By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Planning & Wills Attorney
A client is a NJ resident working at Rutgers. She owns assets in NJ involving real property ($200,000) + $750,000 in retirement accounts and it’s probable she will inherit $100,000 from her mom in the near future.
Her husband is a FL resident (he works for Broward County, FL). He too owns NJ real estate and property ($200,000 condo) + a $110,000 in retirement accounts + $40,000 boat and may inherit $250,000 from his mom. The clients questioned me about using a trust since they intend to both live in Florida full time.
Despite what they may hear at the free dinner seminars, probating a Will in Florida, while not as easy as in New Jersey (I’m not aware of any state where it’s as easy as in New Jersey) is not particularly difficult, expensive or burdensome. Many Wills are probated throughout Florida. The papers are filed electronically so the location doesn’t matter.
I don’t generally do a revocable trust for a Florida resident who is our client unless there’s a particular reason to do so mostly because Florida requires that a personal representative of the Estate be either a relative or a Florida resident. If the client wants someone who can’t qualify, then a trust is the wrong choice.
The substantive difference between NJ and Florida is that New Jersey is a relatively high state income and inheritance estate tax, whereas Florida has neither a state income tax nor a state inheritance tax. With one exception (discussed below), Florida limits what you can do with your homestead (principal residence) if you’re survived by a spouse or minor child. In that case, the spouse receives a life estate (but may elect to receive 50% of the residence outright) and the children receive the vested remainder. The one exception I mentioned is that you’re survived by a spouse but no minor child, you may bequest the homestead to the spouse.
Some people think probate in Florida is expensive vs a revocable trust. First, if you use the statutory schedule of presumed reasonable attorneys’ fees for estates ($30,000 on a $1 million estate), there’s also a statutory schedule of presumed reasonable fees for revocable trusts that’s 75% of the schedule for estates. So in our example, if you use the schedule, the fees for a $1 million revocable trust would be $22,500, plus the cost of creating the trust (payable now rather than at death) and the cost of transferring assets to the trust (payable now rather than at death). So the difference isn’t very much.
Second, in most estates where someone creates a revocable trust, you have to probate a Will anyway (though it’s not usually a big deal).
Third, the statutory schedule of presumed reasonable attorneys’ fees aren’t just for probating the Will. It’s for all of the work (other than extraordinary matters) involved estate administration. Probating the Will is generally a small part of the work in administering an estate.
Fourth, many lawyers handle estates on a time basis. While it’s not appropriate to discuss fess on the internet the fees for the Florida aspects of an estate are relatively modest, and certainly not enough to affect the decision whether to create a revocable trust.
That doesn’t mean a revocable trust isn’t appropriate in certain cases. Since Florida requires that the personal representative be either a relative or a Florida resident, if your first choice isn’t a relative or a Florida resident, a revocable trust is a common workaround. There are occasionally other reasons to create a revocable trust as well. However, the scare tactics that some people in Florida use are at best misleading.
To discuss your NJ Estate Planning matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com. Please ask us about our video conferencing consultations if you are unable to come to our office.