Common Mistakes In Florida Asset Protection
For many people, it is difficult to understand why they would need to include specific asset protection in their estate planning – after all, one figures, one plans their estate so that their assets are protected. However, it is generally a good idea to specifically set up your estate plan so that your assets cannot be reached in the event of a bankruptcy filing, or if Medicaid or Medicare tries to seek repayment of any outlays after your passing. In addition, you can hopefully avoid significant estate taxes if your estate is established correctly.
There are so many different ways that someone can make mistakes in asset protection, most often in terms of choosing the wrong instruments to try and keep your estate safe. For example, using revocable trusts to help avoid probate is very common in Florida – a revocable trust is a trust where the terms can be changed at any point during the life of the settlor (the creator of the trust). However, because the trust can be amended, it is not sufficient to protect the assets in it from the federal estate tax. An irrevocable trust, however, will generally be sufficient because the assets are then no longer under your control, which means there is no transfer to tax.
Another common error that too many people make in planning their estate is what are called fraudulent transfers or conveyances. While very often, the intent is not necessarily to defraud anyone, some transfers of assets that may be made during estate planning may not pass muster – for example, transferring the title of a piece of real estate into your spouse’s name would be considered fraudulent if it was done with the intention of avoiding any kind of transfer tax. Every transfer you make must be done on lawful grounds, with all appropriate taxes paid.
Know Your Options
Given that the most common types of asset protection mistakes in Florida tend to revolve around using the wrong type of instrument or conveyance to protect their property and save it for their beneficiaries, it is crucial to educate yourself on the best instruments to use. This will depend on your specific situation – for some, ‘protecting one’s assets’ is as easy as renting a safety deposit box and placing an item or items inside; for others, offshore trusts and complex titling may be necessary. Knowing your options is crucial.
One major asset protection benefit that Florida has that many other states lack is referred to as the homestead exemption. This exemption allows you to preserve a piece of real property (as long as you make it your permanent residence) and exempt it from all types of taxation (except assessments for special benefits), up to $25,000 to begin with, with more possible depending on the total value of the home. The only two potential creditors who may be able to affect the home under exemption are the Internal Revenue Service, or a spouse in the event of a divorce.
Contact A Naples Estate Planning Attorney Today
If you have questions, concerns or just want to set up a complimentary consultation to discuss your personal legal issues in a confidential setting, contact James R. Nici, the Managing Partner of Nici Law Firm, a Naples estate planning attorney with almost 30 years of legal experience. This may be the first step toward ensuring all is how you want it to be going forward. Contact our offices today via our website, or on the telephone at 239-449-6150, to schedule your complimentary consultation.