South Florida Estate Planning Law : Florida Estate Planning Lawyer & Attorney : David Shulman Law Firm : South FL Wills & Trusts

I'd like to talk a little bit about do-it-yourself wills., but not necessarily in the way that you might think.

One thing that estate planning attorneys --especially those who blog and tweet-- like to rail about are online and store bought do-it-yourself wills. LegalZoom is the enemy, and the lesser-known companies are even worse. I know that I too have in the strongest possible terms castigated do it yourself solutions.

Well, I'm here to tell you that in certain circumstances, and for certain people they may be okay.

But, what are those limited circumstances?

Let's say you are 22 years old, unmarried, childless, and have minimal assets. You don't own a home, you have maybe a few thousand dollars in checking and savings, or even the beginnings of a retirement account. There are certain lawyers who will tell you, that not only do you need a professionally prepared a last will and testament, but that you also need a revocable living trust.

You don't.

For me, estate planning is helping my clients provide for and protect themselves in the event of incapacity, and to provide for and protect their families in the event of their death. Also, it is about helping my clients plan for and minimize taxes.  This involves preparing trusts that protect the decedent's assets for their children upon their death, bypass trusts for spouses to minimize taxes, life insurance trusts, charitable remainder trusts, and other tax minimization strategies like Grantor Retained Annuity Trusts (GRATS).

But there are some people, like the 22-year-old above, who really only need a will to "say where their stuff goes." They don't need a trust for children, because they don't have any children. They don't need a revocable living trust, because they can use a pay on death designation on their bank accounts.  As far as their personal property goes -- let's be honest.  No one is going to really care about their broken down Ikea table.

For them, an online or store bought Will, along with durable power of attorney and health care surrogate is probably ok.  I'm actually more concerned about the health care surrogate and durable power of attorney, as there is certain language that is required to be in there, and I don't know if the DIY companies include it.

My other real concern regards the execution of the documents. The problem often is that these do-it-yourself wills are not properly executed. In Florida, in order for Will to be valid, it has to be executed in the presence of two witnesses who are also in the presence of each other. Then, in order for it to be self proved, the testator and the witnesses need to sign again in the presence of a notary public. The problem with these do-it-yourself wills is that the companies either do not provide proper instructions to their "clients" about how to execute the documents, or, the clients completely ignore them and do not follow the instructions. This can be a problem.

But other than that, for certain people, a LegalZoom will is probably fine.

Now, if you have children, or more significant assets, or real estate, then I do not recommend a do-it-yourself estate planning solution. But, if you are single, childless and broke, you don't need me, and you certainly don't need a revocable living trust, and anyone who tells you otherwise is just trying to sell you something.

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New York Yankees owner George Steinbrenner died today at the age of 80.  According to Forbes Magazine, he was worth $1.1 billion.

Total federal estate tax his family would have owed if he died last year or next year?  Approximately $500 million.

Total federal estate tax his family owes this year?  Exactly zero.

As I've written about before, because of Congress's total ineptitude, incompetence, and outright legislative malpractice, there is no estate tax this year and this year only.  This is something Congress knew was going to happen since 2001, and they allowed this quirk of a year to happen.  So another billionaire's family does not have to pay the estate tax, because their relative had the good sense to die this year instead of last year or next year.

This is extra special to Steinbrenner's children, because this means that they get to keep the team.  If he died last year, his family would owe the IRS the value of 45 percent of all of his assets, in cash, nine months after his death.  Technically, it's 45% of the value of his assets greater than his unused lifetime exclusion.  But the lifetime exclusion was $3.5 million.  For most people, that exempts them from the estate tax.  But for billionaires, it's not really relevant.

I don't know the financial situation of him and his family, but I doubt they have $500 million in cash sitting around.  What often happens when the elderly owner of a sports team dies, his family has to sell the team in order to pay the estate taxes.  It happened with Miami Dolphins' owner Joe Robbie's estate.

Once again, good job Congress.

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The Weekend Wall Street Journal has a story about the (non) state of the estate tax, and whether people will be killing off their rich relatives at the end of the year.

WSJ: Too Rich to Live?

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The sports world is a-twitter (as is Twitter itself), about the news that LeBron James is coming to play for the Miami Heat. In the days leading up to the decision, there was much discussion about how much he would be paid in Miami vs. Cleveland. Because Florida does not have a state income tax (and no city in Florida has a local income tax), the Heat could actually pay him less than other teams, and he would end up taking home more.

In order for a state or local jurisdiction to impose an income tax on someone, there has to be some connection between the individual and the jurisdiction.  There are basically two ways that this can happen. First, a state or city can impose an income tax on their residents.  If you live somewhere, that place can tax your income, regardless of where you work.  Second, a state or city can tax people who work in and generate income there, regardless of where they live.  Living in South Florida, the next state is 400 miles away.  But there are millions of people who live in one state and work in another (or even live outside of a city and work in that city).

Generally, if you live in one state in which there is a state income tax and work in another state that has a state income tax, your home state will give you a tax credit towards the taxes paid to the state where you work, or the two states will have a reciprocal tax agreement so that you are only taxed in your home state.  Either way, there should only be one level of tax and not a double tax.  For professional athletes, this is often an accounting nightmare.  Athletes have to pay taxes not only to their home state if there is a state income tax, but a proportional tax for each away game they play in a state with an income tax.   So a baseball player has to keep track of 81 away games (plus playoffs) and has to make proportional payments for all of them.

Now that LeBron is coming to play for the Miami Heat, it's possible that he can save on the Ohio state income tax that he had to pay for (1) his home games, (2) his significant endorsement income, and (3) the away games in states that did not have an income tax (such as when the Cavaliers played the Heat).  Of course, there is one "simple" question he has to answer to avoid the Ohio income tax.

Where does he live?

Remember, as I said above, if he's an Ohio resident, then Ohio can asses the income tax against all of his income, regardless of what team he plays for, and because there is no Florida state income tax, there is no credit or reciprocal tax agreement.

LeBron has to establish Florida residency.

I often speak with clients from up north, usually from New York and New Jersey who want to move to Florida in order to lessen their state tax burden.  They ask if there is a form that they can fill out that says that they live in Florida, and then they want to go back to their job and home in New Jersey where they spend most of their time.  They think that this will save them on state income taxes.

That doesn't work.

There is no "form" to fill out to truly establish Florida residency, and there is no bright-line test.  It is a question of facts and circumstances.  And, it's not Florida that LeBron has to convince (except for the purposes of the Homestead tax exemption), but Ohio.

So what advice would I give to LeBron about establishing Florida residency?  He should do as many of the following as he can, preferably all of them:

• Buy or rent a home as quickly as possible (obviously the most important)
• Apply for the Florida Homestead Exemption (if he chooses to buy)
• Get a Florida Driver's License
• Register to vote in Florida
• Have all of his mail go to his Florida home
• Move his family down here and have his kids go to Florida schools
• File his Federal Income taxes from Florida
• Actually live here during the off-season
• Sell his Ohio home if he can
• Spend more time in his Florida home than he does anywhere else

Again, it's a facts and circumstances test.  The question isn't "did you fill out the correct form."  The question is, "where do you truly consider your home?"  It's understood that wealthy businessmen, actors, and basketball players making $20 million a year will probably have multiple homes in multiple places.  He can have a home in the Hamptons and the South of France if he really wants.  But there is only one place that he truly lives, that he considers his primary domicile.  If he wants to avoid the Ohio state income tax, he needs to get it into his mind that it's now Florida.

Welcome to South Florida, LeBron.  I hope you win us some championships.  Just make sure you remember that this is truly your new home.

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