Florida Estate Planning Guide

Did you know estate planning laws aren’t the same everywhere? You probably think mainly about the federal government’s role when it comes to estate planning – specifically, the estate tax. But most of the rules that dictate what happens to your money and property when you’re gone are at the state level.

Florida, like other states, has its own nuances when it comes to estate planning. For example, primary homes can be treated separately from other property, there’s no estate or inheritance tax and some legal designations – like a springing power of attorney – aren’t allowed.

So, you can see how critical it is to put your estate planning in the context of the state’s laws where you live. Once you’ve learned why it’s important to have an estate plan, here’s what to consider more specifically when estate planning in Florida.

HOW FLORIDA ESTATE LAWS AFFECT YOUR PLANNING STRATEGY

FLORIDA'S HOMESTEAD EXEMPTION: HOW IT PROTECTS PRIMARY RESIDENCES

Your primary home may qualify for Florida’s homestead exemption, which among other things, reduces your property taxes and helps protects your home from being taken by creditors (other than to satisfy your taxes or a lien on the property, such as a mortgage).

Florida law requires that a homestead property, if you have one, passes to the surviving spouse and minor children, regardless of the terms of your last will and testament or revocable living trust.

If your surviving spouse plans to continue to live in the house, the protections of the homestead exemption continue and the house can’t be used to satisfy your debts or theirs, other than in situations like the ones mentioned above.

NO FLORIDA STATE ESTATE OR INHERITANCE TAX

Most people know about the estate tax at the federal level, which applies to large estates. But some states also have their own estate tax (which is assessed against the value of the estate and removed before inheritors receive anything) or an inheritance tax (which is assessed against the inheritance after it’s received). One state even has both.

Florida doesn’t have an estate or inheritance tax, although of course, the federal tax may still apply.

FLORIDA DOESN’T RECOGNIZE SPRINGING POWERS OF ATTORNEY

As we’ll explain below, a springing power of attorney is used when you want to give someone access and power over your finances, but only if you should become incapacitated. Florida no longer allows springing powers of attorney – all powers of attorney become effective immediately upon signing.

FLORIDA PROBATE PROCEDURES

Florida, like many other states, has a simpler form of probate for small estates. It’s called summary administration, and it can take less time and be less complicated than formal administration.

KEY FLORIDA ESTATE PLANNING DOCUMENTS

LAST WILL AND TESTAMENT

When people consider their estate planning, they often first think about the last will and testament. This is a legal document that allows you to name a guardian for your minor children, describe how your assets are to be distributed at your passing and name the person (called the “personal representative” in Florida) who is responsible for administering your estate in accordance with the terms of your will.

In the absence of a will, you will be considered to have died “intestate” and the laws of the state where you reside will determine who inherits your assets.

In Florida, a valid will must be:

• In writing
• Made by a competent person who is at least 18 years of age (or an emancipated minor)
• Signed in the presence of at least two witnesses, all of whom must also sign in the presence of the testator and each other

Probate is the legal process to validate a last will and testament following an individual’s death and the formal appointment of the personal representative.

The probate process generally is not a process that takes a tremendous amount of time, but it depends on the complexity of the situation and estate. Florida offers a shortened probate process called summary administration for small estates ($75,000 or less). Because of the homestead exemption, the primary home doesn’t count toward the size of the estate, nor do assets passing with a beneficiary designation (such as retirement accounts).

REVOCABLE LIVING TRUST

A revocable living trust (sometimes referred to as simply a “revocable trust” or a “living trust”) is an estate planning document that serves to both manage your assets during your lifetime and act as a testamentary substitute when you pass away. This document is called a revocable trust because you have the right to change its terms or even revoke the trust altogether – just like any other estate planning document. It is only at your passing that the trust becomes unamendable or irrevocable.

At your passing, your revocable living trust will work in tandem with your last will and testament to effectuate your wealth transfer goals.

One of the benefits of a revocable trust is that assets held inside the trust prior to your passing are considered a non-probate asset, meaning that a personal representative does not need to be appointed by a probate court before your fiduciary has access to cash and other assets within your revocable living trust.

DURABLE POWER OF ATTORNEY

With a durable power of attorney, you give one or more loved ones or trusted individuals the right to act on your behalf while you are alive. This allows them to manage your investment and bank accounts, pay your bills, file an income tax return and even cancel a subscription service. This is an immense responsibility, so the person you choose should be someone you fully trust.

In the absence of a durable power of attorney, no one (including spouses) has the right to make financial and other non-health care decisions on your behalf if you were to become incapacitated.

Some people prefer a “springing” power of attorney that only becomes effective under certain conditions (most commonly, upon potential incapacity). However, Florida doesn’t allow springing powers of attorney. They become effective immediately after signing.

HEALTH CARE DIRECTIVE AND HIPAA RELEASE

What if you suffered a severe injury or illness and cannot make health care decisions for yourself, even if just for a temporary period of time? Who would you like to make important decisions for you?

In Florida, you can designate a health care surrogate  to make medical decisions on your behalf if you’re not able to give informed consent to the medical provider or hospital staff yourself. You can also designate an alternate surrogate in case your surrogate is unwilling or unable to provide direction.

To do so, you’ll need to sign a health care directive (in other states, it’s sometimes called a medical power of attorney) in the presence of two witnesses. (If you are physically unable to sign, you can direct someone to sign on your behalf – again, in the presence of witnesses). The person you’re designating as your surrogate can’t be a witness, and at least one witness can’t be your spouse or blood relative.

Florida also allows you to name a separate surrogate for potential mental health treatment decisions if certain procedures are followed. Without that designation, your health care surrogate will also be allowed to make mental health decisions unless your directive specifically states otherwise.

It is also very important that your health care power of attorney includes a HIPAA authorization, allowing your health care surrogate to receive your health care information. Health care information includes knowing whether you are in an emergency room or other health care facility.

For individuals without a health care directive, Florida law dictates who will make medical decisions on that person’s behalf. That’s why all adults 18 and older need a health care directive.

ADVANCE DIRECTIVE

An advance directive (which is called a living will in other states) is another type of health care directive that allows you to leave instructions for your end-of-life care if you’re no longer able to communicate your wishes. Amng other things, you can direct health care providers to withhold artificial life-prolonging measures (while still providing pain management or other comfort care) if your physicians determine that there is no reasonable chance for recovery.

As with a health care power of attorney, you’ll need to sign your living will in the presence of two witnesses, one of whom is not a spouse or a blood relative.

DISPOSITION OF REMAINS

Florida also allows you to formally appoint a loved one to be the agent responsible for your final arrangements. This document also allows you to state burial or cremation preferences and outline funeral preferences.

Having this document in place can be especially helpful for unmarried couples.

FLORIDA ESTATE PLANNING CHECKLIST

As you set up your estate plan, make sure you’ve completed these steps:

• Inventory your assets, including financial accounts, real estate, personal property and digital assets. Think about how you want to divide them up.
• Confirm the beneficiary designations you have on file for accounts and policies that allow them.
• Work with an estate attorney familiar with Florida law to make sure your plan is complete and aligned with your wishes.
• Work with a financial advisor to integrate your plan with the other components of your financial life, including tax strategies.
• Review your plan every 2–3 years or after you’ve experienced a life event.

AVOIDING COMMON MISTAKES IN FLORIDA ESTATE PLANNING

USING A SPRINGING POA

By Florida law, any power of attorney must be a durable power of attorney that takes effect immediately once signed. Springing powers of attorney are no longer allowed. However, any that were in effect before the law change in 2011 are still valid.

If you moved to Florida from another state and you have a springing power of attorney, you should be aware that the courts may not recognize it.

FAILING TO TITLE NON-RETIREMENTASSETS INTO THE REVOCABLE LIVING  TRUST

If you set up a revocable living trust, it’s important to ensure that your property is re-titled in the name of the revocable living trust, or it will lose its  post-mortem efficiency. You may also want to change your beneficiaries to the name of the revocable living trust rather than individuals, but the right strategy depends on your situation and the type of asset, and you should consult with an attorney.

Future property should be titled in the revocable living trust’s name as well, and you need to have a “pour-over will” that directs your property into the trust at the time of your death, just to be safe.

OVERLOOKING DIGITAL ASSETS

We’d be remiss if we didn’t include digital assets in our estate planning guide as we live in such a technology-driven world. Between smartphones and the cloud, we practically have everything we need at our fingertips. Many people don’t realize that there’s more to digital assets than just online banking and retirement accounts. They can also include your social media and email accounts, and anything with a username and password.

It is important to designate individuals that can access these accounts upon your passing. If possible, also provide current login information and any PINs or answers to security questions. While these are good tools for cybersecurity, they become a hindrance to those who actually need to access your accounts.

FAILING TO NAME SUCCESSORS

The personal representative, guardian for minor children, powers of attorney, trustees and health care surrogates you name could die or otherwise be unable or unwilling to act in these capacities in the future. By naming one or more successors when setting them up, you can prepare against that possibility.

WHY WORK WITH A FINANCIAL ADVISOR ON YOUR FLORIDA ESTATE PLAN

An estate plan is an important part of your overall financial picture, but it’s just one of many pieces. A financial advisor who’s familiar with Florida rules can coordinate with your estate attorney, help integrate retirement and tax planning into your estate plan, and make sure your full picture is working together.

FREQUENTLY ASKED QUESTIONS ABOUT FLORIDA ESTATE PLANNING

WHAT HAPPENS IF I DIE WITHOUT A WILL IN FLORIDA?

In the absence of a will, you’ll be considered to have died “intestate” and Florida law will determine who inherits your assets. If you have specific named beneficiaries on accounts – for example, 401ks or life insurance policies – those will pass to the people you named; they won’t go through the process below.

1. Assets (except the homestead property) first pass to your surviving spouse. However, if you had children outside of that marriage, the estate will be divided between your spouse and children.
2. Next in line are any children.
3. If you had no spouse or children, your parents would inherit your estate.
4. If none of these apply, your siblings would inherit your estate.
5. If there are no family members who fall into these categories, your assets pass down your family tree. 

DO I NEED A REVOCABLE LIVING TRUST TO AVOID PROBATE IN FLORIDA?

A revocable living trust can help your estate avoid probate. But all non-retirement assets must be titled in the name of the revocable living trust during your lifetime. Consider working with an estate planning attorney to ensure you’ve set up everything correctly.

Without a revocable living trust, your personal representative has no authority to act without a probate proceeding, with a few exceptions: property that is titled as tenants by the entirety or joint owners with rights of survivorship, and beneficiaries that are on file for retirement accounts and insurance policies, for example.

IS THERE AN ESTATE OR INHERITANCE TAX IN FLORIDA?

No, Florida has no estate or inheritance tax. However, you may still be subject to federal estate tax.

WHAT HAPPENS IF I MOVE OUT OF STATE?

What happens to your estate is determined by the state law where you live. If you move out of Florida, you should consult an estate planning attorney in your new location to make sure your plan is still valid and complete.

GETTING STARTED WITH YOUR FLORIDA ESTATE PLAN

Estate planning in Florida involves understanding state-specific laws and regulations that can impact how your assets are managed and distributed. Unlike some states, Florida doesn’t have an estate or inheritance tax, which can be beneficial. And the homestead exemption provides significant protection for primary residences in certain circumstances. Additionally, Florida doesn’t recognize springing powers of attorney, meaning any power of attorney must be effective immediately.

It's essential to work with a financial advisor and estate planning attorney familiar with Florida laws to help ensure your estate plan is comprehensive and compliant. Planning now can give you peace of mind that your wishes will be followed and your loved ones will be taken care of.