06 Mar Tips For Wisconsin Snowbirds Before Taking Flight to Florida
Our Tips For Advising Florida Snowbirds
With winter upon us, many Wisconsin residents have already escaped to Florida. As attorneys, we must be careful when advising these clients. With proper planning, it is often possible to both reduce the client’s tax exposure, while safeguarding their assets from creditors. However, with poor planning, the results can catch clients off-guard. Therefore, this is an important subject that must be treated with care. In this article, we present our five best tips for advising Florida snowbirds.
Even though our article is focused on Florida, we believe that that the lessons that we have learned in Florida are applicable to the other popular winter destinations.
Tip #1: Work with an attorney who is licensed in the snowbird’s winter destination.
The laws in the most popular destinations for snowbirds are surprisingly complex. In addition, the laws are often different in popular snowbird destinations. One must be especially careful if the documents are being executed in the snowbird’s winter destination.
For example, Florida does not allow agents appointed under a power of attorney instrument to convey homestead property unless that power is specifically listed in the power of attorney document. Even if the document gives the agent broad and extensive powers, the agent will not be able to convey the property unless the power to convey the homestead property is explicitly stated in the instrument. By working with local counsel, they will protect you from this type of error.
In this article, we will follow our own advice by only providing examples from the state of Florida. We are competent to advise clients in Florida. The same cannot be said for the other common snowbird jurisdictions.
Tip #2: Review the client’s insurance policies.
A common mistake for snowbirds is for them to think that their insurance policies will automatically travel with them. For many of them, they will have proper insurance, but this assumption should be verified.
For most clients, their primary liability exposure will come from driving their car. This is especially true in South Florida, which is one of the most litigious areas of the country. Zebra, a popular online insurance search program, released its 2019 rankings for most expensive states to purchase automobile insurance. Florida was ranked fourth in the nation. Florida also had three cities in the top ten: Hialeah (3rd), Miami (4th), and Tampa (6th).
Clients often fail to register their vehicles in Florida. Under Florida law, a car must be registered and have proper Florida auto insurance within 90 days of the car’s arrivals. Drivers who fail to register their vehicle and purchase sufficient insurance face draconian fines and penalties. Furthermore, there is a material risk that their Wisconsin auto insurance policy will not be effective if the car is deemed to be primarily based in Florida. Therefore, it is essential to both register the car and make sure that the driver has adequate insurance if the car will be based in Florida.
Unfortunately, the snowbird’s other insurance policies must be evaluated too. The client’s health-care insurance should be evaluated. Special care must also be taken with the snowbird’s property insurance. Insurance companies often refuse to insure unoccupied properties. Therefore, the lawyer should evaluate the policies in both locations to make sure that they will work as planned. If there is exposure, the client should be told at the earliest possible time, so that the client can take appropriate action.
Tip #3: Find out how long your client will be staying in Florida.
If your client is spending greater than six months out of the year in Florida, it may be advantageous for your client to change their domicile to Florida. Florida does not have an individual income tax. Therefore, the income tax savings can be substantial.
A person’s “domicile” is their true, fixed and permanent home where they intend to remain permanently and indefinitely. A person can have only one true domicile.
There is no clean test for determining an individual’s domicile. Instead the courts review factors such as:
- How many days did the client spend in Florida?
- Does the client have a Florida driver’s license?
- Did the client file a Declaration of Domicile with the Clerk of Courts in the Florida County where they reside?
- Did the client register to vote in Florida?
- Are all of the client’s vehicles registered in Florida?
- Does the client’s pet(s) reside in Florida?
If you client plans on spending over six months Florida, they should be advised of the advantages of changing their domicile to Florida. If the client wants to become a Florida resident, then they should make sure that the answers to the above questions are “yes?”
Tip #4: Does the client own homestead property?
If the client owns property in Florida, it is important to determine if it is homestead property. If it is homestead property, the property will be subject to many advantages along with some disadvantages.
There are three primary advantages to owning homestead property.
- Property tax increases may only increase by the consumer price index or 3%, whichever is lower.
- The first $25,000 of assessed value of the Florida homestead is exempt from all property taxes. An additional reduction of up to $25,000 in assessment also will be allowed if the property is worth at least $50,000; however, the second $25,000 exemption will not apply to school taxes.
- With some exceptions, the property cannot be sold by a judgment creditor to pay off a debt.
The tax advantages are very valuable to clients, because they are able to plan. Property taxes are a major expense for snowbirds who often are living on a fixed income. Therefore, it is very reassuring for them to know that they know exactly how much their property taxes will cost each year.
The asset protection advantages are also very comforting, although we have some concerns that they may create a false sense of securities for some clients.
Under Florida law, the Florida resident’s primary home is considered their homestead property. The Florida resident is allowed unlimited protection for ½ of an acre if living within a municipality or 160 acres if living outside of an official municipality. The Florida Constitution provides its citizens unlimited liability protection for their homestead property. This means that the judgment creditor will be unable to force the sale of the home to pay off the money judgment. 
At a later date, we plan on writing an article on the various ways that homestead protection can be pierced in Florida. While it is a very powerful asset protection tool, it can be pierced in specific situations. For example, the Full Faith and Credit Clause often rears its head in Florida bankruptcy cases. The bankruptcy courts do not honor the homestead protections offered by the Florida Constitution unless the homeowner has lived in the property for at least 40 months. Therefore, buying a home in Florida after the client has been sued may not protect the home from seizure. Other common exceptions to the general rule are tax liens, pre-existing liens, mortgages, or mechanic’s liens.
The primary disadvantage of homestead property is that it can have cumbersome restrictions unless a spouse waives their homestead rights. For example, with certain exceptions, homestead property cannot be transferred unless both spouses agree to the transfer. In addition, the home may not be mortgaged unless both spouses sign off on the transaction. If there are minor children, they will inherit the home. If there are no surviving children, but there is a spouse, the spouse will inherit the home. These rules apply regardless of whether both spouses are listed as the owners of the homestead property.
For clients who on their first marriage, these restrictions are generally not a problem. However, if the client has had multiple marriages and there are step-children involved, the attorney must be especially careful to explain the restrictions that will be on the homestead property.
If the client is uncomfortable with the default homestead rules, the attorney should discuss the possibility of asking the other spouse to waive their homestead rights in the property. Fortunately, clients may elect to waive their homestead rights. The most common mechanism for waiving a spouse right to the homestead property is to ask them to sign a prenuptial or post-nuptial agreement. In 2018, Florida passed a law allowing spouses to waive their right to the home via deed as well. In either case, clients should be made aware of the fact that their homestead property may not pass according to the terms of their Last Will and Testament.
Tip 5: Review the client’s estate on a regular basis or if the client has a major life change.
The only guarantee in estate planning that we can offer our clients is that the future will be different than the past. State laws may change. The tax laws may change. Their client’s life will change. In simple terms, there is a high likelihood that the estate plan will need to be altered in the future.
To account for these changes, estate plans should be reviewed at least every five years. For high-risk clients or clients with low risk tolerances, their estate plans should be reviewed annually.
 Fla. Stat. Ann. § 709.2201 (West)
 Fla. Stat. Ann. § 324.022 (West)
 Fla. Const. art. X, § 4
 11 U.S.C.A. § 522(p) (West)