Florida Estate Planning Lawyer Blog

Joseph Percope has written an article The Impact of Co-ownership on Florida Homestead in the Florida Bar Journal that discusses the tree kinds of homesteads defined in a 1997 Florida Supreme Court case: The tax exemption; The Protection from Creditors; and The restrictions on alienation of homestead property in Florida.

While most are primarily concerned with their tax breaks, as a Florida Estate Planning Lawyer we often deal with the second two more often in our planning. We see families attempting to avoid probate by adding kids on to deeds all the time. We also see parents who own part of their children's homes. The problem begins when in either of these situations one or more of the owners does not live in the home. The home or at the ownership of the person not living in the home is subject to the claims of their creditors.

When no ownership percentage is specified, Florida will apply equal percentages of ownership to each person named on the deed. If a single person adds their child onto their deed as joint tenants with rights of survivorship, 50 percent of the equity in the home will be exposed to the creditors of the child who is not living in the home.

Once a creditor takes an ownership in the home, it is possible to force the sale of the home.

While these types of deeds are rarely a good idea because of the tax and basis considerations, many have not considered the additional risk due to the creditors of co-owners who do not live in the home or qualify for the second type of homestead (the constitutional protection from creditors)

The same scenario applies to those who try to use a traditional life estate deed to avoid probate. ( a Florida Enhanced Life Estate Deed does not have many of the problems that a traditional life estate does.

If you are trying to avoid probate in Florida and would like to also have protection for your homestead from creditors, not have adverse tax consequences, not lose stepped up basis, and/or not create a disqualifying transfer of assets for Medicaid purposes, you should contact a Florida Estate Planning Lawyer to discuss how to protect your homestead and the options available that deal with your circumstances and goals.
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A Florida Enhanced Life Estate Deed (sometimes called "The Lady-Bird Deed" is a tool used by Florida Estate Planning Attorneys, Florida Elder Law Attorneys, and other by Florida Lawyers to preserve the homestead for the benefit of the family and avoid a Probate in Florida. Upon the death of the homeowner's the property will pass to the people designated without the need for a costly probate process in much the same way as a bank account with a beneficary designation.

Why Use an Enhanced Life Estate Deed?
The Florida Enhanced Life Estate Deed provides a mechanism to bypass the probate process and thus the creditors. Under this document, the husband and/or wife retain a Life Estate Interest under which he or she retains the right to live on the property for their life. Unlike a Life estate, the husband and/or wife retain the right to sell, mortgage, convey, gift, or cancel the remainder interest at any time during their life. If there is any property interest upon the last to die of the husband and/or wife, the remainder will pass in fee simple to the designated individuals named in the deed.

Who should use the Enhanced Life Estate Deed?
A Florida Enhanced Life Estate Deed or Florida Lady-Bird Deed should be use by individuals or couples who want to simplify the transfer of their property upon their death and retain full authority and possession over their property.

Will using an Enhanced Life Estate Deed affect my Florida Medicaid Eligibility?
As long as the individuals demonstrate an "intent-to-return" to the homestead Medicaid Eligibility should not be affected.

What are some common mistakes with deeds?
Many Florida residents add their children on their deeds as Joint Tenants with Rights of Survivorship.
Many Florida Residents deed their property to their children and retain a life estate.

What can happen if I have made a common mistake on my deed?
1) My home may not be protected from creditors and/or loose its homestead protection.
2) I may be disqualified from Medicaid in the event that I need to go into a Nursing home.
3) I may have made a gift, subject to Federal Gift Taxes, Penalties, and Interest which my heirs and/or family may be responsible for paying.
4) I may not be able to sell my home or use the proceeds from my home to enhance my quality of life, travel, or pay for the necessary medical care I need.

If I have made a mistake transferring my property, can it be fixed?
Yes, You should meet with a Florida Estate Planning Lawyer to evaluate your situation, and prepare the documents necessary to allow you to qualify for Medicaid, deal with the Gift taxes, protect your homestead, and pass your homestead to the desired beneficiaries without the costly expense and delay of Florida probate.

Florida statutes define probate assets as those assets subject to a probate administration. There are several types of Probate in Florida which are discussed in our Free Florida Probate Handbook that you can request.

Often it is easier to define which assets are not subject to probate.
In Florida any asset with a surviving joint owner, valid payable on death designation, or contract clause which defines what happens to the asset upon death are not subject to probate. Often these include life insurance policies, annuities contract or retirement account with a transfer on death clause, jointly owned bank accounts, real estate with and valid beneficiary designation clause. One of the most common items that is not subject to probate is a Florida homestead. While a homestead is not devised through probate typically, title companies will often require it to be dealt with in a Florida probate to issue title insurance. The good news is unless you messed up your will or other documents, a Florida Homestead will not be subject to the claims of your creditors or the creditors of your beneficiaries if it is their homestead.

a Florida Probate can be expensive so it is wise to review your estate plan with a Jacksonville Estate Planning Lawyer to see if any of your assets will be subject to a Florida Probate and if a probate in Florida can be avoided.

It has been many years since the regional divisor has been updated. For the last several years the penalty period was calculated using an outdated nursing home cost of $5000. As of now, the divisor has been raised from $5000 to $6880 in Florida (Florida Administrative Code)

What does this mean? If one does property planning, they can give away $6880 and only have a 1 month penalty. This becomes important when doing planning for individuals who have nursing home exposure.

This will significantly increase the amount of money most people could save by doing elder law planning in Florida. As you age it is important to consider both Florida Estate Planning and elder law when structuring your plan.

John B. Conner has written a Law Review article in the Estate Planning and Community Property Law Journal titled "DIGITAL LIFE AFTER DEATH: THE ISSUE OF PLANNING FOR A PERSON'S DIGITAL ASSETS AFTER DEATH"

The article starts off discussing issues of digital assets and estate planning by defining digital assets and then discussing issues in estate planning created by digital assets.

It goes on to talk about how websites are dealing with digital assets and privacy acts as the relate to deceased users with social networking, web-based email, blogs and other online content.

Mr. Conner then give some suggestions for dealing with digital assets properly through planning, and some of the problems with using standard wills or other documents.

He then discusses post mortem identity theft and content theft from the deceased blogs and concludes that as the Internet continues to grow the need for estate planners who are able to deal with digital assets will continue to expand. Some state are attempting to implement legislation to help deal with these issues but those may only help if you die in one of those states.

I have recognized the need for planning for your digital death for several years and have been dealing with clients to design systems that will help provide for their digital death. If your current estate plan has not contemplated your digital death, perhaps you should talk with someone who understands how to deal with this unique class of assets.

While we have been saying this for years and it is the reason we created the original Gun Trust it is nice to see others in the legal community begin to recognize the difference and purpose in firearms trusts. Our trust are now designed for all firearms and not just NFA firearms.

A trust protector is a person or group of people (not the settlor, beneficiary, or trustee) who are appointed to exercise one or more powers affecting a trust and the interest of the beneficiaries. The concept of a trust protector is to protect beneficiaries from a rogue trustee. They can often make changes to a trust involving who the trustees are, investment decisions, change how distributions are made and in some cases modify or terminate a trust.

They can provide help when circumstances change and the settlor's intentions are not being dealt with properly. While a trustee has fiduciary duties, in most cases a trust protector acts as an agent of the settlor and may not have the same duties as other trustees.

Others argue that you should impose fiduciary duties on the trust protectors and make them accountable to the beneficiaries. As such, it is important to have detailed discussions with clients about the roles and responsibilities of trust protectors. Their powers and limitations should be clearly defined to limit the scope of their actions.

Some recommend that while imposing a fiduciary duty on a trust protector, the claims can be limited by removing liability for simple negligence but not gross negligence or when their conduct amounts to a willful breach of their fiduciary duty.

If you have trust protectors in your trust, it is important to review the powers and limitations and to what standard they will be held if they damage the beneficiaries.

If you would like to add trust protectors to a trust to protect from improper actions of a named trustee or in the event of changed circumstances which may frustrate the settlor's intentions, you should contact a Florida Estate Planning Lawyer to discuss your circumstances and desires.

Estate planning is an important event in one's life. The fruits of a life time of hard work, passed down in the hopes that they will serve their next owner well. But in this modern age we live in, online digital assets are frequently left out of the estate planning process.

Much of our the time we spend each day is on the internet. How much of your information and is floating out there on the internet Between Facebook, PayPal, Flickr, twitter, iTunes, email addresses, passwords, usernames and passwords, we have a lot of information that is not readily available to others if we should become incapacitated or die. In this age of the internet what happens to all of that personal info when we finally shed our mortal coil and update our Facebook status to dead? Do we want to loose our Facebook account when we die? Once the status is updated to deceased, it cannot be modified, updated, or used for other purposes. It continues to exist, just as you left it, until the asteroid strikes earth, or the apes rise up, or whatever your favorite end of the word scenario is, ends up happening. There may be value to your family or estate in being able to communicate with your previous friends.

To some this is perfectly acceptable. Some Facebook albums just never need to be seen again, for the good of all mankind. The problem arises when there is something worth saving, something worth passing down. The picture of you two on graduation day, wedding photos, that blog about the summer you spent in Europe, or photographic proof of how much more attractive your grandma was at your age. The memories and happiness that these photos will bring your loved ones is immeasurable. There may be things that your family wants to remove or modify. Something that was important to you, which they can now keep close, fondly reflect on, or pass down themselves. The hitch is only you knew your log in info, and your dead, and those close to you can't guess the answer to your asinine password hint question. What is the name of my mother's favorite pet? Seriously.... she lived to a hundred and had 9 cats when she died. How am I supposed to guess that.

The problem of how to handle digital assets is new, but the solution on the other hand is not. The formation of a trust to manage your digital assets can insure that before you pass on, you can form a plan to you give those closest to you the tools to ensure that the virtual you, that online life you build, isn't quarantined in internet limbo, but safely in the care of those you choose.

A Florida Asset Protection Lawyer is of most use when you do not have any potential liabilities. When you have a known creditor, you have to be concerned with fraudulent conveyances and fraudulent transfers. Generally if you participate in a fraudulent conveyance or transfer the court can undo a transaction within 4 years of its occurrence.

A Fraudulent Transfer occurs when you transfer an asset to put it outside the reach of a creditor.

A Fraudulent Conveyance occurs when you transfer an asset for less than full value and this causes harm to a potential creditor.

There are many ways of protecting assets as part of an overall Florida Estate Plan but careful consideration must be taken of your present situation and circumstances. Some of the tools used by Florida Asset Protection Lawyers include creating Florida Asset Protection Trusts, Domestic asset protection trusts, limited liability companies, limited partnerships, Florida LLLPs, and different forms of ownership.

In addition to how the assets are structured there can be different ways in which you spend "at risk" money and save money that is not at risk. If you would like to learn more about Florida Asset Protection, contact us to discuss your circumstances and objectives with a Florida Asset Protection Lawyer.

Note: Asset Protection is a complex practice area and as such we do not offer free consultations in this area. A typical consultation takes 2 or more hours.

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.

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

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.

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.

You asked and a Jacksonville Estate Planning Lawyer will advise you that according to Florida Law, an "Advance directive" means a witnessed written document or oral statement in which instructions are given by a principal or in which the principal's desires are expressed concerning any aspect of the principal's health care, and includes, but is not limited to, the designation of a health care surrogate, a living will, or an anatomical gift.

A Health Care Surrogate is chosen by the principal to act for the principal and to make all health care decisions for him or her during the principal's incapacity. The health care surrogate has the authority to consult with appropriate health care providers, to provide informed consent, to provide written consent, to be provided access to the appropriate medical records of the principal, and to apply for public benefits, such as Medicare and Medicaid on behalf of the principal.

The written designation of health care shall be signed by the principal in the presence of two adult witnesses. The person designated as surrogate shall not act as witness to the execution of the document designating the health care surrogate. At least one person who acts as a witness shall be neither the principal's spouse nor a blood relative. It is strongly suggested that the execution of the designation of health care surrogate be done in front of a notary.

A Living Will made be executed by any competent adult. It is a declaration concerning the providing, withholding, or withdrawal of life-prolonging procedures in the event that a person has a terminal condition, has an end-stage condition, or is in a persistent vegetative state. A living will must be signed by the principal in the presence of two witnesses, one of whom is neither a spouse nor a blood relative of the principal. It is strongly suggested that the execution of the living will be done in front of a notary.

In determining whether a patient has a terminal condition, an end-stage condition, or is in a persistent vegetative state, or may recover capacity, the patient's attending or treating physician and at least one other consulting physician must separately examine the patient. The findings of each such examination are then documented in the patient's medical record and signed by each examining physician before life-prolonging procedures may be withheld or withdrawn.

An "Anatomical gift" or "gift" means a donation of all or part of a human body, to take effect after the donor's death and to be used for transplantation, therapy, research, or education. Chapter 765 of the Florida Statutes has a comprehensive listing of provisions that detail everything one needs to consider when contemplating an anatomical gift.

Now that you know what "Advance Directives" are, contact a Jacksonville Estate Planning Lawyer to have your advance directives prepared today.

You have heard it all before again and again. The reason for the repetition is . . . there really are 7 estate planning documents that should be prepared before one dies.

A Jacksonville Estate Planning lawyer will provide you with story after story that have no happy endings. These stories begin with people who talked about contacting a lawyer to have legal documents prepared, but never did.

The documents you need to consider today are:

1. Last Will and Testament: This document allows you to name a guardian for your minor children in the event of your death, distributes your property to the people you want to inherit, allows you to donate to charity, among other provisions.
2. Living Will: If you remember the Terri Schiavo Florida case, you will recall 7 years of court battles regarding life-prolonging procedures keeping Terri alive, after being diagnosed as in a persistent vegetative state. If a Living Will (which allows you to declare what, if any life-prolonging technology you desire) was in place, this costly, exhaustive and emotional fight would never have happened.
3. Do-Not-Resuscitate Order (DNR): This document is state specific and it must be prepared in strict compliance with Florida Law. If prepared properly, it alerts medical professionals not to perform cardiopulmonary resuscitation on a patient when he/she stops breathing or the heart stops beating in specific medical conditions (end state renal disease, terminal cancer).
4. Designation of Health Care Surrogate: This document allows you to name the person(s) you want to make health care decisions for you in the event that you are incapacitate or too ill to make these decisions yourself. If this document is not in place, the default health care substitute chosen may very well be someone you do not want to serve.
5. Authorization to Release Health-Care Information: We have all heard of HIPAA (Health Insurance Portability and Accountability Act of 1996). This federal privacy rule provides protection for personal health care information. This law is so strict that if you have not executed a HIPAA Release even your health care surrogate or proxy will be unable to obtain and review your records.
6. Trust Documents: There are numerous trusts for different types of situations. In general terms, a trust is utilized whereby property is held by one party for the benefit of another. For a listing of the various trusts available and their purpose, visit Jacksonville Trusts Attorney.
7. Letter of Instruction: This document can be as simple or detailed as you desire. It can contain directions as to your burial and cremation wishes, organ donation wishes, and who you would like to care for your pets.

Don't let another day pass, contact a Jacksonville Estate Planning Lawyer.

In Florida a Will must be in writing, signed by the signed by the testator and authenticated by two witnesses. Florida does not recognize holographic wills that are valid in another state if they do not meet the above requirements. Other than holographic wills, Florida will recognize a will that was validly created in another country.

Therefore a foreign will other than a holographic will is valid in Florida and holographic wills created in anther state or country which are signed by the testator and authenticated by two witnesses are also valid in Florida.

There are three ways in which a will can be contested in Florida.

1. Undue Influence;


2. Testamentary Capacity;


3. Failure to Execute with the Required Formalities.

The above example would involve Failure to Execute with the Required Formalities.
Florida Statute 732.502 defines the requirements that a testator must follow to create a valid will. Carefull attention need to be paid to a will that was not executed in Florida, or an old will to make sure that the requirements were followed at the time the will was created and not necessarily the current requirements.

In addition, a foreign will could be challenged under testamentary capacity. To have the proper testamentary capacity to make a will in Florida you must be of sound mind and either an emancipated minor or more than 18 years of age. Sound mind is having the mental ability to understand the making of a will, knowing what your assets are, and being able to choose who is going to receive them. You do not have to understand it later, but only have a lucid moment at the time you execute the document. If there is a question about mental capacity, it is a good idea to ask questions, and document the answers at the time the will is signed to create evidence of mental capacity for any future dispute.

The third type of will contest deals with undue influence. This happens when a beneficiary or another person causes a person to change a will to the detriment of another person. These are very hard cases to prove but do occur. Often a family member, caregiver, friend, or neighbor with access to a person can cause them to change a will with undue influence.

If you are considering contesting a will in Florida, you should discuss your situation with a Florida Estate Planning Lawyer to determine what your options are.