When planning your Florida purchase you want to also plan for the eventuality of a personal disaster, death; or necessary disposition of your home. Plus the obvious Tax implications.
When a property is owned by the deceased alone, the property will be subject to Florida probate. This is a legal process which allows for a property to be transferred to an owner\s beneficiary.
Probate is costly, time consuming and freezes your estate. Probate can cost up to 3 percent of the market value of the property at time of death. And can take between six to 12 months.
How to Avoid Probate
To avoid probate you will need the deed to be in the name of a Cross Border Revocable Living Trust (CBRLT).. This works if you are in the process of buying or if you have already purchased the property.
There are two main steps and here they are.
1/CBRLT. This will be drafted with specific clauses for Canadian residents. The client is the grantor and trusteed. /she has full power and authority to lease, mortgage or sell the property.
2/ A deed transferring the ownership from the client’s name to his new CBRLT is prepared and recorded.
What This Does
1/ Property is exempt form Florida Probate.
2/ Beneficiary whether surviving spouse, children or others, is designated as such in the trust with as many scenarios or provisos as are appropriate in any well thought out estate plan.
3/ Creditors cannot seize the beneficiaries interst in the Florida property or the proceeds if it is sold.
4/ If the beneficiary divorces, the exspouse will have no right to shre in the benficiary’s inheritance.
5/ If the property owner becomes mentally incapacitated, he is replaced by the successor trustee named in the trust . This will avoid Florida guardianship procedures.
6/ No annual filing requirements to the IRS or Canadian tax authorities.
7/No deemed disposition upon transfer of title to the trust
8/ No annual accountant or attorney services required.
9/ U.S. estate tax payable upon death of first spouse deferred by Qualified Domestic Trust (QDOT) in the CBRLT
The above does not constitute legal advise. You will need to consult with your own tax and legal advisers to determine what solutions suit your personal situation.