Articles Posted in Estate Planning

There is a myth that trusts and estate planning are for the rich only, but this is actually a common misconception. Estate planning for high net worth individuals usually centers on reducing tax bills, but estate planning has a number of benefits and objectives depending on a client’s needs. An estate plan can provide expert guidance on other aspects of wealth transfer through, wills, guardianships, executorships, powers of attorney, and long term health care.  Today one of the most important aspects of estate planning is to provide asset protection.  Asset protection has historically only been available to the ultra wealthy.

Of all the asset protection and estate planning tools we use here at the Law Office of David M. Goldman PLLC, trusts are the most likely to be associated as having the stigma of being only for the rich. An  asset protection or estate planning trust is a great device that can ensure a client’s wishes are followed and further offer asset protection. A trust is a legal entity, much like a corporation, that has a manager called a trustee. The person who creates the trust, the settlor or grantor, will put assets into the trust for the trustee to administer as the trust dictates.  (Often the creator and the manage are the same person or people) Continue reading

A trust is one of the most important estate planning tools available and can be used to achieve almost any estate plan’s purpose. A trust can even be drafted with provisions to allow the settlor, or the person who creates the trust, to set conditions for the beneficiaries to meet in order to receive distributions from the trust after the settlor passes.

Recently a trust with “some strings attached” made news due to some of its stranger and oddly specific requirements of the beneficiaries. Maurice Laboz was the owner of a large real estate management firm Regal Real Estate, and when he died, he left both of his daughters $10 million each through a trust. What is interesting about this trust is that each girl can receive their full inheritance when they reach the age of 35, or sooner if the daughters meet certain conditions Continue reading

Here at the Law Office of David M. Goldman, we come across many estate-planning problems that can be avoided by careful planning and forethought. With higher estate tax exemptions most individuals don’t have to consider avoiding estate taxes, so we often recommend a person’s estate planning goal be to leave behind a legacy that will preserve and protect your family.

A common mistake clients often make is to not name a contingent beneficiary of a retirement account or bank account. Generally, every retirement account requires a person to name a beneficiary, but a problem can arise if this named person passes before the retirement account holder.   Always specify at least one contingent beneficiary to inherit the account if the primary beneficiary dies before you. It is also important to learn the difference between “per stirpes” and “pro rata” designations. Per stirpes means that if the named beneficiary dies, that person’s family inherits what the dead person would have inherited. Pro rata means the inheritance goes to the other surviving named beneficiaries. With the recent Supreme court decision, we often recommend that your trust be named as the primary beneficiary of your retirement accounts to avoid loss to the creditors of the beneficiaries. Continue reading

Elder fraud is becoming a growing concern as the baby boomers are beginning to retire and are not well versed in the latest technology. Recent studies show that senior citizens are being defrauded through Internet and telephone scams. As an estate planner and elder law specialist, I thought I would share a few tips on how to safeguard assets from financial abuse.

One way to prepare for the future and to safeguard assets is to have a Florida estate and financial plan with proper controls in place. We recommend that many clients should start considering adding elder law or asset protection planning once they reach age 60 or acquire large assets. The estate plan should deal with all of a client’s assets are accounted for and the plan be reviewed every periodically or when there has been a change in the family like a birth, death, divorce, or marriage.  Continue reading

 

With the recent Supreme Court ruling making headlines for allowing same-sex couples to get married, the unnoticed effect of this monumental ruling is how it will affect the estate planning for couples that can now tie the knot. Same-sex married couples now have the same estate planning and tax benefits others couples have been enjoying for years. Now is a great time to update your estate plan to take advantage of all new benefits available.

Supreme Court Justice Kennedy wrote in his now famous opinion that same-sex couples are no longer “cosigned to an instability, many opposite-sex couples would deem intolerable in their own lives.” Before this decision 36 states had already recognized these marriages, but now the other 13 mostly southern states must follow.   This means same-sex couples that live and marry in these states should consider updating or creating estate plans that take advantage of their new legal status. Continue reading

While irrevocable trusts were once thought to be untouchable this may no longer be true as the practice of “decanting” a trust becomes more commonly used. Decanting lets a trustee, or the manager of the trust, change certain terms by figuratively pouring the assets from an old trust into a new one. So far, 21 states have adopted decanting laws and a group of trust lawyers and professors are drafting a model law to serve as a template for states to use in the future as a model.

Many families use irrevocable trusts to pass wealth to their beneficiaries because of the tax advantages and other benefits the trust offers. So far there are some limits to what decanting can do, as, for instance, trustees cannot change a beneficiary’s already vested interests in a trust.

So what can the act of decanting do? Continue reading

A GRAT is a Grantor Retained Annuity Trust and is a special type of irrevocable trust that allows the settlor, or trust maker, to transfer assets to this trust and receive an annual annuity payment for a certain amount of years. When the term of the GRAT ends, the assets remaining in the GRAT are distributed to the trust beneficiaries.

So how does it work?

The amount of the annuity payment paid to the settlor during the GRAT is calculated by using an interest rate determined by the IRS called the section 7520 interest rate. The settlor can even set the annuity payment so that it will be exactly equal to the section 7520 interest rate, meaning that theoretically all of the assets that been transferred into the GRAT will be returned to the settlor in the form of annuity payments. Continue reading

Estate planning often focuses on married couples, but estate planning for a single person is equally as important. A single person often owns assets in their name individually, which means these assets must go through the probate process when the person dies. The big question then becomes whom do these assets pass to?   In addition, asset protection and Medicaid issues become more important to address with a single person than a married couple.

A single person like any other person can own many assets and have a desire to see those assets distributed to certain people. Some assets, such as life insurance and retirement plans, are distrusted at death according to the beneficiary designations. If a person dies without a will, his or her possessions are passed intestate according to the intestate laws of the state. For a single person, the state law usually provides that a single person’s assets are passed to his or her closest relatives. If there are no relatives then the assets are collected by the state. So estate planning is needed if a person wants a say in how his or her assets will distributed.

What documents does a single person need?

A will acts as the foundation of an estate plan and serves as the blueprint for how a person’s assets are distributed after death. A will allows this person to name a guardian for young children. A will also assign an executor to help guide beneficiaries through the probate process. The executor can be a trustworthy friend or family member. A will allows the testator, or will maker, to take his or her beneficiaries thoughts into account.

A durable power of attorney is a document that lets a person appoint someone to manage your day-to-day financial and personal affairs if that person becomes incapacitated. A married person will usually name the spouse. We recommend a single person name a trusted family member or friend with a strong financial background. A medical power of attorney allows a third person to make decisions regarding a person’s health care and treatment. This does not have to be the same person who has the financial power of attorney. The person named in a health care power of attorney should be someone who respects your health care wishes, such as a choice not to be on life support when the odds of recovery are not good.

A will or trust are  also great tools when planning for the distribution of your estate. With a will, you can direct whom will receive your assets through probate. A trust is a legal device that holds assets for one or more beneficiaries. A trust allows the beneficiaries to take the trust’s assets without going through the probate process.

While married couples can protect their assets by owning them a certain way, a single person does not have the ability to use Tenants by the entireties or have a spouse own their assets.  It may be necessary to have a properly drafted LLC or Florida Asset Protection trust to help protect assets from creditors.  In addition, the max non exempt assets a single person can have and be eligible for Medicaid is only $2000.  Using certain trusts and other planning techniques into a single person can control assets and make them exempt from creditors as well as Medicaid (there is a 5 year look back for Medicaid planning).

If you are single and currently do no have an estate plan, we urge you to contact our office at 904-685-1200.

When lawyers draft estate-planning documents they are made with current laws in mind. However, estate-planning laws have changed in some key ways over the last few decades. Here are 4 key dates that have changed estate-planning. If your documents created before these dates it may be time to update them.

HIPAA

The first date to look out for is April 14, 2003, which is when the privacy rules under the Health Insurance Portability and Accountability Act first took effect. Although HIPAA was enacted in 1996, its privacy regulations were not enacted until several years later on April 14, 2003.

This act brought about much stricter guidelines regarding the disclosure of a person’s health information to third parties without explicit permission. Now, only a few people are allowed to receive this information, which becomes a much bigger issue if the person becomes incapacitated, such as in Terri Schiavo’s case. Now, a durable power of attorney is needed to make important health care decisions for loved ones. If your will, revocable trust, durable power of attorney or health care power of attorney was executed before this date, your executor, trustee, or agent may not be able to effectively work with your medical care providers or insurers.

State estate taxes Continue reading

In Florida, courts are now permitted to judicially modify an irrevocable trust even when a trust is unambiguous.

Historically, courts held the belief that the intent of the settlor, the person who creates a trust, should only be determined from the actual language of the trust document. This belief led courts to only modify a trust when the trust’s purpose, or provisions within the trust, were found to be ambiguous. If no ambiguity was found the court was unable to consider any other evidence of the settlor’s intent, and the beneficiaries were stuck with whatever the trust says on its face. In Florida, this changed when Florida adopted the Florida Trust code in 2007.

Florida’s Trust code is modeled on the Uniform Trust Code (UTC). The UTC deals with modifications in a number of sections that Florida has mostly adopted. For instance, UTC § 412 allows a court to modify or terminate a trust when the following circumstances occur:

  1. The trust’s purpose no longer exists, unanticipated circumstances have occurred.
  2. A modification or termination will further the purpose of the trust
  3. The trust’s existing terms would be impracticable, wasteful, or would impair the trust’s administration.

In Florida, the Florida Trust Code is still the controlling law when it comes to a Florida court’s ability to modify a trust. The Florida Trust code has many statutes that correlate directly to similar UTC provisions.   Here are a few of the more commonly used Florida modification statutes.

Fla. Stat. § 736.04113

This statute allows a court to modify an irrevocable trust when modification is not inconsistent with the trust’s purpose.   A trustee or qualified beneficiary may petition a court to modify a trust when circumstances have occurred that were not anticipated by the settlor. Under this law, a court may modify the trust or even change the terms of the trust distribution. Courts are also allowed to consider extrinsic evidence at its discretion. This means a party can present evidence of the settlor’s intent with other documents besides the trust.

A good example of when this statute might be used occurs is when a trust is created to support a family member who is not expected to survive. Another example might be a trust created for a child who has special needs and later recovers or a trust created for someone who is expected to be disabled, but is later denied for disability so they do not need the trust provisions. If the circumstances change, it may be possible to change the terms of the trust to deal with the new situation.

Fla. Stat. § 736.04114

This statute allows a court to modify an irrevocable trust with federal tax provisions by defining who the beneficiaries are and the amount of their respective shares. This Florida code also works directly with 736.0416, which allows a court to modify the terms of a trust that was created to achieve the settlor’s tax purposes. Therefore, when estate taxes change or other circumstances occur, a court is allowed to modify or terminate a trust created for tax purposes. This Florida law relates directly to UTC § 416.

Many estate-planning attorneys feel these types of modifications will become more common as the estate and gift tax exemptions continue to grow larger. Only a few years ago, the tax exemptions were much lower and trusts were often created to limit the tax burden on the estate. Now these trusts may actually save more money if they are modified under the existing tax laws. These statutes allow a court in Florida to modify the trusts that were created with this tax limiting purpose in mind.

Fla. Stat. § 736.04115

This statute allows a court to modify a trust when compliance with trust terms is not in the best interest of the beneficiaries. This statute also allows the court to weight extrinsic evidence relevant to the proposed modification. The extent a court will modify a trust for the beneficiaries in a manner that conforms as close as possible to the settlor’s intent. This statute will be used when a beneficiary wishes to modify or terminate a trust, even if that modification would directly conflict with the settlor’s intent.

A good example of when this statute has been used occurred in a case where the beneficiaries were in agreement to allow a corporate trustee to resign without liability. The trust contained a mandatory corporate-trustee clause, which would not allow the corporate trustee to resign without breaching his fiduciary duties to the trust. Looking at the facts of the case, the court felt the corporate trustee had substantially administered the trust and it would be in the best interest of the beneficiaries to modify this clause.

An irrevocable trust is a powerful tool in the estate-planning world, however unforeseen circumstances may require the trust to be modified or terminated in order to still be lucrative to the beneficiaries. Modifications have been known to save estates a fortune, and the Florida Trust codes have made it easier than ever to receive a judicial modification. For more information on how a modification can serve your estate planning needs, contact the Law Office of David Goldman PLLC.

Contact Information