Is this the year for Estate Tax Repeal?

Each year, members of both houses of Congress will sponsor bills that repeal the estate tax. In years’ past, these bills did not go very far given the make-up of our elected officials. This year, though, Donald Trump is in office, and he campaigned on several things, including the repeal of the estate tax.

To be clear, the estate tax comes into play when one has an estate exceeding $5.49 million. Assets passing to a US citizen spouse are not taxed at death. So, you can have a very large estate and pay no estate tax at your death if you leave everything to your spouse. This is not a panacea, though, as your spouse could have an estate tax problem. In other words, you might just be kicking the can down the street for someone else to deal with.

President Trump talked about replacing the estate tax with a capital gains tax on inherited assets. Presumably, this would mean that inherited assets would get a carry-over basis at death. Under current law, we value all assets as of date of death, and that valuation becomes the new basis. This is called “stepped-up basis.” If the estate tax is repealed, then perhaps we would not a step-up in basis, but rather we would keep the basis from the decedent who left us a gift.

Naturally, no one really knows what Congress is going to do, and more importantly, what might happen when we have a new administration. For now, we know that we have an estate tax. According to the Tax Policy Center, one in 517 individuals who die this year will pay an estate tax.

If you are one of the few who have estate tax exposure, consider a plan to minimize (or eliminate it). Even if you do not have exposure, don’t think that planning is not for you. Changes are that you want to provide for your family, which can only be done with proper planning.

Don’t Get Scammed!

If you are a business owner, then this WARNING is for you.  If you are not, please forward this to your friends who are business owners. Each year, you are required to file an Annual Report with the State of Florida by May 1st of that year (unless the business is a not-for-profit).

Several for profit companies send out emails and letters that look very official about the Annual Report requirement.  They collect email addresses and physical addresses from the State’s website and are soliciting businesses. These are THIRD party solicitations not associated with the State – you can file your report on-line without going through any of these companies.

If you get an email or a letter offering to file your Annual Report for a fee, throw away the letter. Each year, we get those letters, too! If you are not sure about a letter you receive, just send us a copy – we will let you know if it is junk mail.

You still need to file your Annual Report. Failing to file on a timely basis will result in a business being administratively dissolved by the State, or at a minimum, being required the payments of expensive reinstatement and/or late fees.  With the Annual Report, a filing fee must be submitted.

The filing fees are as follows:

Filed by May 1      Filed after May 1

·         For profit corporation:               $150.00                   $550.00

·         Limited partnership:                   $500.00                  $900.00

·         Limited liability company:          $138.75                  $538.75

Information on filing an annual report can be obtained at the State’s newly redesigned website: In fact, you submit the Annual Report and pay the filing fee online. To do this, you will need the document number assigned to the business by the State. You can locate the number by searching the sunbiz website for your business record. Feel free to give our office a call if you would like us to walk you through the filing process FREE OF CHARGE. You can also follow the State’s step-by-step instructions here.

Also, do not forget that the act of filing an Annual Report does not negate the responsibility of businesses from following all statutory requirements to maintain those businesses, such as holding annual shareholder and board meetings (for corporations).

How are your communication skills?

As our practice continues to mature (we have been doing this work for 17 years!), it is nature for our clients to die. Despite the horror stories, most of our clients do not leave a mess. They are relatively organized and have done a good job communicating their wishes. What about everyone else?

If you have either been a part of a messy estate or heard of one, we would not be surprised if part of the messiness related to a lack of communication. We have found that communication is a key to minimizing family problems after the death of a loved one.

Before Death:

Clients who share information with their loved ones while they are alive tend to have families with less problems after death. What should you share? That, of course, is different with every family. You could share copies of your documents and financial information, preferably by talking with your loved ones to explain what you are doing and why. Some of our clients wish to keep things a bit closer to the vest, so they tell their families that they have done their planning and where to go when they are gone (e.g., where their documents are stored, who their advisors are and where an asset listing can be located). Most of our clients are somewhere in between these two.

We typically see more information being shared as our clients age, presumably so that an adult child can act for an aging parent in the event of an incapacity.

After Death:

When an estate or trust is being administered, communication by the designated personal representative or trustee can greatly reduce anxiety and feelings of mistrust. After all, if you have three children and name one as your executor, wouldn’t your two children who are not named to act wonder what is happening if your executor does not talk to them? We favor keeping communication open wherever possible. Frankly, those children who are not named are the lucky ones since acting as a personal representative or trustee can be a lot of work. However, not knowing what is going on is a challenge and creates unnecessary friction.

How can you help to minimize this? At a minimum, communicate to your designated representative that you wish for communication lines to be open. You can even suggest that meetings with advisors include all of your beneficiaries. This may not be practical if you have several beneficiaries, so summary letters may suffice.

A Brief Word  regarding the Digital World:

We are increasingly digital, which includes online statements, usernames and passwords. Depending on what articles you read on the internet, you either should use a unique username and password for each online account or have a common one. In other case, if your loved ones (or at least your personal representative) do not know that you get online statements, locating your assets can be very difficult. Florida is in the process of putting together statutes to cover accessing accounts and the like online, but in the meantime, be sure to have your power of attorney and Last Will include authorizations to access your online life. Also, keep a list of your accounts (including access rights) for your personal representative. Without it, your family may not collect everything efficiently, which increases costs and leads to more friction.