Miami FL Estate Planning Law Blog

It's time for America's aging population to start thinking seriously about their plans for late life, according to some experts. While many Florida residents fear getting old for a variety of reasons, including losing friends and failing health, many are not being pro-active about their long-term care planning. Much of the lack of planning, it seems, stems from the simple desire to avoid considering the unpleasant topic.

According to some studies, many people are underestimating how much money a comfortable living arrangement will require, especially if additional care is needed in late life. While it's not pleasant to think about, the reality is many Americans will require assisted living or even nursing support, and that carries a hefty price tag. Many full-service centers charge in excess of $7,000 a month. Contrarily, many people have saved a scant $50,000 for the sum total of their remaining lives upon retirement.

This year, several important changes have been made to federal tax law, and it's a good idea for those who may be engaging in estate planning to pay attention to the details of what is different and what remains the same. On Jan. 2, the American Taxpayer Relief Act was passed by Congress, prompting changes to tax laws in Florida and elsewhere in the nation. Of specific interest are the changes to estate taxes, which will affect estate administration in a variety of ways.

The Act will influence a number of tax rates across the country, including capital gains, dividends, income tax and the aforementioned estate tax. Most notably, the Act has revised estate and gift tax to reflect a $14,000 cap on how much you can give away without incurring a gift tax. In estate terms, this allows unmarried couples to transfer wealth gradually without losing money to tax, and it is of particular use to grandparents who wish to help their grandchildren with often-daunting college costs.

When it comes time to plan for future estate administration needs, many people consider federal estate taxes but may fail to think about state taxes. Florida is actually one of those states that impose neither an inheritance or estate tax, which is helpful for the state's many full-time residents. Those who only reside in our state part-time may have to consider the requirements in the other states they live, along with federal estate tax rules, as they plan for estate administration after their deaths.

Many were worried about how the federal estate tax exemption would play out after the prior exemption expired. Fortunately, the government enacted a new $5.25 million exemption, something which protects many Americans and their heirs from what may seem like an excessive amount of estate taxes after a person's death. It's important to keep in mind, however, that many states have an estate tax that is triggered by a much lower amount than $5.25 million.

It's easy to give up estate planning by telling oneself that the economy is tough and it's a low priority that can be taken up later on, some day. But that of course is the kind of negative rationalization that a person can likely regret years later when the benefits of such planning would have been enjoyed. For a resident of Florida, in addition to general estate planning, some kind of long-term care planning for the future is particularly necessary to protect one's assets if institutionalization or extensive home-care funding becomes necessary.

Many families are woefully prepared to handle the expense of long-term care, whether that takes place at home or in a managed-care facility. The cost of being cared for in a nursing home or similar institution is so prohibitively expensive that one's assets can be wiped out quickly. A family should seriously consider obtaining long-term care insurance to contribute to nursing home charges and home-care services.