March 2012 Archives

March 30, 2012

Florida Makes Power of Attorney Documents More Dangerous

With the recent changes to the Florida Statutes, it is even more dangerous to use Powers of Attorney documents created by online systems or found in forms books. Not only is there a big risk that they will not comply with the new Florida laws and be worthless, but if they are valid, you run a big risk of handing someone a blank check. YES that is what many are calling the powers contained in the new Florida Durable Powers of Attorney act.

While those using a POA are supposed to act in a fiduciary capacity, when they do not, someone has to complain about it or nothing will be done. While under Florida's Elder Law abuse statutes, anyone may complain about the actions of another who is over the age of 55, those under 55 who grant powers of attorney have little recourse when their power of attorney is abused without their knowledge.

More Jacksonville Estate Planning Lawyers are creating systems to accomplish the springing powers that have recently been stripped from the statutes.

Many are asking who pushed for these new changes. The answer is simple, the banks. It is easier for banks to understand what they have to do with the new documents, it limits lawsuits against banks, but all of this comes with great potential harm to the consumer.

individual already do not understand how to properly structure a Power of Attorney, now many will create invalid powers and potentially incur thousands of dollars of additional legal expenses when they find that they are not valid or do not provide the rights necessary to make gifts, create revocable and irrevocable trusts, or do planning that will enable an individual to preserve their assets instead of spending down their assets to qualify for government benefits. (Currently an individual must spend their assets down to less than $2000 before receiving government benefits.)

Even if they have no assets and can qualify for nursing home coverage, they may have too much income to qualify. Most free or low-cost powers of attorney do not provide the correct language necessary to create income trusts.

Some of the Major changes


  • Agents May not Take Any Actions not Clearly Granted to Them
  • New Springing Powers of Attorney Are No Longer Recognized
  • Certain Delegations of Authority Require the Principal's Initials or Signature
    • Creating an inter vivos trust
    • Amending, modifying, revoking, or terminating an existing trust (additionally, the trust instrument must explicitly authorize the settlor's agent to exercise such authority)
    • Making gifts, subject to statutory limits
    • Creating or changing rights of survivorship
    • Creating or changing a beneficiary designation
    • Waiving the principal's right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
    • Disclaiming property and powers of appointment
  • Some Delegations of Authority are Ineffective (Even With the Principal's Consent)
    • Perform a contract under which the principal was obligated to provide "personal services"
    • Make an affidavit as to the personal knowledge of the plaintiff (in other words, take an oath affirming facts which the principal did or did not know)
    • Vote in a public election on behalf of the principal
    • Execute or revoke a will for the principal
    • Exercise authority granted to the principal in her capacity as trustee or as a court-appointed fiduciary
  • General Language No Longer Sufficient to Revoke Prior Powers of Attorney
  • Co-Agents Can Act Independently on the Principal's Behalf
  • Co-Agents to report wrongdoing or become liable for others actions

If you are looking to create a Florida Power of Attorney you should discuss your goals, objective,and limitations under the new Florida law to make sure you create the documents necessary to be able to provide for yourself and family in the case you become incapacitated at sometime in the future.


March 30, 2012

2012 Tax Planning Seminar

David Adams of David N. Adams, Inc is having a Tax Planning Seminar to discuss the new tax laws which are set to start in 2013. The topics discussed will include information on current and future:

  • Income Tax Rates
  • Capital Gains Tax
  • Tax Strategies
  • Taxation of Dividend Income
  • New Medicare Tax
  • Estate Tax Schedules
He has invited his clients as well as our clients and readers of this blog to attend a Free Dinner at Maggiano's where these topics will be discussed. I will be a guest speaker at the event. If you would like to attend, please contact his office to RSVP.
The event will be 6:30-8:00 pm
Maggiano's Little Italy
St. Johns Town Center
10367 Midtown Parkway
Jacksonville, FL 32246

Seating is limited! Please call 904-339-0015 to reserve your seat today!

This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. Event partially sponsored by SunAmerica Capital Services and Cole Capital Corp., Member FINRA/SIPC.
Securities and investment advisory services offered through SagePoint Financial, Inc, Member FINRA/SIPC and a registered investment advisor. Fixed and/or Traditional Insurance Services Offered through David N. Adams, Inc. which. is not affiliated with SagePoint Financial, Inc. or registered as a broker-dealer or investment advisor. 324 6th Avenue North, Jacksonville Beach, FL 32250

March 29, 2012

How Many Death certificates Do I Need? What are the Differences?

The number of death certificates you will need will vary greatly depending on the amount and number of assets that the person had at the time of death. Most insurance companies, banks, & many creditors will request a death certificate. In addition, you will need a death certificate (short form - one without the cause of death) to open a probate case in Florida. While insurance companies will typically ask for a long version, most other creditors and institutions are ok with a short version. The Probate court will not accept a short version. For this reason it is a good idea to get 3-5 long versions and 5-10 short versions. You can always get more and many companies only need to see a copy of a death certificate.

March 28, 2012

Effects of Splitting Anniuty can be Harsh!

Sometimes clients who are in a divorce are ordered to split up assets. Some of these assets can have large penalties when surrendered. Once such example is an annuity. Often annuities have surrender charges and can also have tax penalties when they are held within an IRA. You might have a high yielding annuity that has a 10% surrender charge as well as a 10% additional tax penalty for removing funds early.

If your incremental income is taxed at 35% and you had to pay a 10 % penalty and 10% surrender charge, you could lose over 50% of the assets value to taxes and penalties. In addition, it may be hard to achieve the returns that many older higher yielding annuities are earning.

If you find yourself in such a situation, you may want to see if you can swap assets so that you can keep the annuity but pay the other party their share of its value without the penalty and tax consequences.

March 27, 2012

IRS Safe Harbor Rates for April 2012

The IRS recently announced safe harbor rates for April 2012. Safe harbor rates are the minimum interest rates that can be used to avoid gift tax treatment that is associated with below market rate loans. The minimum interest rates for April are still very attractive.

0.25% per year for loans for 3 years or less;
1.15 per year for loans greater than 3 years and up to 9 years; and
2.7% per year for loans greater than 9 years.

Some uses for these loans include business financing, business startup expenses, loans for a mortgage, or loans from irrevocable trusts to an estate of the deceased to cover administrative expenses and taxes. These Loans should always be documented by promissory notes and payments must be accounted for on a regular basis or they can be disallowed.

March 27, 2012

Indiana to repeal death tax as of Jan 1, 2021

Indians's Gov. Mitch Daniels signed to repeal the inheritance tax for deaths after Dec. 31, 2021. The relief is retroactive to January 1 and increases amounts exempt from the tax for 2012 deaths.

Currently 22 states and the District of Columbia impose an estate / inheritance tax in 2012. See Forbes article on Another State Death Tax Kicks the Bucket, Will More Fall? for more information on this topic.

If you live in a state that has an estate tax or inheritance tax you may want to consider the additional taxes that your estate or beneficiaries might be subject to in your planning.

March 26, 2012

Family is Unhappy with Bank but is Prohibited from Changing Banks.

Be careful of agreements that you sign with banks. This family is being held hostage by a bank that made the beneficiaries sign an agreement that required all 94 of them to agree prior to moving their money to another bank. The Tompkins family had been customers of Riggs Bank for nearly 50 years when a money-laundering scandal at the Washington lender prompted them to take their business elsewhere (to Chevy Chase Bank)....The family blames Chevy Chase for poor investment returns, among other things. They can\'t move the accounts, now worth $100 million or so, because of a fundamental error they made seven years ago when signing up with Chevy Chase: They failed to read the fine print. In their haste to flee Riggs, which was eventually sold to another bank, the family signed an unusual agreement that prohibits it from pulling the money from Chevy Chase unless all 94 family members who are beneficiaries of the trust agree. Having failed to secure familial unanimity, 10 of the grandchildren are now suing Chevy Chase Trust for the right to pull the funds.
March 15, 2012

Estate Planning Tips For Gun Collectors - Gun Trust Lawyer®

If you own firearms and have done estate planning, you might want to review your planning with a Gun Trust Lawyer®. About 5 years ago, I recognized the problems that are inherent with traditional estate planning (wills, revocable trusts, or the default planning offered by each state) as they relate to firearms.

Most Estate Planning is designed to deal with financial instruments and not the issues that surround the purchase, transfer, possession, and use of firearms.

Did you know that you will or trust probably contains language that instructs your family and friends to break the law after you die? Before you put your family and friends at risk of violating the law or giving a firearm to someone who you would not want to hand a gun, you should talk to your Florida Estate Planning Lawyer about creating a Gun Trust.

While gun trusts are great for regular firearms they have additional advantages when it comes to the purchase, use, possession, and transfer of the more restricted firearms like those sold by Dealers with Class 3 SOT licenses.

To learn more about Gun Trusts, visit the NFA Gun Trust Lawyer® blog

March 5, 2012

Attempt to Avoid Probate Earns Medicaid Applicant Penalty Period

Often in an attempt to avoid a relatively small probate fee, individuals can create huge penalty periods and taxable issues for themselves. Take for instance, a woman in New York who, two years before applying for Medicaid, transferred money from her account to an account with a co-owner. Transferring individually owned funds to an account with joint tenants is a common way to avoid a Florida Probate.

While her estate planning attorney seems to have given the advice, he was not aware of the problems that estate planning techniques to avoid probate can have on Medicaid eligibility.

Not only can transfers like this have problems for the individual making the transfer, but they can also create problems for the beneficiary or the new co-owner who will now have additional assets in their name, that may disqualify them from government benefits like Medicaid.

Before you try to save a few dollars and do what worked for your parents or friends, you may want to discuss your circumstances with a Jacksonville Estate Planning Lawyer who is familiar with Medicaid and Elder law issues.