December 2006 Archives

December 30, 2006

Florida Holographic Wills: Valid or Invalid?

A Florida Holographic Will: A will written entirely in the testator's own handwriting. NOTE Holographic wills are not valid in Florida unless they comply with the statute of wills and Florida statute 732.502, even if they were valid in another state when created.

All other wills are valid in Florida if they were valid in the other state at the time they were created.

Florida statute 732.502 requires that the:

(a) Testator's signature.--

    1. The testator must sign the will at the end; or
    2. The testator's name must be subscribed at the end of the will by some other person in the testator's presence and by the testator's direction.

(b) Witnesses.--The testator's:

    1. Signing, or
    2. Acknowledgment:

      a. That he or she has previously signed the will, or
      b. That another person has subscribed the testator's name to it, must be in the presence of at least two attesting witnesses.

(c) Witnesses' signatures.--The attesting witnesses must sign the will in the presence of the testator and in the presence of each other.

December 24, 2006

Florida Homestead Definition

The Florida Homestead exemption: In Florida, this refers to a surviving spouse's or lineal heirs right to receive the primary residence of their family member free of claims from creditors other then perfected security interests on it such as the mortgage. In Florida there is no limit to the value of the property that is covered by a Florida homestead exemption.

The Florida Homestead protection is found in Article X Section 4 of the Florida Constitution.

Although there may be limits placed on the Homestead Exemption by Federal Bankruptcy Law and Florida Medicaid planning through the 2005 Debt reduction act.

An invalid conveyance of a homestead in a decedents will is ineffective and results in a spouse receiving a life estate in the property with the remainder going to the decedents children per stripes.

The same result happens if there are minor children at the time one of the parent dies. The transfer of time is valid at the time of the decedents death, but this tile is not considered marketable tile by Florida Title Agencies. Because of this it is necessary to open a Florida Probate case for the decedent to transfer the property.

One can accomplish their desired goals by using a Florida Estate planning attorney who is familiar with Florida Homestead, Florida Elder Law, and the rules regarding the Florida Homestead protection in regards to Florida probate administration.

December 22, 2006

Florida Guardian Definition

In Florida Estate Planning, Florida Guardianship Proceedings, and Florida Probate cases it is often necessary to setup a full or plenary guardianship.

Guardian: an adult appointed by a surviving parent in his or her will or by a court, who is responsible for a minor child or legally incapacitated person's personal care and nurturing.

A parent is the natural guardian of their minor child. If a child receives over $15,000 from a probate or settlement that requires court approval, a parent will need to create a Florida Guardianship over the Property of the minor child.

Other times Florida Guardianships are used to try to stop individuals from wasting their assets. Although this was permissible in the past in Florida, the new standard does not take into account the actions of the individual only the mental capacity of the individual and by law must impose the least restrictions on an individual when evaluating their mental and physical capacity.

Often, Florida Estate Planning Techniques such as Florida Revocable Living Trusts, Florida Durable Powers of Attorney, and Florida Designation of health Care Surrogates are used to prevent a guardianship from being imposed on an individual at a later date.

December 20, 2006

Florida Probate Full Administration Definition

In a Florida probate case, where there is more than $75,000 of non-exempt property and the decedent died less than 2 years ago a Full or Formal administration is required. A formal administration can be used when the assets are lower than $75,000 but one can also do a summary administration.

Formal Probate: a proceeding before a probate judge either with a will or intestacy which is not a summary administration or disposition of property without administration and is governed by Chapter 733 of Florida statutes.

December 19, 2006

Florida Fiduciary Agent Definition

Fiduciary: This refers to a person (or entity) that serves in a representative capacity. Personal representatives, trustees, guardians, conservators, and agents under powers of attorney are all fiduciaries. A fiduciary stands in a position of confidence and trust with respect to each heir, devisee, and/or beneficiary. They are subject to a responsibility to act in the best interests of the person that they are serving on behalf of and can be sued if they act improperly.

December 18, 2006

Florida Probate Family Allowance Definition

In Florida Probate, when the spouse of children of the decedent were being supported by the decedent they may be entitled to a family allowance.

Family Allowance:

An allowance that a surviving spouse, minor or dependent children are entitled to from his or her deceased spouse's estate. If there is a surviving spouse this is typically given to them and may be up to $18,000. It is intended to provide some money for the spouse and family to live on during a probate administration.

December 17, 2006

Florida Probate Exempt Property Definition

Exempt property:

Florida law (Florida Statute 732.402) provides the right of a surviving spouse or children to receive tangible personal property such as furniture and furnishings within the homestead property up to $10,000 as well as the automobiles regularly used by the decedent if they are not devised to someone else. These properties are not subject to any claims except those with perfected security interests on them. Those entitled to such designation may be required to file the probate forms to declare such property as exempt within 4 months of publishing notice of administration of the probate administration. A surviving spouse and/or children are also entitled to a designation of homestead property that the property is exempt from creditors.

December 16, 2006

Devise Devisee Definition

In Florida probate and Florida Estate Planning the:

Devise: To give away real, personal or intangible property under a will or trust.

Devisee: An entity or a person selected in a will or trust to receive a devise.

Donee: A person or entity who receives a gift. This can also be referred to as a beneficiary.

Donor: A person who makes a gift.

December 15, 2006

Probate: Community Property Definition

In Florida Probate, if an individual acquired assets while living in a community property state, those assets, their proceeds, and income received from the assets may be subject to a different distribution than assets or income that was acquired while living in a non community property state such as Florida. One way to resolve this issue is to have both spouses contribute the property to a revocable living trust.

Community Property:

Property acquired during a marriage and while living in one of the 9 community property states (see below). As a general rule, everything derived from the earnings of either spouse is shared equally by a husband and wife. Each spouse owns only one-half of the community property because the other half belongs to the other spouse. Community property rules can be modified by pre-marital and post-marital agreements made by the spouses. See also separate property, commingle, quasi-community property, and commingle. Florida law is a separate property state. Property that was Community property may retain its character as Community Property though when someone moves from one state such as Arizona to another such as Florida.

Community Property States:

States in which community property laws apply. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington State and Wisconsin are considered community property states.

December 14, 2006

Charitable Trust Definitions

Florida Residents can use a variaty of Charitable Trusts with the Estate Planning and to help reduce estate taxes in their Florida Probate.

Charitable Lead Unitrust (CLUT): Income goes to charity and remainder to one's heirs or beneficiaries. Generally for the very rich and for those whose children won't need the income until years later when the trust ends. For example Jacklyn Kennedy Onassis used this to save taxes when she was seeking to benefit John Kennedy Jr. and Carolyn Kennedy.

Charitable Trust - One of several different types of charitable trusts, including Charitable Lead trusts and Charitable Remainder Trusts, established to benefit a particular charity or the public. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of Federal (and some states') estate and gift taxes and/or to save capital gains tax. It can be a win win situation since the donor is able to achieve a tax reduction while still providing for a very worthwhile charity that provides a great service to the public. When this is done during life an income tax deduction is available then the property is out of the estate for estate tax purposes or will generate a deduction to remove it. Some of this tax saving is often the put into the premiums for a life insurance policy as a wealth replacement technique. The insurance policy can be designed so the payment of the premiums will not result in a gift and the value of policy is not included in the estate. Used in this combination the donor is able to provide for a gift to charity through the charitable trust they can still receive income from the trust and despite their gift to charity their children can end up with as much and in some cases more money then if no charitable trust planning had been taken.

Charitable Remainder Trust (CRT) A trust funded with assets that go to charity upon death. The donor/trust creator can sell the assets without paying capital gains taxes and receive an annual income. Will also receive a tax deduction for the charitable gift and eliminate appreciated assets from one's estate.

Charitable Remainder Annuity Trust A charitable remainder trust in which the trust donor is paid an annual fixed dollar amount.

Charitable Remainder Unitrust: This pays an annual fixed percentage of the fluctuating value of trust assets.

December 13, 2006

Florida Probate Beneficiary Definition


In Florida Estate Planning and Florida Probate context this is a person entitled to receive property that was left to them by a will or trust or as a named beneficiary. This is contrasted by a person who receives property merely because of their family or marital relationship to the decedent which would be known as an heir. It may also include someone who is a named beneficiary of property such as a life insurance policy or a retirement account.

December 12, 2006

Florida Probate Attorney-in-Fact Definition


The person selected to have the authority to act on the behalf of a principal. An attorney-in-fact can be any adult that the principal selects. (He or she need not be a Florida lawyer.) Typically, people appoint an attorney-in-fact in a power-of attorney, granting the attorney-in-fact the power to transact business (enter into agreements, contracts, make transfers of property, etc.) in accordance with the power-of-attorney. The authority of the attorney-in-fact cannot last beyond the life of the principal. In most cases a power of attorney expires if the principal becomes disabled or incapacitated. Florida allows for a Durable Power of Attorney that can become effective upon a disability, an occurrence of an event, or at the time that the document is signed. Florida law provides that a durable power of attorney is not impacted by a persons subsequently disability. The agent can also use this power to help the principal qualify for Florida Medicaid.

December 11, 2006

Florida Probate Assets Definition

Assets Subject to Florida Probate Administration:

Refers to assets that are in the sole name of the decedent and therefore need to go through probate so the title can be changed to those entitled to receive them. Assets owned jointly with another as joint tenants with right of survivorship or with a spouse through tenancy by the entireties, property with a designated beneficiary such as a life insurance policy, IRA or other retirement plan account or property that is designated to be Transferred on Death to a specified person are not part of the probate estate and therefore will not be subject to probate administration. It is a good idea to avoid probate administration in Florida because of the additional time and cost it takes to receive the property.

Even though these assets may not be subject to Probate, they may be included in the decedent's estate for Estate Tax Purposes.

December 10, 2006

Florida Probate Annual Gift Tax Exclusion Definition

Annual Gift Tax Exclusion:

Each person has an annual gift tax exclusion of $12,000 annually free of gift tax if it is a gift of a present interest such as cash, tickets to Jacksonville Jaguars football game that are currently being given or a new car. If you are not giving the current right to enjoy the property and giving up complete control of it unless an exception applies such as a Crummey power for an irrevocable life insurance trust there will not be an exclusion and the value of the gift will use up part of the individuals applicable exclusion amount or if it has been used subject them to gift tax. A husband and wife can elect to split gifts for a year and are then able to give $24,000 to an individual in a year for gifts of a present interest with no tax. Other then spouses who are not US Citizens or residents spouses can give one another an unlimited amount of gifts of any type of interest during their lives and it will not be taxable at that time.

In addition, an individual is able to pay for the education and healthcare costs of their children and grand children. For these payments to qualify, the person must make the payments directly to the school or medical facility or health insurance company, if the funds go through the child, the will not qualify.

December 9, 2006

Florida Probate Administration Definition

Administration - Probate or Trust: The process of handling the affairs of a deceased person's estate or a trust. Florida Probate and Trust Administration

Ancillary Administration: probate proceedings in another state. This is usually necessary when the deceased person owned real estate in their sole name in a state other than his or her home state. It could be avoided by putting the property into a trust or passing the property so the beneficiary (beneficiaries have) has a remainder interest in which the property will pass to them by operation of law upon the death of the decedent. With limited exceptions such as requiring documents from the decedents probate in their home state ancillary probate in Florida is generally treated according to the same rules as if the decedent were domiciled in Florida.

Formal Administration: a proceeding before a probate judge either with a will or intestacy which is not a summary administration or disposition of property without administration and is governed by Chapter 733 of Florida statutes.

Summary Administration: an abbreviated proceeding before a probate judge either with a will or intestacy which the value of the entire estate subject to administration in this Florida, less the value of property exempt from the claims of creditors, does not exceed $75,000 or that the decedent has been dead for more than 2 years is governed by Chapter 735 of Florida statutes.

December 8, 2006

Florida Trust Summary


A Florida revocable trust can be a helpful estate planning tool. It retains flexibility while the grantor is alive and has capacity and allows for them to name a trustee who will handle their affairs if they were to loose capacity or when they die and helps avoid probate in Florida. The technique is not for everyone though and you should discuss the various Florida estate planning options of a will to pass on your property, a revocable trust and in large estates that would be subject to estate taxes possibly additional irrevocable trusts and other estate planning techniques would also be appropriate. With full knowledge of your specific facts and what you would like to do with your property after meeting with a trust attorney they can help and offer advice regarding your situation and which documents would be most appropriate for you.

December 7, 2006

Florida Testamentary Trusts

Testamentary Trusts

A testamentary trust in Florida is formed through a provision in a will and does not come into existence until a person dies.
It does not help if someone becomes incapacitated although hopefully that person will have a power of attorney to handle their financial affairs otherwise a guardianship would likely be required. A testamentary trust does not avoid Florida probate. It would need to go through probate and after all costs and delay of probate had been wrapped up and all valid creditor claims had been paid then the trust could be funded and operate.

December 6, 2006

Florida Trust Naming Conventions

5. How do you name a trust?

Revocable Trusts

A revocable trust usually includes the following information:

(1) The specific name of the trust,
(2) The date that the trust was executed/created,
(3) The name of the trustee,
(4) The title of the word trustee

An example is: the John Q. Public Revocable Trust dated April 15, 2006, John Q. Public Trustee.

At least one or more successor trustees should always be included in a revocable trust.

Irrevocable Trusts

Names of irrevocable trusts are similar to the revocable trusts. A primary difference of the names is the name of the trust itself, which typically indicates its purpose and would typically have a different trustee then the grantor. or example, Tom S. Smith could create an irrevocable life insurance trust (ILIT) that would be named as follows: Tom S. Smith , as Trustee of the Tom S. Smith 2006 Irrevocable Life Insurance Trust dated March 15, 2004.

The year is especially important in naming irrevocable trusts because one can create several trusts of the same type. For example, Beth Jones could create two charitable remainder unitrusts (CRUTs) to accomplish charitable tax planning objectives in successive years: (1) the Beth smith 2007 Charitable Remainder Unitrust, ABC Bank, Trustee; and (2) the Beth smith 2005 Charitable Remainder Unitrust, ABC Bank, Trustee.

The more significant distinction between the revocable trust and irrevocable trust are the tax consequences and flexibility. A revocable trust as its name states can generally be altered or amended at any time during the life of the grantor while they retain the capacity to do so. An irrevocable trust cannot although in some circumstances there are ways to essentially revoke the trust such as having the trustee stop paying the premiums on an irrevocable life insurance policy.

An irrevocable trust needs to get an independent tax identification number. For income tax purposes the trust is at the highest income tax rates after reaching a much lower amount of income then if it were earned by individuals. An Irrevocable Trust could help with estate tax planning though by getting property out of a decedents estate. The appreciation of the assets subsequent to the creation of the trust would also be sheltered from the estate tax. The Estate tax starts at 41% and rises to nearly 50% well above the top income tax rate. The current estate tax exemption amount a taxpayer has is $1.5 million in 2005. Under current law this will rise to $2 million next year through 2008 then rise to $3.5 million in 2009 and be repealed in 2010 only to return to $1m in 2011 when the prior law sunsets. However, President Bush is pushing to make a permanent repeal to estate taxes and do so more quickly then 2010. Although there is some support in Congress for this he would need to reach 60 votes and with mounting deficits and other priorities of the war and social security reform it is unclear what will happen with this. Some attorneys and tax commentators think it is likely that the estate tax exemption will be increased but not repealed prior to 2010 although until it happens one can only plan based on the current law and with the knowledge that there may be subsequent estate tax reform on the horizon of the next few years.

December 5, 2006

Florida Trust Myths

4. What are the general myths about Florida revocable trusts?

"Revocable Trusts Save Taxes."

Revocable trusts do not save income taxes or estate taxes. Typically during the life of the grantor the tax id of the grantor is used and any tax flows through to the grantor at his rates. Following the death of the grantor if the trust continues and is not immediately distributed outright to the beneficiaries it must then get a tax identification number and the retained income is taxed to the trust which has a more compressed rate schedule often resulting in a higher tax rate then if the individual beneficiaries were paying. This is not a potential problem until after the passing of the grantor though and then with proper planning the income can be distributed to the beneficiaries and there will be no adverse tax issues.

"Revocable Trusts Protect Assets from Creditors." - Myth

This is generally not correct as it relates to the grantor themself. Creditors may reach the assets of the grantor. Some asset protection could be achieved for other beneficiaries though. A Florida trust attorney could further help explain the details of how a trust could help with asset protection for other beneficiaries.

The primary benefit of creating a revocable trust is that it allows for continued management and preservation of your assets, should you become disabled. It can also help avoid probate and set forth all of the dispositive provisions of your estate plan including delayed distributions to beneficiaries if desired and professional management of such assets.

December 4, 2006

Florida Trust Disadvantages

3. What Are some disadvantages of Florida Revocable Trusts

Re-Registration of Property and Changes to Beneficiary Designations
In order for the trust to ensure the continuity of management of the assets and Florida probate avoidance
the trust must be funded through a process of retitling assets of the estate. Depending on if there is a change in beneficial interest, there may be fees due when the new Florida Deeds are filed. If there is no change in the beneficial interest there are no additional document taxes due.

Increased initial costs

The costs to initially prepare a trust is more then a will given it is typically a more complicated and extensive document although the ultimate costs of having the trust and saving on the probate administration and other expenses is less.

December 3, 2006

Florida Trust Advantages

2. What are the general advantages of revocable trusts?

Continuity of Management During Disability

Creating a Florida revocable trust is probably the best way to ensure that your property remains available to be used for your benefit, should you become physically or mentally incapable of managing your own affairs. While continuity of management is also possible when a Florida durable power of attorney is signed, third parties such as banks, brokers, and transfer agents often have more difficulty in dealing with a durable power of attorney than with a trust and do not always accept the authority of the agent.

If you become disabled and you have neither a revocable trust nor a durable power of attorney, (power of attorneys are controlled in Florida by the Florida Durable Power of Attorney Statute 709.08 an expensive, lengthy, and potentially embarrassing court proceeding is generally required to appoint a guardian before your property can be used to benefit either you or your family. Even after a guardian has been named, continued court supervision over the management of investments and disbursements is usually required. This can include annual bond fees, annual accounting, and additional legal, accounting, and other professional fees. It was also require a restricted depository account in which the court must approve of the transactions from.

Using a funded revocable trust may allow you to name unrelated, out-of-state individuals and out-of-state trust companies to act as the primary administrator of your property at death. Without a trust, Florida and other jurisdictions limit your flexibility in this regard. To serve as a non corporate Personal Representative in Florida a person must be a Florida resident or a close family member (as defined by Florida Statute) of the Florida decedent

Avoiding Florida Probate
Because Florida probate can be costly and time-consuming, the avoidance of probate in Florida is often cited as one of the primary benefits of a revocable trust. Depending on the assets that are funded in the Florida Trust may determine how great a benefit avoiding probate may be. If you own real estate in more than one state such as in Florida, California and Pennsylvania you can avoid multiple probate proceedings. If the decedent was a Florida domicile and owned property in Southern California, another piece of real estate in Philadelphia, and also owned real estate in Manhattan New York for example then putting the real estate in the trust can help avoid a California Ancillary Administration, avoid New York Ancillary Probate as well as helping to avoid Ancillary Probate Administration for the Pennsylvania property. The property can be distributed to the beneficiaries in a quicker manner and with far less administration costs.

Continue reading "Florida Trust Advantages" »

December 2, 2006

Florida Trust Structure


A Florida revocable trust is created when an individual (typically called the grantor in Florida but also known as settlor, or trustor) signs a trust agreement naming a person(s), a corporation, or both to administer the trust (the trustee or corporate trustee). In Florida and many other jurisdictions the Grantor can also serve as a trustee, the grantor and the trustee can be the same person. Generally a grantor does serve as the initial trustee of their revocable trust and then names a few successor trustees two or more of whom may serve as successor co trustees in order to insure continuity of management in the event of death or disability.

Naming a corporate trustee rather than an individual ensures that a competent and experienced trustee will always be available to act in the grantor's interests and upon his or her passing assisting the Trust Beneficiaries with the trust administration. Florida Trust Statutes requires a corporate trustee when the assets of the trust are in excess of ten million dollars.

Continue reading "Florida Trust Structure" »

December 1, 2006

Florida Trust Law Information part 1

1. What is a Florida revocable trust?

A Florida Revocable Trust is a trust that is prepared by a Florida Grantor or sometimes know as a Settlor who is domiciled in Florida and the trust can be altered, amended or revoked. A revocable trust may also be known as a Florida living trust or a revocable living trust. Prepared by a Florida grantor or settlor the person making the trust for their property they would be known as a Florida living trust or a Florida Revocable living trust.

A Revocable Trust is a technique a that can be used for administration of assets both during the grantor's lifetime and after death.