Florida recently surpassed New York as the third most populous state in the country behind California and Texas. Everyone is familiar with the term “snowbird” and many Michigan estate planning attorneys have clients who live in Florida for at least part of the year. However, the increasing number of people declaring Florida as their permanent residence presents traps for the unwary due to Florida’s treatment of the elective share for the surviving spouse.
The elective share is expressly for the purpose of caring for the surviving spouse (male or female) by preventing that spouse from being disinherited. However, it can have drastic consequences. For example, assume that Michigan resident Wayne Wolverine creates an estate plan consisting of a pour over will and revocable living trust. Wayne and his second wife, Sally Spartan, then move to Florida and declare Florida as their domicile. Wayne passes away after two years in Florida without ever updating his estate planning documents. Approximately six months prior to Wayne’s death, he gifted $50,000 each to each of his two adult children. Both children reside in Michigan and are not descendants of Sally.
Following Wayne’s death, Sally notifies the personal representative that she intends to take her elective share of his estate. Under the Florida elective share scheme, the children could be liable to Sally if her elective estate is not sufficient due to the gifts they received. This problem could have been avoided had Wayne updated his documents after he changed his domicile to Florida by specifying how the elective share would be paid or by having Sally sign a waiver.
Florida’s broad elective share for the surviving spouse can cause unintended consequences following a person’s death. Individuals who move to Florida should update their estate planning documents to meet their goals while minimizing the impact of Florida’s elective share on beneficiaries. This would be especially crucial in second-marriage situations where the surviving spouse might be more likely to pursue beneficiaries for contribution
