Homestead Protection—One of the Many Benefits of Living in Florida

Posted by on Aug 7, 2017 in estate planning, Real Estate |

Summer is about to end.  Classes are about to start and stores are crowded with parents trying to get the best deals on school supplies.  Florida has many benefits, like inexpensive college tuition for in-state residents, warm weather all year round and access to theme parks, like Disney and Universal Studios.  However, there is also another benefit of living in Florida—the homestead protection provided by the Florida Constitution.

The overall purpose of the homestead exemption is to protect the family by protecting a family’s shelter from being attacked by creditors. In this regard, the Florida Constitution protects homesteads in three specific ways: (1) it provides a homestead with an exemption from taxes; (2) it protects homesteads from forced sale by creditors; and (3) it delineates the restrictions a homestead owner faces when attempting to alienate or devise the homestead property. Also, homestead prevents loved ones from having to go through the lengthy and expensive process of probate because the homestead is passed directly to the designated heir.

Be that as it may, homestead creates interesting circumstances with regards to probate. When a property owner dies, there are restrictions on how the property can be transferred to the family.

Who gets the property will often rely on who survives the decedent. If a spouse or minor child survives the owner of a homestead property, the homestead may not be devised.  If there is no minor child, the surviving spouse gets the property. However, the property owner may not give less than a fee simple interest to the surviving spouse.  If a spouse and lineal descendants survive the decedent, the surviving spouse takes a life estate in the homestead with a vested remainder to the lineal descendants in being at the time of the decedent’s death, per stirpes.

Ultimately, homestead laws trump any clauses in a will or trust.  If a spouse or lineal descendant survives a decedent, the descendant cannot devise the property to anyone in a will or trust.  Therefore, it is important to understand how homestead property could affect your overall estate plan.

For more information on Estate Planning, Asset Protection, and Probate administration visit our website at www.wfplaw.com

It’s A Wild World. Are Your Protected?

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The Benefits of Holding Rental Property in an LLC

Posted by on Aug 4, 2017 in asset protection, Limited Liability Company |

It is that time of year in which people are just realizing that their leases are expiring and are searching for a new place with the best rate, location, and amenities available.  This means for you, rental property owners, that your doors are about to be flooded with people looking for the best deal they can find.  However, before you accept any new leases, it is very important to make sure that all your assets are protected.

Asset protection is simply risk management planning that tries to prevent a lawsuit before it happens.  A comprehensive asset protection plan will be structured with the thought in mind that someday the plan may be laid out in front of a judge or a creditor who wants to attack the plan.  Even though there is no perfect strategy that will protect all of your assets all the time, there are ways, as a rental property owner, you can protect yourself from future liability, like creating your business as a limited liability company (LLC).

An LLC limits personal vulnerability to potential lawsuits related to the property. For example, if a lessee has a party and someone happens to get hurt, it would prevent the victim from going after your personal assets.

Also, as the owner of the rental property, you can enjoy the benefits of pass-through taxation. Since the IRS classifies a real estate holding company with one owner as they would a sole proprietorship.  The LLC is disregarded for federal tax purposes and income and capital gains from the LLC pass through directly to you.  Therefore, you are able to avoid double taxation, while still enjoying the protections offered by the LLC.  However, if you happen to have several owners, you not only get the benefit of pass-through taxation, but you also enjoy more flexibility than either a corporation or a partnership because you can have owners or third-party managers manage your rental property.

Essentially, as a property owner, it is important to protect yourself from future lawsuits and potential creditors.  Therefore, by setting up your business as an LLC, not only do you avoid personal liability, but you also get some extra tax benefits.

For more information on Estate Planning, Asset Protection, and Probate administration visit our website at www.wfplaw.com

It’s A Wild World. Are Your Protected?

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