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A publication by Gunster’s Private Wealth Services team, offering a timely roundup of tips, information, and Florida news for our out-of-state friends.

Make sure that your documents comply with Florida’s new notarization law

Effective as of January 1st of this year, Florida’s notary laws were changed to allow for remote (online) notarization. Essentially this means that if certain criteria are met, the notary is no longer required to physically (in person) witness the signer execute the instrument requiring notarization, but rather notarization can be accomplished through a video feed and recording. However, not all notaries are qualified to handle such remote notarizations. To qualify as a remote notary, a notary must complete a two-hour training course, post a $25,000 bond, and obtain $25,000 of errors and omissions insurance coverage. Additionally, there are multiple technology requirements for notarizing an instrument via remote connection.

As a result of this expansion of the notarization rules, there are mandatory changes to the notary block to be contained on instruments and affidavits notarized pursuant to Florida law (and such change is required to be reflected on all forms, not just forms that are electronically notarized).  Even if you will not be using remote notarization, the relevant portion of the notary block should read as follows (the bolded section is the new required language):

The foregoing instrument was acknowledged before me, by means
of ☐ physical presence or ☐ online notarization, this ____ day of
_______, __(year), by __________ [ ] who is personally known
to me or [ ] who has produced ___________ as
identification…….

or:

Sworn to (or affirmed) and subscribed before me by means of ☐
physical presence or ☐ online notarization, this ____ day of
_______, __(year), by __________ [ ] who is personally known
to me or [ ] who has produced ___________ as identification
……

All other portions of the notarization block remain in effect.

The new law applies to all documents executed on or after January 1, 2020.

March 1 deadline for Florida homestead ad valorem tax exemption. 

The Florida homestead exemption entitles the owner to (1) a $25,000 reduction in the assessed value of the property ($50,000 if the assessed value of the property exceeds $50,000), and (2) limits yearly assessment increases to the lesser of the Cost of Living Index or 3%. The homestead exemption, along with other exemptions, can amount to a substantial savings on a client’s real estate tax bill. Please be aware that the homestead exemption must be applied for with the county’s property appraiser’s office by March 1, 2020 to be effective for this year (though the applicant must have owned and used the property as his or her homestead as of January 1, 2020). In many instances, a client can apply online or download and file the form.

Is your family suited for a Florida situs trust?

A fairly recent U.S. Supreme Court decision may benefit Florida residents who wish to establish trusts for their beneficiaries who live in states with high state income tax rates. In Kaestner v. Comm. (No. 18-457 (U.S. Jun. 21, 2019)), a New York situs trust was created by a New York resident with a New York Trustee for the benefit of each of his children. One child later became a North Carolina resident. The State of North Carolina then assessed state income tax on the undistributed income of the Trust. The Trust provided that the beneficiary had no specific right to income or principal; distributions were wholly discretionary with the Trustee, and the Trustee had made no distributions to the beneficiaries.

In holding for the New York situs trust, the U.S. Supreme Court held that there must be a rational and definite link or connection between the “person” being taxed and the state attempting to tax the undistributed income. Because the Kaestner Trust beneficiary had no right to the income of the New York Trust and could not compel distribution, no such connection existed that would permit North Carolina to tax the Trust’s undistributed income.

Following the Kaestner case, a Florida resident could establish a Florida-situs trust with a Florida resident trustee for a child that lives in a high income tax state. The trustee would have sole discretion to distribute income or principal. Although actual distributions of income to the beneficiary would be subject to state income tax, undistributed trust income would not be so taxed.

This arrangement would permit a Florida resident to gift all or part of his/her $11,580,00 lifetime exemption to such a trust, and its income could be accumulated without incurring income tax in the beneficiary’s state of residence. The trust would incur federal income tax on its accumulated income but would avoid a state income tax until the distributions were actually made or until the beneficiary changes state of residence.

 

If you have any questions about these topics, please contact us directly.

About us

For over 90 years, Gunster’s top-ranking Private Wealth Services team has served the needs of high net worth individuals, including business owners, hedge fund managers, family offices and families, to preserve and tax-efficiently transfer wealth to the next generation. Our PWS attorneys also represent individuals and fiduciaries in related high-stake litigation

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