Note from Michele: This is a guest post by my colleague, Maura S. Curran of The Curran Law Firm, P.A. in Jupiter, Florida (www.TheCurranLawFirm.com), which originally appeared on her blog here. This issue is an important one for those of you who own or are thinking of buying a vacation home outside of Canada.
By Maura S. Curran
Are you a Canadian and own real property south of the border? Far south, say in Florida?
If you are like many Canadians, you own a second home in the US, and in particular, the Sunshine State, Florida. Why not? Florida has beautiful winters – no need for parkas and galoshes here, nope, just sunscreen and sunglasses. But do you understand what happens if you die leaving property in the US? What about if you become incapacitated?
There are many questions to consider if you become incapacitated or die while owning real property in Florida when you are not an American citizen. Will there be US federal estate taxes? Do you have to probate? Who is allowed to be the personal representative? Does my estate need an attorney?
Florida law requires anyone dying and owning Florida real property in their own name to file a probate in a Florida Circuit Court so the property can legally transfer to your beneficiary. The probate process can take several months, cost thousands of dollars in fees and costs, and is public record plus it can create unnecessary stress on everyone involved with an international probate.
But did you know that probate is voluntary? You can legally avoid the cost and time and public nature associated with probate. One common way is to have a revocable living trust own your property. When a trust owns the property you avoid probate and your beneficiaries can avoid the hassle, delays, costs and stress of having not only a probate, but an international probate.
Do not be confused however, a trust alone will not avoid federal US estate taxes. Depending on the size of your assets, your estate may be subject to federal estate taxes. Currently there are no federal estate taxes, however, starting in 2011 depending on the size of your estate, your estate could be taxed at 55% ! So if you own property exceeding $1 million you need advanced estate planning in order to minimize, if not avoid, federal estate taxes.
Want yet another reason to have the property held in a trust? Should you become incapacitated, there is no need to have a Florida probate court approve the guardianship of the owner – another time consuming, stressful court procedure. Rather, if you are the Trustee, the successor trustee will assume your duties – much quicker and easier process to change a trustee than to get court approval for a guardianship.
If you are a Canadian citizen and own or are considering purchasing property in Florida, call my office and ask to have a consultation regarding your Florida home or visit my online virtual office at www.AbacoaVLO.com – serving all of Florida!