Florida Estate Planning Lawyer Blog

Starting January 1, 2008 every non-spouse designated beneficiary will have the option to rollover an inherited IRA and stretch distributions. To take advantage of this opportunity your Florida estate plan must be setup correctly to qualify for this rollover opportunity. You are not entitled to a rollover, you must prove you meet the technical legal requirements. Let’s take a look at why your family would not qualify for the new IRA rollover opportunity.

The IRS has very specific rules for how a trust can qualify as a see through trust and treated as a designated beneficiary. The top level bullet point requirements are:

The trust must be valid under state law;
The trust must be irrevocable or become irrevocable when the IRA owner dies;
The trust beneficiaries must be identifiable from the trust instrument;
Proper documentation must be provided to the IRA custodian.

Seems simple enough right? Remember, this is the IRS we are dealing with and they take income tax deferral very seriously because they think they are losing money. They have regulations on top of regulations on top of Private Letter Rulings and court decisions defining each one of those bullets in extensive detail. There is enough material to write a book on those four issues, and people have. I can’t get into detail on all of them here because it would take forever.

The most common issue is the requirement that beneficiaries be identifiable from the trust document. Often trust documents do not contain adequate language to comply with the IRS rule. Make sure you have the proper language to qualify for rollover treatment.

Rollover treatment is a privilege, not a right. Your family will not qualify for rollover treatment if you do not follow the rules in your estate plan. Make sure you and your Florida Estate Planning lawyer or attorney understands the requirements and that your estate plan doesn’t fall apart on this critical issue.

In Jacksonville Florida there are many Nursing homes. Some of them have very long agreements and some are very complex. You should review them carefully and make sure you look out for liberal guidelines regarding when a resident can be evicted, very restrictive visiting hours for family members, and requiring that a family member accept financial responsibility for the resident. These types of requirements may violate federal law; specifically, the Nursing Home Reform Act of 1987. This law is summarized by AARP

Other concerns I have touched on are the ability for someone with a durable power of attorney in Florida to bind the resident or heirs to using binding arbitration in future claims. You may want to have specific language in the durable power of attorney which prohibits the signing or agreement of a mandatory arbitration agreement on your behalf. You have the right to a trial by jury in the United States and may not want your agent acting under a Durable Power of Attorney to Waive your rights.

It is generally a good idea to have an Florida Elder Law Lawyer or Florida Estate Planning Lawyer review a nursing home agreement.

Over the last weekend I tried to keep up with various websites. While Visiting Universal in Orlando with my family I say a posting by Michale with The Ohio Trust & Estate Blog and thought you might enjoy it also.

What is "fiduciary responsibility?"
An attorney-in-fact is a fiduciary and as such has a duty to invest and manage the assets of the principal as a prudent investor. This standard requires the attorney-in-fact to exercise reasonable care and caution in managing the assets of the principal. The attorney-in-fact must apply this standard to the overall investments and not to one specific asset. If an attorney-in-fact possesses special financial skills or expertise, he or she has an obligation to use those skills. The attorney-in-fact should keep careful records. Everything the attorney-in- fact does for the principal should be written down, and the attorney-in-fact should keep all receipts and copies of all correspondence, and consider logging phone calls so if the attorney-in-fact is questioned, records are available.

This is the last part on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

When does the attorney-in-fact's authority under a Durable Power of Attorney terminate?
The authority of the attorney-in-fact of a Durable Power of Attorney automatically ends when one of three things happens: (1) the principal dies; (2) the principal revokes the Power of Attorney, or (3) when a court determines that the principal is totally or partially incapacitated and does not specifically provide that the Power of Attorney is to remain in force. In any of these three instances, the Durable Power of Attorney is terminated. If, after having knowledge of any of these events, a person continues to act as attorney-in-fact, he or she is acting without authority. The power to make health care decisions, however, is not terminated when a court determines that the principal is totally or partially incapacitated unless the court specifically terminates this power.

What is the procedure for a principal to revoke a Power of Attorney?
Written notice must be served on the attorney-in-fact and any other party who might rely on the power. The notice must be served either by any form of mail that requires a signed receipt or by certain approved methods of personal delivery. Special rules exist for serving notice of revocation on banks and other financial institutions. Consult with your lawyer to be sure proper procedures are followed.

When does a general Power of Attorney terminate?
In addition to the three events detailed above, a general (non-durable) Power of Attorney terminates when the principal becomes incapacitated. If the principal of a non-durable power of attorney is believed to be incapacitated, then the attorney-in-fact should consult with his or her lawyer before exercising any further powers on behalf of the principal.

Court proceedings were filed to appoint a guardian for the principal or to determine whether the principal is incapacitated. How does this affect the Power of Attorney?
If a court proceeding to determine the principal's incapacity has been filed or if someone is seeking to appoint a guardian for the principal, the Durable Power of Attorney is automatically suspended and an attorney-in-fact must not continue to act. The power to make health care decisions, however, is not suspended unless the court specifically suspends this power.

Authority as attorney-in-fact has been suspended because guardianship proceedings are pending for the principal. Now there is an emergency but there is no guardian and no attorney-in-fact to do something. What now?
The attorney-in-fact may ask the court for special permission to take care of the emergency even though the Power of Attorney remains otherwise suspended. Contact your lawyer.

This is the sixth part of a seven part article on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

What is the relationship between a Declaration of Living Will and Power of Attorney?
A declaration of living will specifies a person's wishes as to the provision or termination of medical procedures when the person is diagnosed with a terminal condition, has an end-stage condition, or is in a persistent vegetative state. A living will and a health care surrogate designation are termed "health care advance directives" because they are made in advance of incapacity and need. If a person is unable to understand or unable to communicate with a doctor, a living will is a legally enforceable method of making sure the person's wishes are honored. Whether or not a person has a living will, a person's attorney-in-fact may make health care decisions if the Durable Power of Attorney specifically gives this right.

What is a Health Care Surrogate Designation and how does it differ from a Power of Attorney?
A Health Care Surrogate Designation is a document in which the principal designates someone else to make health care decisions if the principal is unable to make those decisions. Unlike a Power of Attorney, a health care surrogate decision-maker has no authority to act until such time as the attending physician has determined the principal lacks the capacity to make informed health care decisions. (In instances where the attending physician has a question as to whether the principal lacks capacity, a second physician must agree with the attending physician's conclusion that the principal lacks the capacity to make medical decisions before a surrogate decision-maker's authority is commenced.) Many medical providers prefer a designation of health care surrogate for health care decisions because the document is limited to health care.

This is the fifth part of a seven part article on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

There have been many revisions to Florida's Trust Code and I have touched on some of them on this blog in the past.

There have been major changes to creditors rights. Creditors cannot compel distributions from or attach or otherwise reach a beneficiary's interest in a third party discretionary trust whether or not:

1) The trust has a spendthrift provision;
2) The discretion is subject to a standard; or
3) The trustee has abused the discretion.

This clarifies many issues with Florida Trusts.

If you have questions about creditors rights and the New Florida Trust Code please contact a Florida Estate Planning Lawyer to discuss your concerns with.

RELATIONSHIP OF POWER OF ATTORNEY TO OTHER LEGAL INSTRUMENTS
What is the difference between an attorney-in-fact and an executor or personal representative?
An executor, termed a "personal representative" in Florida, is the person who takes care of another's estate after that person dies. An attorney-in-fact may only take care of the principal's affairs while the principal is alive. A personal representative may be named in a person's Will and is appointed by the court to administer the estate.

What is the difference between a "trustee" and an "attorney-in- fact?"
Like a power of attorney, a trust may authorize an individual to act for the maker of the trust during the maker's lifetime. Like an attorney-in-fact, the trustee may manage the financial affairs of the maker of the trust. A trustee only has power over an asset that is owned by the trust. In contrast, an attorney-in-fact may have authority over all of the principal's assets (except trust assets). Another important distinction is that a trustee may continue acting for the maker of the trust after the maker of the trust dies. In contrast, the Power of Attorney expires upon the death of the principal.

What if the principal has a "guardian" appointed by the court?
If no less restrictive appropriate alternative is available, then a guardian may be appointed by the court for a person who no longer can care for his or her person or property. A person who has a guardian appointed by the court may not be able to lawfully execute a Power of Attorney. If an attorney-in-fact discovers that a guardian has been appointed prior to the date the principal signed the Power of Attorney, the attorney-in-fact should advise his or her lawyer. If a guardianship court proceeding is begun after the Durable Power of Attorney was signed by the principal, the authority of the attorney-in-fact is automatically suspended until the petition is dismisssed, withdrawn or otherwise acted upon. The law requires that an attorney-in-fact receive notice of the guardianship proceeding. If a guardian is appointed, the Power of Attorney is no longer effective unless the court allows certain powers to continue. The power to make health care decisions, however, is not suspended unless the court specifically suspends this power. If the attorney-in-fact learns that guardianship or incapacity proceedings have been initiated, he or she should consult with a lawyer.

May a Power of Attorney avoid the need for guardianship?
Yes. If the alleged incapacitated person executed a valid Durable Power of Attorney prior to his or her incapacity, it may not be necessary for the court to appoint a guardian since the attorney-in-fact already has the authority to act for the principal. As long as the attorney-in-fact has all necessary powers, it may not be necessary to file guardianship proceedings and, even when filed, guardianship may be averted by showing the court that a Durable Power of Attorney exists and that it is appropriate to allow the attorney-in-fact to act on the principal's behalf.

This is the fourth part of a seven part article on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

When is a Durable Power of Attorney effective?
The Durable Power of Attorney is effective as soon as the principal signs it unless the document specifies that it is conditioned on the principal's lack of capacity to manage property in which case appropriate affidavits are required in accordance with Florida law.

Must the principal deliver the Power of Attorney to the attorney- in-fact right after signing or may the principal wait until such time as the services of the attorney-in-fact are needed?
No. The principal may hold the Power of Attorney document until such time as help is needed and then give it to the attorney-in- fact. Because third parties will not honor the attorney-in-fact's authority unless the attorney-in-fact provides the Power of Attorney document, the use of the Power of Attorney may effectively be delayed.

Often, the lawyer may fulfill this important role. For example, the principal may leave the Power of Attorney with the lawyer who prepared it, asking the lawyer to deliver it to the attorney-in- fact under certain specific conditions. Since the lawyer may not know if and when the principal is incapacitated, the principal should let the attorney-in-fact know that the lawyer has retained the signed document and will deliver it as directed.

How does the attorney-in-fact initiate decision-making authority under the Power of Attorney?
The attorney-in-fact should review the Power of Attorney document carefully to determine what authority the principal granted. After being certain that the Power of Attorney gives the attorney-in-fact the authority to act, the Power of Attorney (or a copy) should be taken to the third party (the bank or other institution, or person with whom you need to deal). Some third parties may ask the attorney-in-fact to sign a document stating that the attorney-in-fact is acting properly. (The attorney-in- fact may wish to consult with a lawyer prior to signing such a document.) The third party should accept the Power of Attorney and allow the attorney-in-fact to act for the principal. An attorney-in-fact should always make it clear that the attorney-in-fact is signing documents on behalf of the principal.

How should the attorney-in-fact sign when acting as an attorney-in-fact?
The attorney-in-fact will always want to add after his or her signature that the document is being signed "as attorney-in-fact for" the Principal. If the attorney-in-fact only signs his or her own name, he or she may be held personally accountable for whatever was signed. As long as the signature clearly conveys that the document is being signed in a representative capacity and not personally, the attorney-in-fact is protected. Though lengthy, it is, therefore, best to sign as follows:

Howard Rourk, as attorney-in-fact for Ellsworth Toohey.

In this example, Howard Rourk is the attorney-in-fact, and Ellsworth Toohey is the principal.

What if the third party will not accept the Power of Attorney?
If the Power of Attorney was lawfully executed and it has not been revoked, suspended or terminated, third parties may be forced to honor the document. Due to changes in the law, Durable Powers of Attorney executed on or after October 1, 1995, have more clout. An older document may be enforced as well. Under some circumstances, if the third party's refusal to honor the Durable Power of Attorney causes damage, the third party may be liable for those damages and even attorney's fees and court costs. Even mere delay may cause damage and this too may be actionable. It is reasonable, however, for the third party to have the time to consult with a lawyer about the Power of Attorney. Banks will often send the Power of Attorney to their legal department for approval. Delay for more than a short period may be unreasonable. Upon refusal or unreasonable delay, consult an attorney.

Continue reading " Florida Powers of Attorney (Part 3 USING THE POWER OF ATTORNEY) " »

Here are some of the more common rationalizations for not creating a Florida will, and the facts that quickly dispel those "myths."

Myth: "My estate is so small that a Florida will or estate planning is not needed."

Think again. Few people are have so little value as to not require estate planning. Did you add the value of your home, car, furniture, jewelry, savings account, retirement accounts, life insurance, and investments. Even if some items do not hold monetary value, they could have sentimental value. Failing to indicate who receives these items will can cause disagreements between family members that can last forever.

Myth: "When I die, my spouse will get all of my assets."

If you and your spouse own assets jointly, at death your share of the assets will automatically go to the surviving spouse. If you have separate assets, you have to look at the states statutes to figure out who gets them. Also what will happen when your surviving spouse dies? What will your children receive? What if your children are not your husbands children? Does your spouse know how to manage the family wealth? If your spouse remarries, some or all of your spouse's assets may wind up in the hands of his/her new spouse or the new spouses children and not your children.

Myth: "I don't want my final wishes to be set in stone. I'll create a will later in my life."

A will is an extremely flexible document whose terms can be changed as often as needed. In fact, any estate planning lawyer will tell you that a Florida will should be re-examined periodically to make sure it is up to date. A Florida will should receive a checkup whenever there is a substantial change in your life. Remember, the terms of a will only become effective at death.

Making a will is not expensive or difficult, but it is a legal document and must be properly prepared. It is usually best to contact an Florida Estate Planning Lawyer or Attorney who will be able to help with the precise wording to make sure your wishes are clear and that they are carried out exactly as you wish. Although it is not advisable, there are software options for the creation of wills, you may read about some of the problems that have occurred because individuals used preprinted wills or software created wills.

There is nothing wrong with putting your house in order today as tomorrow may be too late.

What activities are permitted by an attorney-in-fact?
An attorney-in-fact may perform only those acts specified in the Power of Attorney. If an attorney-in-fact is unsure whether he or she is authorized to do a particular act, the attorney-in-fact should consult the lawyer who prepared the document or other legal counsel.

May an attorney-in-fact sell the principal's home?
Yes. If the Power of Attorney authorizes the sale of the principal's homestead, the attorney-in-fact may sell it. If the principal is married, however, the attorney-in-fact must obtain the authorization of the spouse.

What may an attorney-in-fact not do on behalf of a principal?
There are a few actions that an attorney-in-fact is prohibited from doing even if the Power of Attorney states that the action is authorized. An attorney-in-fact, unless also a licensed member of The Florida Bar, may not practice law in Florida. An attorney-in-fact may not sign a document stating that the principal has knowledge of certain facts. For example, if the principal was a witness to a car accident, the attorney-in-fact may not sign an affidavit stating what the principal saw or heard. An attorney-in-fact may not vote in a public election on behalf of the principal. An attorney-in-fact may not create or revoke a Will or Codicil for the principal. If the principal was under contract to perform a personal service (i.e., to paint a portrait or provide care services), the attorney-in-fact is not authorized to do these things in the place of the principal. Likewise, if someone had appointed the principal to be Trustee of a Trust or if the Court appointed the principal to be a guardian or conservator, the attorney-in-fact may not take over these responsibilities based solely on the authority of a Power of Attorney.

What are the responsibilities of an attorney-in-fact?
While the Power of Attorney gives the attorney-in-fact authority to act on behalf of the principal, an attorney-in-fact is not obligated to serve. An attorney-in-fact may have a moral or other obligation to take on the responsibilities associated with the Power of Attorney, but the Power of Attorney does not create an obligation to assume the duties. However, once an attorney-in-fact takes on a responsibility, he or she has a duty to act prudently. (See Financial Management and the Liability of an Attorney-in-fact).

Is there a certain code of conduct for attorneys-in-fact?
Yes. Attorneys-in-fact must meet a certain standard of care when performing their duties. An attorney-in-fact is looked upon as a "fiduciary" under the law. A fiduciary relationship is one of trust. If the attorney-in-fact violates this trust, the law may punish the attorney-in-fact both civilly (by ordering the payment of restitution and punishment money) and criminally (probation or jail). The standard of care that applies to attorneys-in-fact is discussed under Financial Management and the Liability of an Attorney-in-fact.

This is the second part of a seven part article on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

Next time you attend a Living trust seminar in Jacksonville Florida or where ever you live, you may want to think twice. This week Family First Advanced Estate Planning, and insurance company, and a life insurance company who targeted low cost estate planning to seniors settled with the Attorney General of California.
An article on Kristen Howe's Blog states:

I caution everyone to remember the old saying “If something looks too good to be true it probably is.” If someone is offering to write a revocable trust and a will for you for free or for just a few hundred dollars, you have to ask yourself why. The two big lessons to be learned from this case are:

1. Do not let anyone who is not an attorney write an estate plan for you. There are just too many complexities in this area of the law to trust it to someone who is not educated.
2. Do not take investment advice from anyone who sells any kind of investment product. Period. It doesn’t matter what it is, life insurance, annuities, mutual funds.

If they make their living selling it they cannot possibly give you objective investment advice about it. If you believe you have been victimized by Family First, another trust mill or by annuity fraud, you should report the crime to the local district attorney or the Department of Insurance. You may also file a complaint with the Attorney General.

Although this problem did not involved lawyers the general ideal of seminars where you are told that everyone can benefit from a Florida Living trust have problems also. You should only consider a Florida living trust if you meet with a Florida Estate Planning Lawyer and determine that your finances and needs require and justify a living trust.

More about Anna Nicole's will
According to Jay MacDonald , You can accidentally disinherit your heirs,

Here are the 7 ways to disinherit your kids which Mr. MacDonald discusses:

1. Failure to update a will
2. Faulty will
3. Stepparent succession
4. Ademption
5. Misunderstanding survivorship
6. Mirror-image grant
7. Failure to prepare a will

Although children have no legal right to inheritance throughout most of the United States, many states do provide protection against accidental disinheritance. Because she was born after the execution of Anna Nicole's will, Dannielynn will likely be considered a pretermitted child that was accidentally disinherited, and thus will likely inherit the bulk of Anna Nicole's estate.

if you have a will you should review it, if not you should create one. For help with your will see a Jacksonville Estate Planning Lawyer.

ABOUT THE POWER OF ATTORNEY
What is a Power of Attorney?
A Power of Attorney is a legal document delegating authority from one person to another. In the document, the maker of the Power of Attorney grants the right to act on the maker's behalf. What authority is granted depends on the specific language of the Power of Attorney. A person giving a Power of Attorney may make it very broad or may limit it to certain specific acts.

What are some uses of a Power of Attorney?
A Power of Attorney may be used to give another the right to sell a car, home or other property. A Power of Attorney might be used to allow another to sign a contract, make health care decisions, handle financial transactions, or sign legal documents for the maker of the Power of Attorney. A Power of Attorney may give others the right to do almost any legal act that the maker of the Power of Attorney could do.

Where may a person obtain a Power of Attorney?
A power of attorney is an important and powerful legal document. It should be drawn by a lawyer to meet the person's specific circumstances. Pre-printed forms are often a disaster and may fail to provide the protection desired.

What is a "principal?"
The "principal" is the maker of the Power of Attorney - the person who is delegating authority to another.

What is an "attorney-in-fact?"
The "attorney-in-fact" is the recipient of the Power of Attorney - the party who is given the power to act on behalf of the principal. An "attorney-in-fact" is sometimes referred to as an "agent," but not all "agents" are "attorneys-in-fact." The term "attorney-in-fact" does not mean the person is a lawyer.

What is a "third party?"
As used in this pamphlet, a "third party" is a person or institution with whom the attorney-in-fact has dealings on behalf of the principal. Examples include a bank, a doctor, the buyer of property that the attorney-in-fact is selling for the principal, a broker, or anyone else with whom the attorney-in- fact must deal on behalf of the principal.

What is a "Limited Power of Attorney?"
A "Limited Power of Attorney" gives the attorney-in-fact authority to conduct a specific act. For example, a person might use a Limited Power of Attorney to sell a home in another state by delegating authority to another person to handle the transaction locally through a "limited power of attorney." Such a Power could be "limited" to selling the home or to other specified acts.

What is a "General Power of Attorney?"
A "general" Power of Attorney typically gives the attorney-in- fact very broad powers to perform any legal act on behalf of the principal. Often a list of the types of activities the attorney- in-fact is authorized to perform is included in the document.

What is a "Durable Power of Attorney?"
Limited and general Powers of Attorney terminate if and when the principal becomes incapacitated. Because many people would like Powers of Attorney that may continue to be used upon their incapacity, Florida law provides for a (special) power known as a "Durable Power of Attorney." A Durable Power of Attorney remains effective even if a person becomes incapacitated; however, there are certain exceptions specified in Florida law when a Durable Power of Attorney may not be used for an incapacitated principal. A Durable Power of Attorney must contain special wording that provides the power survives the incapacity of the principal. Most Powers of Attorney granted today are durable.

Must a person be competent to sign a Power of Attorney?
Yes. The principal must understand what he or she is signing at the time the document is signed. The principal must understand the effect of a Power of Attorney, to whom he or she is giving the Power of Attorney, and what property may be affected by the Power of Attorney.

Who may serve as an attorney-in-fact?
Any competent person 18 years of age or older may serve as an attorney-in-fact. Attorneys-in-fact should be chosen for reliability and trustworthiness. Certain financial institutions and not-for-profit corporations may also serve.

This is the first part of a seven part article on Florida Powers of Attorney Click to review the others . If you need help with a Florida Power of Attorney contact a Jacksonville Florida Estate Planning Lawyer.

A recent update to the IRS website could affect you if your Jacksonville Florida Business is a Limited Liability Company.

Important information for Single Member Limited Liability Companies (LLC) who have or will have employees within the next 12 months:

IRS regulations require a single member limited liability company that is (1) owned by one individual and (2) has or will have employees within the next 12 months to have two EINs. One EIN is assigned to the individual owner (as a sole proprietor) and one is assigned to the LLC. If you do not already have an EIN as a sole proprietor, you cannot use the online EIN application to apply for the LLC EIN. Please call the Business and Specialty Tax Line at (800) 829-4933 between 7