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.

July 16, 2014

The Benefits of Creating a TAP Trust for Protecting Retirement Assets

A TAP trust is an extremely versatile trust designed to hold a variety of assets. This type of trust helps the grantor avoid needless estate taxes without the restrictions of other trusts.

The TAP trust can hold a variety of assets that include: real estate, stocks, insurance policies, bonds, and a few other business interests. A TAP trust can even own an IRA after the grantors death.

A TAP trust can set up as a grantor, or non-grantor trust. This distinction will decide h A non-grantor trust is taxed like a separate taxpayer with all income directly taxed to the trust at a trust income tax rate. However as a grantor trust, all income is taxed on the personal income tax of the grantor at an individual's tax rate.

Those who are knowledgeable of estate planning have most likely encountered an ILIT, or an Irrevocable Life Insurance Trust. This trust was designed to hold life insurance policies after a person dies to ensure the funds within the trust were not included in the probate of the estate.

The ILIT can be either a grantor or non-grantor trust. A grantor trust is a trust in which the IRS deems the grantor the owner of the funds for tax purposes. This means all of the income generated by the trust is taxed to the grantor and the trust is spared the tax. This is sometimes ideal because the top tax rate for a trust occurs around $11,000, while the top tax bracket for an individual is only reached at the $450,000 mark.

Traditionally, the ILIT trust was used, along with a few other trusts, to secure a person's assets through estate planning. The TAP trust is a fairly new trust that provides much more flexibility and convenience for clients because one trust can hold so many different assets. A TAP trust is so flexible it can even be used for IRA planning purposes by acting as the stand-alone IRA trust.

Another great way a grantor can use a TAP trust is to use the trust to make annual gifts to avoid yearly estate taxes. These taxes are avoided by the trust making annual gifts in the amount of the tax exclusion, which is currently $14,000. These gifts should be made to the grantor's beneficiaries, such as children and grandchildren. In turn, these benefactors should be appointed as trustee of their own separate trust and have the funds deposited there.

The main purpose of the TAP trust is to ensure all gifts made to the trust will be excluded from the grantor's estate. For more information on TAP trusts and how they can benefit your estate, contact Jacksonville attorney David Goldman today.

July 15, 2014

Estate Planning: The Risk of Creating Your Own Will. Is it valid?

will and testament.bmpThe Florida Supreme Court recently decided the long and costly case of a deceased woman who tried to write her own Will using an online legal form.

In Aldrich, v. Basile, Ann Aldrich used a pre-printed legal form to draft a Will. She did this most likely to avoid paying an estate-planning attorney. This Florida Supreme Court Decision resulted in costly legal fees and most likely years of anguish for her family.

Deciding who would inherit Ann Aldrich's property was appealed twice, which was finally decided by the Florida Supreme Court. The court's decision of who would inherit the property was most likely not what the deceased had intended. Justice Pariente wrote in her concurring opinion the result of the court's decision came not from the interpretation of Florida law but from Ann's mistake of using an online form that did not adequately express her specific needs.

Ann Aldrich handwrote her Will using an E-Z legal form. In this document she wrote specific directions for her house and its contents, her life insurance policy, her car, and her bank accounts to pass to her sister Mary Jane Eaton. She even took a further precaution by writing in her Will that if her sister died before her, the above-mentioned assets would pass to her brother James Aldrich.

Tragically, her Will failed to include a residuary clause to address any other property she might own at death. Her sister died three years later after Ann drafted her Will. Her sister left her cash and real estate, which Ann deposited into an account with Fidelity Investments.

Ann Aldrich passed away 2 years later and had never revised her Will to include the additional assets she acquired from her sister's estate. Since her Will did not include a residuary clause, a dispute arose within the family regarding who should actually inherit the property Ann received from her sister. James Aldrich, the brother, believed he should receive these assets, like the other property described within the Will. The other heirs, two nieces, believed the property should be considered intestate property. Intestate property is property distributed to the deceased's heirs according to state law, because the property was not accounted for in a Will. If the property were intestate, then the nieces would receive a significant portion of the assets.

Ann did attempt to draft an amendment to her Will in 2008. The amendment stated that since her sister died, she wished to reiterate that all her worldly possessions should pass to her brother. However, the note only had one other signature, and thus the amendment was not valid under Florida law.

The trial court originally found in favor of James Aldrich, but the nieces appeal and won. The Florida Supreme Court agreed with the appeals court, ruling Ann's 2008 amendment to be extrinsic evidence because the amendment was not properly drafted. When looking at a Will, the Court shies away from trying to guess the intent of the deceased who drafted the bill, and instead will only consider the concrete language of the document. Therefore, any assets not specifically included in Ann's Will would have to pass to her heirs according to Florida's intestate laws.

This court case serves as a reminder of the risks involved with estate planning. We recommend hiring an experienced estate planning attorney to draft your Will and to ensure your heirs are properly taken care of.

June 27, 2014

Protecting your IRA from Creditors and Preditors After the Supreme Court Decision

The U.S. Supreme Court recently held that the funds contained in an IRA are not "retirement funds" and thus not protected from creditors during bankruptcy. The next question many attorneys now have is how this ruling will affect tax law?

The Supreme Court justices felt there were three legal characteristics that lead the Court to conclude inherited IRA's are not retirement funds within the meaning of 11 U.S.C. Section 522(b)(3)(c).

  1. Inherited IRA holders are not able to invest more money into the account.
  2. The law requires the holder to withdraw funds from an inherited IRA no matter how far from retirement the holder may be.
  3. The holder is able to withdraw 100 percent of an inherited IRA's funds without penalty.

Before this case, IRAs and inherited IRAs were believed by some to be protected from creditors. It now appears that for inherited IRAs this is not the case. While Florida residents have protection for Inherited IRAs, where the Florida law applies, we do not know where our beneficiaries will live or what type of trouble they may create in the future. Those who inherit IRAs may now need to take extra precautions to avoid the risk of loss of their IRA.

When a spouse inherits an IRA he or she has three options. The spouse can inherit the IRA, create a new IRA, or roll the inherited IRA into an existing IRA. We do not recommend that the Spouse inherit the IRA as would make the IRS subject to risks of creditors. A spouse should generally choose to create a new IRA or roll the IRA over into an existing IRA.

Another way to reduce taxes or extend the life of an IRA is to convey the IRA to the children instead of the spouse. Naming a trust as the beneficiary can provide this option in the future as it is often difficult to know if there will be enough money for the surviving spouse. The trust should have separate retirement account language so that the trust will be a "see through" trust and not require a 5 year payout of the funds.

There are four steps required for the IRS to find a trust to be a "see through" trust.


  1. the trust must be irrevocable at death.

  2. the trust must comply with the state law of where the trust is located.

  3. the trust's beneficiaries must be human.

  4. a copy of the trust must be provided to the IRA custodian by a certain date.

As far as providing a copy of the trust say this must be done prior to death and others state it must be done no later than 9 months after death. We recommend that a copy be given to the custodian prior to death.

The next issue comes from what beneficiary must be named in the trust. Remember the same rules regarding naming of the beneficiaries should be followed as if the IRA was left to a beneficiary.

It is also important to determine how the trust will pay the beneficiaries. This is done through either an accumulation or a conduit trust. An accumulation trust allows a trustee to hold the funds and not distribute them. This is usually done to protect the money from judgments and creditors. However, an accumulation can be taxed at the highest tax rate after only $12000 in income. If there is a creditor who would take the IRA payments, then paying a higher tax rate is not a bad option compared to loosing the entire amount. A conduit trust is used to make regular payments to beneficiaries for the remainder of the projected life or the life of the oldest person to receive a portion of the IRA. If there are people with large differences in their ages as beneficiaries, it is possible to split the IRAs so that each person has their own life expectancy to calculate their IRA payments over. Many planners do not give the option of using an accumulation trust, but giving our clients the extra flexibility can be a good option. Remember as estate planners we try to plan for unexpected events and offer options for them when they do happen.

Planning how to protect your IRA or retirement accounts from the potential creditors of your heirs is a fairly complicated process that should be reviewed by an attorney who is familiar with these issues. For more information regarding inherited IRAs, contact David Goldman at 904-685-1200.

June 26, 2014

Some of the Benefits of using Trusts for Estate Planning and Asset Protection

Establishing a trust is often an important part of the management of your assets and estate. A trust can help to ensure decedent's assets are passed to their heirs precisely the way they are intended.

Trusts can either be irrevocable or revocable. The person who creates a revocable trust can change the trust at any time. An irrevocable trust can be more restrictive, but can offer greater protection for an individual and their family.

The most important part of establishing a trust is choosing the right trustee. The trustee is an important person because he or she will be responsible for the record keeping, accounting, tax planning, and the investment decisions. It is important for this person to be someone who is trustworthy. Often, individuals manage their own trust, but it is important to pick a backup trustee or successor trustee who is trustworthy.

The successor trustee should also be a person who is experienced in dealing with the difficulties of disturbing assets to beneficiaries. Often beneficiaries are not happy with the amount of his or her inheritance. For this reason, it may be beneficial to hire a professional trustee such as an experienced estate-planning attorney.

A trust can be beneficial for people with a net worth of at least $100,000 or with a a substantial portion of their assets in real estate or in a small business. A trust may also reduce the need for a probate, which can cost between 5 and 7 percent of the estate's total value. There are other ways of avoiding probate and you should have a professional evaluate your individual circumstances and goals to determine if a trust is appropriate for your situation.

A trust is also a great way to put conditions on how and when the assets of the estate are distributed to a beneficiary. A trust can be designed to protect assets from creditors and lawsuits. Many estate plans include a will, a living will, a health care proxy, HIPAA release, and one or more trusts.

Assets can begin to be protected by some types of trusts once the asset has been titled in the name of the trust.