GIVING

Saint Peter, whom legend says is the "Director of Admissions" at Heaven's Golden Gate, wrote in his first letter, "Be…on the alert. Your adversary Satan prowls about like a roaring lion, seeking someone to devour."

I'm not suggesting that any "benevolent" state or federal government is like Satan, never. But they do have one thing in common: we want to keep both (and what they extract from us) away from our life or death's door as much as we are able.

Unless you are a "rare breed", as I am - a native Florida resident (whom some think should be placed in cages with other strange and rare things) - your former state of residence MAY have or will set a tax trap, which awaits your death's door.

Let me explain.

Congress, many decades ago, in a move to gain more taxes, greatly broadened the Federal Death Tax law. (While there are different modes of death tax whether imposed on the deceased or the heir, the result is the same). Since a few states, such as Florida, by Constitution prohibited both a personal income or death tax, the Federal law, to put all states on equal footing, said that states could elect to receive back as a credit (not as a separate state death tax) a portion of the Federal Tax paid.

As a consequence, many states shut down their separate State death taxes and merely accepted the "credit" allowed them. And Florida and the other states prohibiting state death tax fell in line. Why not accept this free gift of tax? What the heck. Didn't cost the family any more. Some states, notably New York and Massachusetts kept their separate taxes, over laying their tax on the "credit."

But once the Tax Lion tastes tax blood, the hunger can become insatiable.

How many times have you seen any newly created government program, just disappear? I discovered decades ago that the New York State Tax Department maintained agents in Florida for the purpose of searching out "former residents" who died in Florida. Try leaving a bank account in a New York bank and discover the multi-page form giving your moment-to-moment life's travel history before the account is withdrawn.

In 2001, Congress under the guise of incrementally eliminating the death tax to "zero" in 2010 (only to have it re-appear, like a somewhat milder form of cancer in 2011). At the same time, over a period of four years, ending in 2005 all State "credit" death tax was eliminated. Now, the President wants Congress to make the repeal permanent, but one should not hold their breath. Death will likely occur long before that happens.

Why all the concern about this?

Because the U.S. Supreme Court many years ago determined that a person or an entity, may have a "domicile" for purposes of taxation in more than one state. And that is determined by the person's intention and state contacts. Again since as legend says "dead men tell no tales," intention in the case of death, is determined by the record we leave behind. A part of that intention may be determined by both our business and personal contacts with the former and new state of residence.

So, if you now "claim" Florida as your residence, filing for homestead exemption (especially because of the "Save Our Homes" provision limiting the increase in your annual assessment to the lesser of 3 percent or the consumer price index), filing solely in Florida as a registered voter, re-writing your will stating Florida residence, securing only Florida driver's licenses, filing a sworn declaration of domicile, and filing your federal tax return as a Florida resident, as well as the Florida intangible tax return - are a wonderful start.

But you need to search deeper. What kind of business and personal contacts have you retained in your former state? Even a statement in your obituary that "His home was in Ohio" could make a difference. I had a Florida resident client many years ago, a "former" resident of Michigan, who spent his summers in Michigan, and who one summer filed his application for a fishing license and checked the "resident" box to save an additional $3. When he died Michigan claimed he "claimed" Michigan residence. True story.

What to do? If you have not done so since 2005 (when the State death tax credit was dissolved), you may want to contact your local tax and legal advisors and if necessary your former state advisors, as each of the 50 states will have their own tax and residence laws, as to how this Federal Tax Law change may affect you specifically, and how you might "shore up" your Florida Residence.

Of course one of the best ways to avoid this tax dilemma, either partially or fully, is to consider a gift to begin or enhance a specific cause. For more information and advice on many "tax-wise" advantageous ways of giving through the Foundation, contact the Foundation office at 274-5900.

John W. Sheppard, a long-time member of the board of trustees of the Southwest Florida Community Foundation, is a retired estate planning attorney and author of several books on the subject of estate planning and planned giving. He can be reached through the Foundation office.