December 11, 2014

Why Not to Name Kids as a Beneficiary of your IRA

If you have been told, don't worry about your IRA it is protected because Florida has statutory protections for IRAs, you may have misunderstood or been mislead. While Florida does have statutory protection for inherited IRA's, this protection only applies if your beneficiaries are residents of Florida at the time of your death.

Why take a chance with naming individuals as a beneficiary of your IRA. A properly designed trust should be the beneficiary of your IRA to protect the proceeds from the creditors of your beneficiaries at the time of your death.

In June of this year, the US Supreme Court in Clark V Rameker stated that children or other "non-spouse" individuals who inherit are at risk of loss to their creditors. This was not a close call, it was a 9-0 decision and clarifies that an inherited IRA is not protected from the creditors of its owners.

While a spouse can be named, the spouse has a unique option that other beneficiaries do not have. The spouse can do a rollover IRA. This protection does not help one who dies without a spouse or has serious risks if the surviving spouse is in need of long-term care.

While in the past, most financial professionals would object to naming a trust as a beneficiary, you will start to see them realize the benefit as they become aware of the new risks to the beneficiaries that they did not foresee. They also did not understand that it is possible to create a trust where the stretch out provisions are not lost.

To maintain the stretch out provisions in an inherited IRA where a trust is a beneficiary, the trust must be a qualified beneficiary. For a trust to be a qualified pass thru beneficiary of an IRA, it must meet 4 criteria:

  1. The trust must be valid under state law;
  2. The trust must have identifiable "human" beneficiaries;
  3. The Trust must be irrevocable after the death of the settlor; and
  4. a copy of the plan document must be provided to the plan administrator
It is important to comply with these rules when naming a trust as a beneficiary of an IRA or other retirement account.

If a spouse was to maintain the decedent's IRA status and draw out funds over the life expectancy of the decedent, the IRA would not be protected as a Roll over IRA or a new IRA.

If you would like to discuss how to properly name a trust a beneficary of your IRA, please contact our Jacksonville estate planning lawyers.

November 17, 2014

Estate Planning and Florida Homestead Protections

In Florida, the primary residence is often protected by the Florida constitutional homestead protections.

While in many other states, a persons homestead is not protected from creditors and can be lost to claims for Medicaid reimbursement, this is not the case in Florida. The only creditors that can make a claim against the home are those that do something with the home. These may include a roofer or the bank which financed the home.

If you or a spouse needs nursing home case, selling the home can place that asset or the money received from the sale at risk to creditors as well as Medicaid eligibility. There are several methods of avoiding probate on your homestead. Choosing the right method is not an easy decision without knowing your facts and circumstances.

Many people make the mistake of adding another individual through a deed. This mistake can cause tax problems, subject the home to creditors, cause the loss of part or all of the homestead tax credits, and create an ineligibility period for Medicaid.

Every person who owns and resides on real property in Florida on January 1 and makes the property his or her permanent residence is eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption up to $25,000, applies to the assessed value between $50,000 and $75,000 and only to non-school taxes

To apply for a homestead tax exemption, complete this Form.

In some situations, a ladybird deed or enhanced life estate deed may be a valid solution while in others a trust may offer a less expensive route and offer better protection for the beneficiaries.

An improper transfer or change in ownership can have many adverse effects including violating the 5 year Lookback for transfers on Medicaid.

To find out which option makes the most sense for your family, you should contact a Florida estate planning lawyer who is familiar with elder law issues and discuss your circumstances in detail.

November 12, 2014

What is the iPug™ Trust Your Family's New Best Friend

We often get asked about the iPug™ Trust and how it can be so different than a traditional revocable trust or a standard irrevocable trust. The iPug™ takes the best parts of an irrevocable trust and mixes them with the best parts of a revocable trust to create a new type of irrevocable trust where you are in control and can make changes to the beneficiaries and management of the trust just like you can with a revocable trust.

Why Do People Love iPug™?
Because iPug™ Protects You and Your Family From:

  • Lawsuits
  • Nursing Homes
  • Those that want to take away what you worked hard for.
  • Children's indiscretions, their spouses and divorce.

An iPug™ Keeps You In Control By:

  • Allowing you to control your assets until death.
  • Allowing you to retain some, all, or none of thel income from your assets.
  • Permitting you use of your assets during life.
  • Ensuring you are able to qualify for Medicaid in the shortest period of time possible (often less than three years).
  • Favorable income and estate tax treatment.
Asset Protection Planning includes many complex laws, including, trust law, Medicaid law, probate law and contract law. If you have been using a traditional trust or will to protect from probate, it may be time to upgrade your planning to include asset protection. An iPug™ trust can be used with your current estate plan with some minor changes to your will and trust documents.

November 10, 2014

Estate Planning for Out-of-State Property

If you live in Florida and own property in another state an ancillary administration will be necessary upon the death of the owner(s) of that property. This special probate administration will be in addition to the administration you have where you lived. This is required because real estate or real property is treated differently than personal property.

There are several ways to avoid the additional administration:

  1. The real estate could be owned in a business entity. This converts the ownership from one of the real estate to one of a personal property interest in the stock or membership of the business entity.

  2. The real estate could be owned in a trust. Because the trust survives you, the trust will distribute the property according to the terms of the trust. The trust can also be used for other property and may even enable you to avoid the probate of your entire estate.

  3. The real estate could be retitled using a ladybird or enhanced life estate deed. This special type of deed, available in some states, is very similar to a deed with a beneficiary designation.

Florida's statutory probate fees apply for an ancillary administration like other forms of probate in Florida. The legal fees start at $1500 and are typically 3% or less for the first million dollars of value. If your property is located in another state, the fees may not be as reasonable as they are in Florida.

We would be happy to discuss your specific situation and help you determine if a business entity, trust, or enhanced life estate deed could benefit your family and help to avoid the costs and delays invovled with probate. Note: some methods of avoiding probate can protect assets from creditors of your and your estate.

October 29, 2014

Revocable Trusts and Asset Protection

Many times we get questions from clients asking if their revocable trust provides asset protection from creditors. The answer to this is the typical legal answer "It Depends". That is it depends on who owes the money. In Florida a revocable trust can provide some limited protection against the creditors of your beneficiaries through a spendthrift clause, but it will not provide protection from the creditors of the person who creates the trust. Upon your death, the assets in your revocable trust are available to your creditors.

There is a new type of irrevocable trust that is similar to a revocable trust in terms of management, control, and no negative tax effects. This special irrevocable trust is called an IPUG and can be structured to provide asset protection for the items placed in the trust.

An IPUG can be designed to protect an entire asset, the principal, or the income from the asset. The most common design is to protect the entire assets. If you are concerned about protecting your assets from future creditors and the creditors of your children, an IPUG may be the right choice for you.

More articles on what an IPUG is and the benefits of using an IPUG trust.

October 28, 2014

Florida Probate Intake form

Many of our clients have asked us to put our Florida Probate Intake form online so that they can easily download it. You can download the Florida Probate Intake form with the following link: Probate Intake Form.pdf

September 30, 2014

4th DCA and Charging Order Protection for Florida LLC

In Florida, a multi member LLC, has asset protection characteristics. Prior to 2011, Florida law was not clear on whether a charging order was the exclusive remedy for a creditor of a member of a multi member LLC. Assets in a Florida multi member LLC are protected from the reach of the member's creditors so that the debts of one member do not cause harm to the other members. Once a creditor receives a judgement, they can apply for a charging order and stand in line to receive distributions that are made to that member. The problem with this is that a charging order also subjects the creditor to the tax gains that a member is allocated. For this reason, it is difficult to find a lawyer who will take a case on a contingency basis against a multi member LLC. Even if a creditor is successful, the potential downside from the tax liability is huge and can be painful.

In Young v. Levy, the 4th DCA ruled that the trial court erred in entering a writ of garnishment upon the member's interest in a multi member limited liability company because as of 2011 the charging order is the exclusive remedy that a creditor of a member of a Florida multi member LLC can obtain as per Florida Statute 605.433(5).

A Florida multi member LLC is not real asset protection like is available with some of our IPUG Asset Protection Trusts, but the LLC can, in the right circumstances, give you the ability to wait out your creditors and make it expensive for them to try. This, in turn, can give you a great ability to negotiate a favorable settlement.

In many cases, a trust may be a better solution, but that cannot be determined without reviewing your specific circumstances and goals.

It is important to make sure that you are not violating fraudulent transfer or conveyance rules when transferring assets to a Florida multi-member LLC.

September 29, 2014

If a person dies intestate what proof must their children show the court to prove they are the heirs to the estate?

Most Florida probate courts simply accept the information contained in the pleadings that are filed with the court. These pleadings are usually signed "under penalties of perjury".

Some courts (such as Citrus Count and Miami-Dade County) often require an Affidavit of Heirs.pdf to be filed along with the pleadings. There really is no other independent evidence that is required to prove who the beneficiaries are.

When a rightful heir has been omitted from the pleadings, it is important to act timely. Sometimes, there are people who are included that should not receive a ​portion of the estate.

If anyone (most likely one of the heirs) contests the proposed distribution of assets by claiming that one or more of the alleged heirs are not heirs at all, there will be an evidentiary hearing where the disputed heirs will need to prove they are heirs. (A Birth certificate is a good start on this).

Generally, the Affidavit of heirs contains information on the spouse, children of the decedent, the surviving spouse, children of the surviving spouse, parents, siblings, grandparents, aunts, and uncles.

August 25, 2014

Estate Planning: Dealing with your digital death instead of before

Portland company WebCease is making waves in the probate and estate-planning community by helping attorneys and grieving families locate the deceased's digital accounts.

CEO Glenn Williamson aims to be the first to provide this service to the growing market of families and attorneys trying to track down digital accounts. Williamson is banking on the need for this service to continue to grow as people continue to use digital accounts for shopping, social media and traveling.

WebCease searches across different vendors to determine if the deceased person had an account. WebCease then generates a report that outlines the location of the deceased's accounts and includes instructions on how to transfer the account or shut it down. The company will not take any action to use the account, or attempt to login to the account.

For example, if a person has accrued points with Delta Airlines or Marriott Hotels, Webcease will find the account and alert the interested party as to what further steps and documents are needed to use the points. Williamson hopes the company's services will help to save time for grieving families and reduce the possibility of identify theft.

Williamson first came up with the idea while visiting his LinkedIn page. The networking site suggested he connect with two people he knew had passed away. The idea further took root when Williamson's mother died, and he himself had to search for her digital accounts. He documented these steps and realized the immense amount of time and work it took to track down these accounts.

It took him more than 20 hours or searching and researching the various companies' terms of service. He eventually found his mom had 13 online accounts. This search allowed him to find more than 50,000 miles through United Airlines, which could be transferred or donated to another account.

Currently, about 60 percent of the process is automated. The rest of the work required the company to hire a team of researchers to compile the report. Williamson plans to hire six employees throughout the year. So far the company has targeted its service to probate attorneys and other estate-planning professionals. A full report costs $529, but the company is releasing a $99 pared-down version for consumers.

WebCease focuses on companies and websites with monetary value, such as travel sites, shopping websites, and social media sites that could hold sensitive information about the deceased person. Currently WebCease searches through about 70 websites and plans to add more as the company grows.

WebCease is a inventive solution for those who have not included their digital accounts in their estate-planning materials. According to Williamson, only 50 percent of Americans have a will and 90 percent don't include digital assets in the will. For more information on Webcease or including digital information in your estate-planning materials contact the Law Office of David Goldman today at 904-685-1200.

August 18, 2014

Three Documents Every 18-Year-Old Should Sign

As most young adults are about to return to college, most parents do not think about the fact that not that their child is 18 they are an adult in the eyes of the law. Deborah Jacobs has written an article on this in Forbes outlining two documents that are needed. Most professionals would agree that there are actually 3 that are needed.

Now that they are an adult, parents can no longer make health care of the financial decisions for their children without the legal authorization to do so.

If a child or young adult is injured or needs help with a financial matter, a parent cannot speak with doctors or help the child with financial decisions with our a power of attorney. Once a child reaches the age of 18, it is important to prepare financial and medical powers of attorney to that someone can help the child if they are injured or disabled without having to go through the expensive process of setting up a guardianship.

A Durable Power of Attorney is a document that lets someone select an agent who can speak or act for them if they are unable or unwilling to do so.

A Designation of Health Care Surrogate is a similar document that permits a predesignated agent to speak to doctors and make health care related decisions when you are unable to communicate or make decisions.

Along with a Designation of Health Care Surrogate, it is important to sign a HIPAA release so that doctors can talk with your agents and disclose your private information that would be otherwise restricted.

If you have a young adult in your family, you should talk with a Florida Estate Planning Lawyer to prepare these documents to permit the child to appoint a representative to help them if they are ever injured or would like you to have the ability to talk on their behalf.

August 14, 2014

Do I need to go through a lawyer to make a will in Florida or can I use a website like legalzoom?

You can use a website or create your own will in Florida, but we find that some people do not create valid wills, or create wills that do things other than what they want. We only charge $200 for a will so an online will does not save very much considering the risks.

If you want to create your own will be sure that you sign the will at the end and in front of two witnesses. There are benefits to using a self proving affidavit, but one is not required under Florida law. Of course, most lawyers will include a self proving affidavit with the will that they prepare for you.

Many online wills or wills that individuals try to create do not include provisions for things that happen routinely. Some examples are a named person dies simultaneously, shortly after you, or before you. An improperly drafted will could expose your belongings to their creditors in such a case.
Another common example is that a will could leave money to someone who ends up being disqualified for government benefits because of the inheritance.

Your will could leave a large amount of money to a young adult, who is not financially responsible yet.

Your will could leave money to someone who is bankrupt or files for bankruptcy shortly after you die and their inheritance could be lost.

There are many reasons to hire a Florida estate planning lawyer to create a valid will in Florida that deals with your specific circumstances, but also many reasons like the ones mentioned above that most people never consider.

July 29, 2014

Dangers of Relying on Joint Accounts for Estate Planning in Florida

Many people see joint accounts as a cheap and easy way to avoid probate, since joint property passes to the join owner at death, but these accounts can actually be quite risky when it comes to estate planning.

Joint ownership of accounts can be a great way to easily pass assets to another owner at death. Joint ownership is also a great way to plan for an elder person's incapacity, since the joint owner of the account can pay bills and manage investments if the primary owner falls ill or suffers from any other sickness.

There are some potential downsides to joint ownership of an account. The biggest factor to consider is the risk of joint ownership. Joint owners have complete access to the account, and the ability to use the account funds for any purpose. When children are made joint owners of an account, it is often the case they can take money without consulting with the other children.

Another risk involved with joint ownership accounts is that the funds of the account are available to all creditors of all the joint owners of the account. There is one type of joint ownership called tenants by the entireties that does not have this risk for assets in Florida. In addition, joint ownership of an account can also serve as a roadblock to receiving financial aid or health benefits.

Joint ownership of accounts can also cause some heirs to receive more inheritance than others. An example would be if a child is named a joint owner of the account. At the death of the original owner, that child could receive more than the other children. While the original account owner can hope the children will share the funds from the account equally, there is no guarantee the other joint owner will distribute the money equally.

A system based on joint account ownership can also fail if the joint owner passes away before the original owner. If a child is the joint owner and passes, the child's loved ones may not receive the benefit of those funds. For instance, if a mother places an account in the name of her child and herself with rights of survivorship and the child dies before the mother, the assets in that account will go to the mother's heirs and not to the daughter's heirs.

Joint accounts are best used in limited situations. One situation to possibly use a joint ownership account is when a senior has just one child and wants to pass everything to the child. Generally an estate planning trust can provide better protections for the unexpected than joint ownership or a beneficiary designation. There are risks involved with joint ownership and tax issues, so you should consult an estate-planning attorney before relying on joint ownership.

Another way a joint account can be useful is to include children on a person's checking account to help pay monthly bills. This checking account should be a smaller account that does not include the bulk of the original owner's assets.

Instead of taking a risk with joint ownership accounts, we recommend using more reliable estate-planning tools such as durable power of attorney to provide the ability to pay bills or help with financial decisions. These tools can limit the risk of loss by eliminating your agent's creditors from those who can access your funds.

July 28, 2014

Banker Suicides indicate Stress of the Profession.

If your family works in a high stress profession is a good idea to make sure you and your family keep their estate plans up to date.

The unexpected deaths of finance workers in the past few months by suicide around the world have raised concerns about mental health and stress levels of the banking profession.

JP Morgan executive director Julian Knott, 45, killed himself after shooting his wife Alita Knott, 49, to death with a shotgun. Julian worked for JP Morgan until July 2010, before he and his wife moved to the United States. Before the move, Alita had opened a nursery in Southwick, West Sussex and remained the nursery's care provider until 2013.

Police officials in London are currently investigating two suicides of finance workers. William Broeksmit, 58, was a retired risk executive at Deutsche Bank. Broeksmit died on Jan 26, 2014 at his home in west London, where Police found him hanging. Gabriel Magee was a 39-year-old vice president at JP Morgan who died after falling from his firm's 33-story building. A few weeks later, Li Junjie, a 33-year-old banker at JP Morgan in Hong Kong, jumped from his firm's local headquarters as well.

The banking world's aggressive, hard-working culture may be too much for some to handle. Peter Rogers says banks are beginning to realize the scale of the problem. Rodgers believes the banking sector needs to see a number of initiatives to improve staff well being and hopefully a cultural shift will occur within the firms.

Emma Mamo, who leads a workplace initiative in the U.K. said finance does have a long-hours culture. "People can't keep doing long hours; you need perspective and downtime," she warned.

America has also seen a recent trend of banking suicides. Mike Dueker, a 50-year-old chief economist of a US investment bank was found dead recently near the Tacoma Narrows Bridge in Washington State. Richard Talley, 57, was the founder of American Title Services in Colorado. He was found dead earlier this month after allegedly shooting himself with a nail gun.

On January 10, Bank of America issued a statement to employees telling them they should take some weekends off. Christian Meissner, head of global corporate and investment banking at Bank of America said analysts and associates should "take a minimum of four weekend days off per month."

JP Morgan is not a member of the City Mental Health Alliance and has announced any measures to deal with the alarming increase of employee suicides.

Carolyn Wolf, executive partner and director of mental health law practice at Abrams, Fensterman, suggests the trend may be tied to substance abuse. She thinks many young people get hooked on drugs such as Adderall to cope with the long hours. Many take the drug, prescribed for ADHD, to stay focused during a long workday. However, she says the substance abuse can exacerbate underlying mental health issues.

Suicide statistics show that financial professionals have a 39 percent higher likelihood of suicide than professions within the general public. In 2010, more than 38,000 Americans died by suicide, according to the Center for Disease Control.

July 18, 2014

Probate: Is it a good idea to give your heirs their inheritance while you are still alive?

Planning an estate can be a difficult process, but also a rewarding one because it helps to ensure that a person's heirs will be provided for after he or she dies. Many assume they should wait until after death to convey assets to their loved ones, but there are some benefits to giving assets to an heir while still alive.

There are two types of taxes to consider when determining when to give an heir your assets. A decedent who gives his or her assets to someone while still alive may have to pay a gift tax. This is a tax imposed by the federal government on any transfer of property. Property includes intangible items such as cash and stocks, as well as physical items such as vehicles or furniture.

The most important aspect of gift tax to understand is the unified gift and estate tax credit, which allows a person to give property tax free up to $5.34 million throughout his or her life.

According to current tax law, a person is allowed to give a tax-free gift worth up to $14,000 per recipient each year. This $14,000 is not counted against the lifetime exception. Any amount given to one recipient over $14,000 would count against this total. So this means if a person is given $18,000, then $4,000 would be deducted from the lifetime total and reported with a federal gift tax return.

When a person dies, an estate tax is imposed by the federal govern on the decedent's estate after the property transfers to his or her heirs. This tax is calculated by the decedent's "gross estate," which includes all of his or her assets such as real estate, cash, and business interests. The net amount of these calculations are then added to any taxable gifts given by the decedent with a value large enough to deduct from the decedent's unified credit.

These laws mean that giving heirs some inheritance now can actually be a good way of avoiding higher estate taxes. However, this is only beneficial to the gift giver if he or she avoids the gift tax by giving something with a value less than $14,000 per heir. If the gift giver is married, and gives the gift jointly with his or spouse, this gift will avoid the tax if its value is under $28,000.

There are other advantages to giving gifts while alive, which includes the benefit of seeing the heir actually enjoy the gift. This allows the gift giver to also advise the heir on how to use the gift. If the heir misuses the property against the decedent's wishes, he or she can stop giving that person money and adjust the will accordingly.

There are also some good reasons to hold off on giving an heir their inheritance early. The biggest reason is the decedent may need that property or money while they are still alive. The financial climate can change between now and when the estate owner dies. A person who gives too many assets away may find they now need them in order to survive. A final reason to wait to give assets until after death is it allows the heirs to grow and mature first before receiving the gifts. This can ensure the inheritance is both more appreciated and used more wisely.

For more information on estate planning, contact Florida estate planning and probate attorney David Goldman at (904) 685-1200.

July 17, 2014

Can a surviving spouse claim loss of consortium after the other spouse dies?

A recent ruling by the Fifth Florida Appellate Court on Friday allows surviving spouses to claim loss of consortium separately from others claims after the spouse dies.

The surviving spouse Margaret Randall filed the case, Randall v. Walt Disney World Co., in 2006 after her husband Barry Randall allegedly suffered injuries to his head and neck from riding a roller coaster. Besides personal injuries, Ms. Randall also claims loss of consortium. Loss of consortium is the inability of one spouse to have normal martial relations. Judges will sometimes award the surviving spouse damages for his or her loss of intimacy with their spouse.

The issue here was could Mrs. Randall claim loss of consortium after her husband died. Mr. Randall died shortly after the lawsuit was filed, which Mrs. Randall claims was a result from the rollercoaster injury. In Florida, the rules of civil procedure requires that when a party in a lawsuit dies a personal representative of the deceased's estate must be substituted within 90 days. This is a rather harsh rule that must be performed on time or else the deceased party will be dismissed from the lawsuit.

In this case, Mrs. Randall did not make a timely substitution and thus the court dismissed her spouse's personal injury claim. The trial court dismissed Mrs. Randall's loss of consortium claim, reasoning the claim was derivative of the same personal injury claim it had just dismissed. However, the appellate court reversed and allowed the loss of consortium claim to survive.

This court had previously held in another case that a wife's cause of action for loss of consortium, while derived from the personal injury to the husband, survives the death of her husband. When making this decision, the court looked to Gates v. Foley. The court in that case held that, "deprivation to the wife of the husband's companionship, affection and sexual relation (or consortium...) constitutes a real injury to the marital relationship and one which should be compensable at law due to the negligence of another."

In Ryter, the first district court in Florida held a wife's loss of consortium claim is actionable regardless of the status of the husband's claims. The court reasoned a, "wife owns the cause of action [and that] it is her property right in her own name." Finally, the court in Orange Cnty. V. Piper, held loss of consortium to be a "separate cause of action belonging to the spouse of the injured married partner, and... it is a direct injury to the spouse who has lost the consortium."

The appellate court of the third district reasoned a loss of consortium claim should not continue past death because the Legislature made recovery for a surviving spouse a part of the Wrongful Death Act. However, the Fifth District found this hold to be too limiting to the surviving spouse's rights because the act only allows recovery in specific situations. This court felt the Legislature did not intend to limit a spouse's right to claim loss of consortium, and thus reaffirmed its view that a loss of consortium claim survives a dead spouse.

Another appellate court disagreed with this conclusion, and thus the Florida Supreme Court may soon decide because of the circuit split. For more information regarding the surviving rights of a married spouse in Florida, contact Jacksonville attorney David Goldman at 904-685-1200.