July 2012 Archives

July 26, 2012

Can Life Insurance be subject to Creditors in Florida?

While traditionally in Florida the proceeds from a life insurance police are exempt from the claims of a creditor, what happens if the beneficiary designations fail or the proceeds are directed back to an individuals probate estate or revocable trust?

In a recent Florida case, life insurance benefits were directed to the descendants revocable trust upon his death. This could have only happened intentionally unless a revocable trust was the owner and the beneficiary designation failed because it was improper or the beneficiary died before the grantor of the trust.

When the grantor of the trust died, the trusts instructions told the successor trustee to pay the settlor's death obligations. Even if such language was not in the decedent's revocable trust, they are presumed under Florida Law.

Normally under Florida Statute 222.13(1) Whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy, and the proceeds thereof shall be exempt from the claims of creditors of the insured unless the insurance policy or a valid assignment thereof provides otherwise.

While the mere fact that life insurance proceeds are payable to a trust, rather than directly to a natural person, does not deprive them of their exempt status,4 section 733.808(1), Florida Statutes (2008), makes it clear that life insurance proceeds payable to a trust "shall be held and disposed of by the trustee in accordance with the terms of the trust as they appear in writing on the date of the death of the insured."

The court stated that
In other words, the exemption rendering life insurance policy proceeds unavailable to satisfy estate obligations can be waived. The very statute that creates the exemption makes this clear:

Notwithstanding the foregoing, whenever the insurance, by designation or otherwise, is payable to the insured or to the insured's estate or to his or her executors, administrators, or assigns, the insurance proceeds shall become a part of the insured's estate for all purposes and shall be administered by the personal representative of the estate of the insured in accordance with the probate laws of the state in like manner as other assets of the insured's estate.
§ 222.13(1), Fla. Stat. (2008). Section 222.13(1) does not prohibit life insurance proceeds' paying the insured's estate's debts and other "death obligations," nor does it prohibit directing payment of policy benefits to a trust for that purpose.

An insurance policy is a contract. The right to select the beneficiary of a life insurance policy is an aspect of the freedom to contract. The statutory exemption does not purport to restrict that freedom. The owner of an insurance policy may waive the section 222.13 exemption merely by designating the insured or one or more of the insured's creditors as a beneficiary or beneficiaries, by naming the insured's estate as a beneficiary of the policy or, as here, by naming as beneficiary a trust whose terms direct distribution of the trust assets to the personal representative, if requested.

In this case, there was an attempt to reform the trust under FL statute 736 but his requires clear and convincing evidence that both the accomplishment of the settlor's intent and the terms of the trust were affected by a mistake of far or law.

In this case they were unable to prove the intent necessary to reform the trust.

If you have a life insurance policy or a revocable trust in Florida you may want to review the terms of the beneficiary designations as well as what the policy directs the successor trustee to pay. It was unfortunate that the life insurance policy became subject to claims of the creditors because of the poor choice of wording.

July 25, 2012

Spousal Refusal: The Painful (But Sometimes Necessary) Decision

rings.jpgCouples who are still married, even into their 70s or 80s are the lucky ones. They've made it through the hard times, the ups and downs of life, ]and still have their companion at their side. But even the most devoted of spouses is sometimes finds it necessary to exercise "Spousal Refusal" to pay the long-term care bills of their spouse when he or she has lost the ability to perform the activities of daily living.

Spousal Refusal refers to one spouse's official and legal refusal to pay for long-term care expenses of the other spouse. In general, married couples have a legal obligation to pay for the healthcare costs incurred by either spouse if they are admitted into a nursing home. However, if your spouse has been admitted to a nursing home, and you have limited resources, you may fill out a form with Medicaid stating that you refuse to pay for your spouse's care. This may sound cruel or selfish, but exercising Spousal Refusal can sometimes be the only way to save the healthy spouse's small nest egg for his or her own needs in later years.

Spousal Refusal is not about turning away from a spouse in their time of need; in fact, many of the elderly individuals who exercise this option do so only after a long and painful decision-making process, and they do it not out of selfishness but out of necessity. Patients who need more than the first 100 days of nursing or rehab care covered by Medicaid can find themselves facing costs in excess of $100,000 per year. It is not uncommon for a couple to lose their house and all of their savings because of one extended stay in a nursing home.

It is good to know that couples who forgo Spousal Refusal and choose to pay for a spouse's long-term care costs after all won't be left completely out in the cold. Anti-spousal impoverishment laws were enacted on the federal level in the late 1980s. In 2012, the healthy spouse is permitted to retain up to $113,640 in assets while his or her sick or recovering spouse is covered under Medicaid. Unfortunately, in this day and age, $113,640 doesn't go a long way, especially if the healthy spouse lives for another decade or so. The decision to exercise Spousal Refusal is not an easy decision to make. Married couples must weigh the costs and benefits--not only financial costs and benefits, but emotional and ethical as well. The decision-making process can be emotional and overwhelming, and no couple should have to go through it alone. Contact our office if this is something you or your family is facing, we can help.

To read more on Elder Law download our Elder Law Update.

July 24, 2012

The High Emotional-- And Financial-- Cost of Alzheimer's Disease

happy_elderly_couple_americare.jpgAlzheimer's is a disease that affects everybody it touches--husbands, wives, children and grandchildren--they all bear witness to their loved one's slow demise.

Sadly, emotional stress is not the only stress that accompanies Alzheimer's disease; those loved ones serving as caretakers may carry a huge amount of financial stress as well. The cost of caring for an Alzheimer's patient can run anywhere from $64 a day to $77,380 a year, and because Alzheimer's disease can be such a long-lasting disease (a person can suffer from Alzheimer's for up to 20 years) the costs of care can end up being astronomical. It's obvious that people can't do it alone.

Long-term care insurance can be very helpful in paying for the costs of care necessary for a loved one suffering from Alzheimer's... if your loved one has thought ahead and purchased the policy before they or their spouse began suffering from symptoms of Alzheimer's. Some people may not have thought ahead and hope that government programs will be able to help with the high cost of care. Medicaid (or MediCal in California) can be helpful--although Medicare doesn't cover the cost of long-term care--but only if you fall in the right category and know how to navigate the complex Medicaid system.

Unfortunately, learning how to navigate the system is not something you can do in an hour or two. Because each individual experience with Medicaid will depend on a number of unique factors we can't give you an easy set of instructions to follow. The best advice we can give is to say that right now, the best way to navigate the Medicaid/Medi-Cal system is to find someone who knows the system to assist you. As an elder law firm we help clients with these issues on a regular basis. If you want to ensure that you and your loved ones will be cared for no matter what the future may bring, please contact our office for help.

To read more on Elder Law download our Elder Law Update.

July 23, 2012

New Wave of Lawsuits May Force Children to Pay for Elderly Parents' Nursing Costs


Many of our clients and readers in Florida are caregivers of elderly parents; they have chosen to take responsibility for their parents--whether it be physical responsibility, financial, or other. But what if instead of making that choice, you had responsibility for your aging parents thrust upon you? This is exactly what happened in the case of Health Care & Retirement Corporation of America v. Pittas, recently brought before the Pennsylvania appeals court.

This particular case states that "On or about September 24, 2007, after completing rehabilitation for injuries sustained in a car accident, Appellant's [John Pitta's] mother was transferred to a HCR facility for skilled nursing care and treatment. Appellant's mother resided in the facility and was treated by HCR until March of 2008. In March of 2008 Appellant's mother withdrew from the HCR facility and relocated to Greece."

Following Pittas' mother's relocation, a large portion of her bill at the nursing home went unpaid. Mr. Pittas' mother applied to Medicaid to cover her care, but while that application was still pending, the nursing home sought to hold Mr. Pittas responsible for the debt under the state's filial responsibility law. Although the case went to an arbitration panel which initially ruled in favor of Mr. Pittas, eventually the Pennsylvania trial court ruled in favor of the nursing home, holding Pittas responsible for nearly $93,000 of his mother's nursing expenses.

At this time Florida does not have these issues, but Florida residents should be careful if their parents live in other states.

So far this has only happened in one state, but there are many other states which still have filial responsibility laws on the books. These laws have rarely been enforced thus far, but this ruling by the Pennsylvania Supreme Court does not bode well for children of aging parents throughout the U.S., many of whom are finding themselves caught between caring for elderly parents and for grown children who have not yet left the nest.

Perhaps one of the most disturbing things about this case is that the nursing home was given so much leeway. The Pennsylvania Supreme Court found that "Nothing in [Pennsylvania Law] requires a movant or a court to consider other sources of income [for the elderly parent] or to stay its determination pending the resolution of a claim for medical assistance." Furthermore, the court also stated that it was the nursing home's right to choose which family members to pursue for the money owed.

This would seem to condone (if not encourage) a litigious mind-set among nursing homes; and if you are one of many siblings with an elderly parent you could find yourself involved in a lawsuit merely because you live the closest, are the wealthiest, or called mom more often than your brothers or sisters.

The best way to guard against yourself or your family becoming embroiled in a similar lawsuit is to ensure that you (or your elderly parents) have a plan in place to pay for long-term care. Talk to your
parents about what plans (if any) they have to pay for their future long-term care needs, and contact our office to explore your options.

To read more on Elder Law download our Elder Law Update.

July 19, 2012

How Many Estate Planning Lawyers do you Need?

couple.jpgAccording to a recent article on Forbes.com, the importance of estate planning for married couples cannot be stressed enough. The seriousness of such forward thinking is even more critical in blended families which tend to present more opportunities for volatility following the death of a parent.

The first issue for all couples to resolve is whether to be represented jointly by the same estate planning lawyer or for you each to go it alone. While joint representation can be more cost-effective, it can mean that both parties don't have the freedom to speak up about their individual concerns. Unless there is healthy communication between the spouses joint representation can be a recipe for disaster.

The following are some good rules of thumbs to consider when deciding whether you need your own or joint representation:

  • Only one of you has children. Most people want to leave their estate to their children but if the other spouse has no children of their own then the parent may fear dying first and leaving their kids with nothing.
  • Rich spouse, poor spouse. A large disparity in income between spouses can effect joint planning and may be a good reason to go your own way.
  • One of you does all of the talking. If one party dominates the other in the planning phase this could be a sign of communication problems to come. As a result the one spouse may not feel happy with the final deal and an estate planner should recognize this discrepancy in power between the parties and consider pursuing separate representation.
  • Length of the relationship. The shorter the relationship, the greater reason to get separate attorneys.
  • The number of past relationships. Another pretty solid rule of thumb is that the greater the number of past relationships one, or both of you, have had, the greater the chance that you need separate estate-planning representation.
  • Large age difference. The greater the age difference between you, the greater the need to consider separate representation as you both are in very different places in your lives and face unique concerns.

If you have questions about probating an estate planning contact a Jacksonville Estate Planning Lawyer to talk about your estate, will or forming a trust.

Source: "Estate Planning For Couples: Should It Be A Solo Or A Duet?," by Deborah L. Jacobs, published at Forbes.com.

See Our Related Blog Posts:
How does a Florida living will work?
Removing a Personal Representative in a Florida Probate

July 18, 2012

How to Avoid Probate in Florida

Thumbnail image for last-will-and-testament-document-with-gavel-and-pen-58750624.jpgWith a little careful planning, you may be able to avoid the probate question all together. Avoiding probate saves money and greatly reduces the strain placed on your family by time in court. A meeting with an estate-planning attorney can help you figure out how to structure your estate so that probate is not necessary, no matter how large the value of the estate. The following is a list of estate-planning tools that can help you avoid having to go through the probate process. Be careful replying on some of these because they may expose you to unnecessary risk of loss of the assets due to litigation. If you are interested in protecting assets and avoiding probate contact us to discuss your specific needs.

1. Living Trusts: Living trusts (also called an "inter vivos" trust) is a trust that is created while you are alive, rather than one created upon your death. Living trusts are great vehicles to avoid the lengthy and expensive probate process.

2. Joint Ownership: If you own property jointly with someone else, and this ownership includes the "right of survivorship," then the surviving owner automatically owns the property when the other owner dies. An asset that is owned by two or more people in joint tenancy is not required to go through probate.

In Florida, the following forms of joint ownership are available: 1) Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. No probate is necessary. Joint tenancy often works well when couples acquire real estate, vehicles, bank accounts or other valuable property together. 2) Tenancy by the entirety. This form of joint ownership is like joint tenancy, but is allowed only for married couples in Florida.

3. Payable-on-Death Bank Accounts: In Florida, you can add a "payable-on-death" (POD) designation to bank accounts such as savings accounts or certificates of deposit. You still control all the money in the account - your named beneficiary has no rights to the money, and you can spend it all if you want. At your death, the beneficiary can claim the money directly from the bank, without probate court proceedings.

4. Transfer-on-death Securities: Florida lets you register stocks and bonds in transfer-on-death (TOD) form. If you do so, the beneficiary you name will inherit the account automatically upon your death. No probate court proceedings will be necessary.

If you have questions about probate, asset protection, or estate planning contact the a Jacksonville Estate Planning Lawyer today at (904) 685-1200.

See Our Related Blog Posts:
Should you make a gift in 2012 and avoid Gift Tax on $5.12 Million

Frequent estate-planning mistakes in Jacksonville

July 16, 2012

Should I receive regular payments from a Trust as a Beneficiary?

untitled.bmpBeneficiaries or people who think they are beneficiaries of trusts often ask up if they should receive regular payments or distributions from a trust. As with most legal issues the answers "depends on the circumstances and what the documents state".

Without reviewing your trust to determine if it is a revocable trust, revocable trust that has become irrevocable, or an irrevocable trust as well who the beneficiaries it is difficult to tell whether you are entitled to anything.

Sometimes people think they are beneficiaries when they are contingent beneficiaries and have no rights until a triggering event occurs. Often that is the death of the person who created the trust or their spouse.

There are so many possibilities as to the rights you have that it would be impossible to go over each of them without a place to start. The place to start is by having a Florida estate planning lawyer or Florida trust lawyer review your trust. If you would like your trust reviewed and was written in Florida or created by a Florida resident, contact us and we can discuss review your trust and help you determine your rights under the trust document.

July 11, 2012

Elder Law Update: States That Could Make Children Pay for Dad's Care

Unpdaid long-term care bills are increasing and becoming more of a problem in many states. All 50 States have statutes that obligate adults to care for children or other family members; if your parent lives in one of 29 states, you could be held responsible for your parents unpaid long-term care bills. What? How could this be? are the typical reactions to many living in these unfortunate states.

Katherine Pearson at Penn State Law School has written a paper on Fillal Support Laws and the enforcement Practices for laws requiring adult children to pay for indigent parents.

Her abstract states:

Family responsibility and support laws have a long but mixed history. When first enacted, policy makers used such laws to declare an official policy that family members should support each other, rather than draw upon public resources. This article tracks modern developments with filial support laws that purport to obligate adult children to financially assist their parents, if indigent or needy. The author diagrams filial support laws that have survived in the 21st Century and compares core components in the United States (including Puerto Rico) and post-Soviet Union Ukraine. While the laws are often similar in wording and declared intent, this article demonstrates that enforcement practices are quite different among the two countries, even as both countries struggle with aging populations and recession. In addition, the author analyzes a potentially disturbing trend emerging in at least two U.S. states, most significantly Pennsylvania, where filial support laws are now a primary collection tool for nursing homes, with decisions against adult children running to thousands of dollars in retroactive "support." The article closes with concerns for policy makers in any state or country considering filial support as an alternative or supplement to public funding for long-term care or health care for the elderly.

What is interesting is that some states like NY have cases where they were able to go after children in other states to collect the funds. I can see how a state can enforce laws against its residents or those domiciled in that state but the concept of creating a law in one state that creates an obligation on adult children living in another state is beyond logical.

If your parent's are alive and going to receive care from a nursing home in one of the following 29 states, you should talk with an estate planning professional to determine what your risk of liability is.

Alaska, Arkansas, California, Connecticut, Delaware, Georgia, Indiana, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Mississippi, Montana, Nevada, New Hampshire , New Jersey, North Carolina, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia .

NOTE: There are no laws in Florida that would require such support but we often see individuals who check their parents into nursing homes or hospitals who sign admission papers who unnecessarily obligate themselves financially. You may want to discuss how to limit such financial obligations by use of a power of attorney.

July 10, 2012

Should you make a gift in 2012 and avoid Gift Tax on $5.12 Million

gifttax.jpgDecember 31 the 5 Million Dollar gift tax exemption is set to expire and revert back to 1 Million dollars. This is separate from the $13,000 annual gift exclusion. There is a relatively small percentage of the population that this can make a difference for. Even for those who could take advantage of it, many are not so eager to give away the money just to reduce their future estate tax bill. Many older people feel that they will not have enough to live on if they give away the funds.

The deadline for making such a gift is rapidly approaching as it can take several weeks to prepare document to deal with the issues correctly.

There are ways of making the gifts so that exposure to creditors is limited. Some ways of making the gift are in the form of cash, in trust, as part of a business, or a combination of the above.

Careful attention to the assets is necessary so that you can take advantage or not lose stepped up basis on highly appreciated assets that would normally occur with assets that pass after death.

July 6, 2012

Frequent estate-planning mistakes in Jacksonville.

Thumbnail image for pigbank.jpgWhile there are many mistakes people can make while planning their estates, a recent column on Forbes.com, lists some of the errors most frequently encountered.

1. Not having a Florida Estate Plan

Not having a will or trust means that at your death the distribution of your assets will be dictated by the inheritance laws of the state where you were domiciled, likely Florida. These "intestacy laws" leave a percentage of assets to various members of your family. While there's a small chance that the laws will accomplish what you wanted, that's unlikely. Your will applies to the disposition of your "probate assets," those things that are not following a beneficiary designation. Non-probate assets will pass by operation of law or contract. For example, whoever the beneficiary designation was when you originally began your 401(k) or IRA will override either your will or the laws of intestacy. This could easily lead to distribution of your assets to people you may not anticipate.

2. Failure to take advantage of the estate tax exemption

As every good Florida estate planning attorney will tell you, making lifetime gifts is a simple and effective estate tax minimization strategy. Giving away assets at no gift tax cost will allow the corpus of the trust and any future appreciation to avoid estate tax upon the death of the donor. Using the exemption equivalent amount during your life is better than leaving it till your death. The reason to act now is that the current estate tax structure is set to expire at the end of 2012. Beyond the annual exclusion gift limit of $13,000, the federal exemption amount for transfers during life and death has increased to $5,120,000 per person for 2012, far and away higher than it has ever been. If you're able and willing to do so making such gifts before the end of the year is a good idea.

3. Leaving assets outright to your children

There's a growing consensus that among those with the means assets should remain in trust even for adult children as long as possible to serve the goal of asset protection. The question of a trust often does not hinge on legal capacity or maturity, though they can sometimes be factors. The question is instead how do I protect the people I leave my assets to from creditors, potential creditors and ex-spouses. Whether or not to leave assets in trust for adult children depends on many factors; not the least of which is personal preference. However, in our incredibly litigious society, leaving some assets in trust with easy access is certainly an idea worth considering.

4. Going it alone rather than relying on professionals

While many people are increasingly turning to the Internet to help prepare their wills and trusts and dozens of websites cater to such customers, doing so can be a recipe for disaster. Proper estate planning is complicated and cumbersome and requires a well thought out plan. Websites can provide you with documents but no actual advice that fits you in the context of your specific personal and financial circumstances.

If you have questions about probating an estate or about a will or a trust, contact the Law Office of David M. Goldman PLLC today at (904) 685-1200.

Source: "7 Major Errors In Estate Planning," by Rob Clarfeld, published at Forbes.com.

See Our Related Blog Posts:
Florida Wills Must Be in Writing

Florida Elders can Improve Memory through Exercise

July 5, 2012

How does a Florida living will work?

signhere.jpgIn Florida a living will can contain an advance medical directive. A living will is a statement of your wishes for the kind of life-sustaining medical intervention you want, or don't want, in the event that you become terminally ill and unable to communicate. A living will is typically used by people to identify the point at which they no longer desire certain types of life-prolonging medical treatment. The Advanced medical directive can also lay out an individual's desire for continuation of treatment in the even that the individual is unable to communicate their desires or but is not in one of the predefined terminal medical states that they have already communicated their desires in relation to medical care.

Living wills are very important legal documents with legal power. Assuming the proper procedure has been followed, a patient's wishes are taken very seriously, and a living will is one of the best ways to have a say in your medical care when you can't express yourself otherwise.

Once your living will has been drafted, make sure it's signed and on file with your Florida estate planning attorney. You should also provide a copy to:

· Your regular physician
· Family members
· Close friends
· The medical records department of the hospital you're likely to visit
· If you are in a nursing home or are seeing a medical specialist, they should get a copy as well.

Finally, you can put a card in your wallet that says you have a living will and whom to call to get a copy.

While living wills are important documents, many people don't realize their limitations. Typically, living wills are only effective after your attending physician has declared that you are in final states of life and you are both mentally and physically incapacitated or permanently unconscious. The problem is that many people who are not competent to make health decisions are not in an end-state medical condition or permanently unconscious. As a result of the limitations of the living will, many experts recommend that you move beyond simply leaving instructions for others and name a person who will be authorized to make health care decisions for you in the event of your incapacity.

That is why we would recommend including advanced medical directives with your living will. The advanced directives will allow someone who you designate to make decisions when your living will does not and you are unable to make the decisions. These documents should be in a single document so that someone cannot manipulate your desires by showing one document but not the other.

If you have questions about probating an estate or about a will or a trust, contact the Jacksonville estate planning lawyer or call the Law Office of David M. Goldman PLLC at (904) 685-1200.

Source: "Living wills and health-care proxies," published at CNN.com.

See Our Related Blog Posts:
Removing a Personal Representative in a Florida Probate

Planning for Pets who are Part of Your Family: Can a Pet Trust help?

July 1, 2012

Florida Wills Must Be in Writing

untitled.bmpAlthough your parents have for years been telling you (and anyone else who will listen) that they are leaving their home to you, if they don't put their words in writing, you WILL NOT get their home upon their death. In Florida, Wills Must Be in Writing, the Florida Statutes are clear about this. If someone dies and has not left a writing evidencing wishes as to how his/her belongings are to be distributed, then the estate is distributed according to the Intestacy statute.

In the Florida case In Estate of Corbin v. Sherman, the First District Court of Appeal considered a written will which contained the following language,"I give, bequeath and devise all of my estate of whatsoever kind and nature to Betty Sherman to dispose of as she has been instructed to do by me".

The Court concluded that the language in this clause, "clearly attempts to devise the decedent's property to Ms. Sherman for Sherman to distribute according to oral instructions from the decedent." As Florida does not recognize oral wills, the court likewise, invalidated this Will.

Every Florida Will must be in writing. It must be signed by the Testator (the person making the Will) at the end of the will. The Testator must sign his/her Will in the presence of at least two witnesses, who must sign the Will in front of the Testator and in the presence of one another. Florida is one of the majority of states that has adopted a self proving affidavit procedure. It is recommended by a Jacksonville Estate Planning Attorney that every Florida Will include a "Self Proving Affidavit". This procedure is when the testator and the witnesses after executing the will, execute in front of a notary public an affidavit reciting that all of the requisites for due execution of the will have been complied with. This allows the will to be probated in the Florida Courts even if the witnesses are dead, cannot be located, or have moved far away.

It is certain in Florida that if your parents do not put their oral statements about leaving you their home in writing, you will be sharing their home with all your siblings pursuant to the intestacy laws. Don't wait until it is too late.

Having a Will prepared is an easy task. Once you have contacted a Jacksonville Estate Planning Lawyer, all that is needed is some basic information as to what your assets are, and how you wish to distribute them upon your death, and your will can be prepared. Once your Will is ready, you come into the office and sign your Will in front of witnesses. Knowing that an experienced attorney has not only prepared your will, but has ensured that you execute your will pursuant to Florida law, is a great comfort.