The Florida 'Boom': For Estate Planning, It's the Place to Be

By Stephenson, Correy E. | THE JOURNAL RECORD, January 4, 2007 | Go to article overview

The Florida 'Boom': For Estate Planning, It's the Place to Be


Stephenson, Correy E., THE JOURNAL RECORD


BOSTON - People are flocking to the Sunshine State in greater numbers than ever, seeking asset protection and a decrease in taxes, estate planners said.

"It's a tidal wave," said Bruce M. Stone, a 32-year estate planning veteran at Goldman Felcoski & Stone in Coral Gables, Fla. "We've noticed a huge increase in the numbers of wealthy clients claiming Florida as a domicile."

"We're seeing a significant uptick in the number of people relocating, or establishing themselves as Florida residents," agreed Donald R. Tescher, an estate planning and tax specialist at Tescher Gutter Chaves Josepher Rubin Ruffin & Forman in Boca Raton, Fla. "We've been really busy."

Clients with a second home in Florida are establishing it as their primary residence, and others are simply moving all of their assets into the state, he said.

Jonathan B. Alper, a solo in Heathrow, Fla., who specializes in asset protection, said that lawyers and clients are increasingly taking advantage of Florida's favorable legal climate because "technology gives them the ability to communicate out of state so easily. Now it's possible to live in Florida but run a business up north or stay in contact with family in California."

Why Florida?

Attorneys say there are several reasons for the upswing:

Tax-free haven

With no income tax, no estate tax and the recent abolishment of the tax on intangibles, "we've noticed a high concentration of wealth flowing into the state," Tescher said.

The repeal of the intangibles tax - an annual assessment on stocks, bonds and notes - takes effect Jan. 1.

The Economic Growth and Tax Relief and Reform Act of 2001 established a gradually increasing federal estate tax exemption, which will culminate in temporary repeal of the tax in 2010. But many states, such as New York, still have a state estate tax, and in some states it has actually increased as the federal exemption has risen.

Florida's constitution doesn't allow for a state estate tax, Stone said, and as a result, people trying to avoid estate tax are "flooding" into the state as permanent residents.

Establishing residency is crucial, explained Stephen J. Silverberg, an estate panning attorney at Certilman Balin in East Meadow, N.Y., because with the repeal of the federal estate tax Florida increased its real property taxes to compensate for the loss of income, and only state residents can obtain relief from the continually increasing rates. (States shared in the federal estate tax under a program of credits, but because Florida's constitution doesn't allow for an estate tax or an income tax, the lost income has to be recouped through property taxes.)

Asset protection

Alper is frequently contacted by business people facing a possible lawsuit or already involved in litigation, seeking to protect their assets from potential judgment by establishing residency in Florida.

While other states such as Texas and Iowa have homestead provisions, a 2001 state supreme court decision "supercharged" the situation in Florida, Alper said.

In that case, the court held that if a person moves to Florida to protect his or her money from creditors, even with the purpose to defraud (with some exceptions), his homestead is still protected. (Havoco of America, Ltd. v. Hill, 790 So.2d 1018).

Florida has had homestead protection since it became a state, Stone noted. Declaring a homestead allows residents to protect one- half acre within a municipality and up to 160 contiguous acres in any county from creditors, including single-family homes, condos and manufactured or mobile homes.

Homesteads - no matter how valuable - cannot be touched by creditors, and are also protected from fluctuations in property taxes.

In the mid-1990s, voters voted to establish a cap on the yearly assessment increase for residents' homes, limited to 3 percent or the Consumer Price Index, whichever is less. …

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The Florida 'Boom': For Estate Planning, It's the Place to Be
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