testator? That’s why we have laws governing the signing of testamentary documents.

So what happens when pages are replaced? That’s when litigation commonly arises between beneficiaries. Assuming that the original pages of the trust (or will) – or copies of them – can be found, the beneficiary who would most benefit from the old provisions (before they were ripped out and replaced) will argue before a court that since the new amendment was invalidly executed, the old provisions should be resurrected and enforced.

Another beneficiary may argue that since the testator ripped out the old page, he intended to revoke that provision and that the document should be read as if the old provisions weren’t ever included. Since the new provisions inserted weren’t validly executed, they’ll look to the rest of the document to see who should get what.

But let’s say that in so examining the documents that there is a gaping hole.  Assume for example that the man ripped out the provision that says to leave 25% of his estate to his sister.  He replaced that provision with one that directs a 25% bequest to his church, but the new provisions weren’t validly executed.

The provisions he left alone direct a 25% bequest to his son and a 50% bequest to his wife.

So if we assume that he intended to revoke the 25% gift to his sister, but that the 25% gift to the church wasn’t signed correctly, who is entitled to that 25%?

Here there are a number of legal theories that may apply. One is called the doctrine of dependent relative revocation. Under this theory, the man intended for his sister to reclaim the 25% if the provision for the church was found to be invalid, as it likely will be.

This Court may follow this theory if the trust or will prior to the one he destroyed gave his sister 25% as well. But let’s assume that his sister did not appear in any prior version of his will or trust. In that case, there are at least two alternative solutions a Court may find.

The first solution would be to declare the man to have died intestate (without a will) as to the 25%.  Here, the Florida intestacy statutes would say who is to receive the 25%. If the man was survived by his spouse and not by any minor children, and if his children are the children of his spouse, then his spouse would likely receive the 25%. But let’s say that the man’s prior trust gave the 25% to his brother. Here, the brother may use the doctrine of dependent relative revocation to claim the amounts as his.

Depending upon the son’s relation to the man’s spouse, the son may also have a claim to some or all of the 25%.

You can clearly see where all of this is going. The church is likely to hire a lawyer to argue their rights to the share, although it would have the least likely chance of prevailing. The spouse, brother, sister and son would also have a potential claim to at least some portion of the 25% in question under various legal theories, so each of them would likely hire a lawyer to argue their case before the judge. Under Florida law, the estate would likely be obligated to pay all of these legal fees from the various claimants.

The poor judge has one big headache. The lawyers have a lot of work to do (and hence a lot of fees to collect from the estate) including reviewing prior wills and trusts, and taking depositions of family members and of the lawyers who drew the trusts. Each lawyer will try to build a case that would prove the man’s intent as benefitting that lawyer’s client. This courtroom drama could drag on for years before being settled or resolved.

As I’m sure one can now see, the man would have saved his family and his estate a great deal of aggravation and expense if he had only hired a qualified lawyer to help him amend his legal documents in the first place.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

 

Cultural Capital Requires Altruistic Individuals

Rabbi Jonathan Sacks delivered an insightful speech entitled “Cultural Climate Change: The Role of Religion in a Secularized West” in which he rebutted Darwin’s atheistic writings by saying “we hand on our genes as individuals, but we only survive as members of groups, and for a group to survive it has to have altruism among its members. It has to have people as part of a group that puts the group ahead of their own private interests.”

Rabbi Sacks goes on to say that when society is full of altruists then that society is rich in social capital. A society of individualists who think mainly of themselves is poor in social capital. While the Western world has arguably tilted toward the individualist, Sacks points out that social capital and altruism does exist in America, but it is found mainly in houses of worship.

I thought about this in relation to the horrific tragedies associated with Hurricane Harvey in Texas, Hurricane Irma in Florida, and Hurricane Maria in Puerto Rico. In almost all cases one can point to altruistic behavior on the part of many Americans. It’s also evident that churches, synagogues and other houses of worship rallied to help those in need, organizing the collection of much needed food and supplies.

Naturally, as an estate planning attorney, Rabbi Sacks’ speech and my observation of recent tragedies got me thinking about charitable planning. I’d say that roughly one-in-five or twenty percent of my clients include charitable planning as part of their estate plan. That percentage increases with those that don’t have children or grandchildren.

We’re all pre-programmed to care for our children and put their needs above all others, including our own. Our genetic operating system is built that way to ensure survival. At the same time, I frequently engage in conversation with my clients over their concerns that large gifts and inheritances will end up being counterproductive. The common fear is that by giving too much the child will lose his or her ambition and drive.

Those in my profession site the proverb “Shirtsleeves to shirtsleeves in three generations.” Similar sayings exist in other cultures. In Japan the expression goes, “Rice paddies to rice paddies in three generations.” The Scottish say, “The father buys, the son builds, the grandchild sells and his son begs.” In China, “Wealth never survives three generations.” Wisdom beckons from all corners of the globe.

So what is one to do? Should we create charitable remainder trusts or fund private foundations with our estate plans? That would certainly satisfy our altruistic desires. Many über-wealthy individuals such as Warren Buffet and Bill Gates have joined in The Giving Pledge, which is a commitment by the world’s wealthiest individuals and families to dedicate a majority of their wealth to giving back.

Is that too easy for those with billions? If they only leave a fraction of their estates to family then that fraction may still add up to tens of millions of dollars, or more than enough for their offspring to not work and enjoy an easier lifestyle.

For those of us with more modest means, we worry that our children and grandchildren have enough to be educated, live in a decent neighborhood, enjoy a comfortable retirement and provide healthcare into old age. Is that altruistic enough? And what about our larger society? Rather than giving a portion of our wealth to those in need, should we instead abide by the adage, “charity begins at home?”

I don’t believe that there are any easy answers to these questions. Every individual must consider his own circumstances, goals and desires. There are estate planning vehicles that provide income to family for life or a stated number of years then terminate to charity, or work in the other direction by giving income to charity for a stated number of years then distributing principal to loved ones at its termination. There are a variety of options available.

If these thoughts appeal to you, rather than “going through the motions” when sitting down with your estate planning attorney generating documents that simply divide your wealth at death, perhaps consider combining your altruistic inclination with your aspirations to provide for your loved ones.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Escaping Your Former State’s Taxing Authority

Regular readers of this column know that I like to educate on the importance of distancing oneself from your former state of domicile when declaring Florida residency. A recent State of New York State Tax Appeals ruling in the Matter of Thomas Campaniello highlights the reasons necessary to remove any doubt as to your state of residency for both income and estate tax purposes.

Campaniello had declared Florida residence, maintaining a home in Key Biscayne since 1981. He spent more time in Florida during 2007 than in New York, and had substantial business ties to Florida. He obtained a Florida drivers license and maintained personal items in Florida, including a doctoral diploma, guitar and his Ferrari.

In Campaniello, the New York State Division of Taxation had a substantial financial reason to argue that he had not established Florida as his new state of domicile or given up his ties to the State of New York. In 2007, Campaniello filed a New York state income tax return as a non-resident, which New York’s Division of Taxation audited, assessing state income taxes of $319,000, New York City taxes of $169,772 plus penalties and interest totaling $709,429.

In response to the audit, Campaniello submitted a summary of his trips from December 2006 to January 2008, copy of passport pages evidencing foreign travel during that time period, credit card statements, quarterly bank statements (indicating a New York address), and cellular phone statements, among other things.

The auditor’s review of the evidence determined that Campaniello (i) was present in New York for 169 days during 2007; (ii) had significant weekly travel between New York and Florida; (iii) always returned to his domicile in New York City for a portion of nearly every week in 2007 and (iv) continued utilizing New York medical professionals. As a result, an Administrative Law Judge sided with the New York Division of Taxation. Campaniello appealed.

The Tax Court agreed with the lower court, reaching its determination on litany of factors: (i) continuing ownership and frequent use of his New York apartment that he had owned since 1979; (ii) his presence in New York for 171 days (note this is less than half a year); (iii) maintained personal belongings and clothing in his New York apartment; (iv) continued receipt of mail and bills (cellular phone service and credit cards) at his New York address; (v) his spouse maintained New York residency; (vi) family ties; (vii) substantial business ties to New York; and (viii) operation of his New York and Florida businesses from a New York office.

It should come as no surprise that New York state pursued Mr. Campaniello for this tax revenue. States have been chasing both “former residents” and corporations for years to cover budget shortfalls. As states raise their income and corporate tax rates, individuals and entities leave states for others, like Florida, that do not impose such taxes.

While the warning is important, that doesn’t mean that one should give up and succumb to state taxing authorities. When making the decision whether to become a Florida resident, several factors should be considered, including:

  • Do you intend to spend the requisite amount of time outside of your former state to qualify for non-resident status?
  • Do you continue to earn income in the state?
  • Is your health insurance or other benefits that you may receive non-transferrable to Florida if you should become a resident here?
  • Are you willing to do the things necessary to sever the ties to your former home state in order to escape that state’s taxing authority?

And there may be other questions pertinent to your situation. If you must remain a state resident to retain certain government benefits such as health insurance or Medicaid, and if it would be unlikely to match those benefits in Florida, then it may not be a good idea to change domicile.

One comment, that is not pertinent, and which I hear often is this: “I have lived in that state my whole life and I cannot imagine not being a resident of that state!”

To this I raise my eyebrows with a perplexed look. Just because you are no longer a legal resident of a state does not mean that you cannot travel within its borders, enjoy the company of family and friends who live there or otherwise feel a close association. It just means that you no longer wish to make contributions to its taxing authority on an annual basis.

So the real difficulty for those who maintain residences here and in their former home state, becoming a Florida resident is not meeting Florida residency requirements so much as it entails escaping the clutches of your former state’s taxing authority.

The Sheppard Law Firm is located in Fort Myers and Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.