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April 2, 2013

General Guidelines for Successor Trustees in Florida

The management of a revocable living trust is intended to be a simple, private, inexpensive matter handled by the Settlor and those people the Settlor chooses, without court intervention. It is always a good idea to seek professional advice when taking over the management of another persons trust. Generally the roles, responsibilities, and duties can be explained quickly and stop many problems before then create harm.

The following are general guidelines that you should supplement with the specifics of the trust you will be managing; these guidelines are not intended to be specific advice for any particular situation. These guidelines apply to successor trustees who find themselves in charge of a trust.

There are three situations in which you may have assumed the title of Trustee: 1) The Settlor has been determined to be incapacitated as defined in the Trust; 2) The Settlor has died; or 3) The Settlor has resigned as the Trustee and either appointed you as the Successor Trustee or named you the Successor Trustee in the Trust document.

An Overview
Regardless of why or how you came to be trustee, all successor trustees should keep a few general ideas in mind.

  1. You are handling someone else's property, not your own. When you act as a Trustee you should follow the rules and laws that apply to the trust. These rules and laws come from two sources. The first source is the trust document. In that document you will find many paragraphs that describe what you are allowed to do, what you are required to do, and what authority you have to exercise your own discretion in making decisions. The second source is the state and federal laws that apply to the trust.

    A successor trustee should immediately familiarize himself or herself with the trust document, and any amendments to the trust, to be certain that the successor trustee knows what is expected and what is required by way of management, distributions, reporting, accounting, and any other specific duties that the trust might place on the trustee.

  2. You will be required to account for and explain your decisions and activities in the management of the trust. You will be required to provide regular accountings to the beneficiaries of the trust, and may be required to make certain reports to the tax authorities. Detailed records will make that reporting a lot easier. Your records might include detailed checking ledgers much like you would keep for your own checkbook. The records should show the check number, date, amount paid or received, whom the payment was from or to, and the purpose of the payment. Another good idea is to keep a journal or log book of activities for the trust, in which you would make notes about what you have done and why. You should have a good initial accounting where you list the assets at the time you took over the job.
  3. Clear communication between the trustee and the beneficiaries can avoid future misunderstandings.
  4. Avoid self-dealing. Do not have your spouse or family provide services for the trust if they will be paid for their work. If you feel that you must be involved people who you have a close relationships with, you should only do so after a full disclosure of the terms and circumstances and obtaining written approval from each of the beneficiaries. A small degree of formality now can avoid a major misunderstanding later when the trustee and the beneficiary may have quite different recollections of an arrangement.

Continue reading "General Guidelines for Successor Trustees in Florida" »

August 10, 2012


News sources recently revealed that Facebook founder Mark Zuckerberg -- as well as other Facebook top brass--use Grantor Retained Annuity Trusts ( GRAT or GRATS) to protect their assets and investments from excessive taxation. A Grantor Retained Annuity Trusts (more commonly called GRATs) is a perfectly legal--and very efficient--way to protect and pass significant assets from one person to another without incurring an exorbitantly high tax bill.

GRATs differ from certain other asset protection trusts in that they offer a good vehicle for wealthy investors who put money in start-ups, while other trusts may not. But it's not only wealthy startup investors who may find GRATs useful. GRATs are an excellent way to shift wealth to others at little or no tax cost and with minimal legal and economic risk. As such, they can be the perfect tool for business owners, professional investors, and many others. Setting up a GRAT allows the investor/grantor to give assets over to the trust for a pre-determined number of years. During this time the assets appreciate and the grantor receives annual payments adding up to the asset's original value plus a return based on a fixed interest rate determined by the Internal Revenue Service. At the end of the trust term the assets (at their new value) are transferred to the beneficiary named in the trust with none of the usual gift or estate tax on the appreciation.

This makes GRATs sound like the perfect (and perfectly simple) tool, but nothing is perfectly simple. The pre-determined lifetime of your GRAT will depend on your individual circumstances, as well as the tax laws at the time, so you'll want to make sure you have the help of an experienced and knowledgeable attorney helping you design your trust. Contact our office for more information.

We also have other types of irrevocable trusts that can be used to create similar benefits with or without inclusion in your estate. Today with the estate tax exemption at 5 million not everyone will benefit from a GRAT but for those with less than 5 million, some of our other trusts can offer the same benefits as GRATs offer the wealthy.

October 20, 2011

Problems with Domestic Asset Protection Trusts

Domestic Asset Protection Trusts (DAPT) have become the latest rage in estate planning and asset protection. We have generally found that there are better ways of protecting assets from creditors by using traditional estate planning that has case-law history.

In a recent US bankruptcy case, a DAPT was invalidated and the 10-year bankruptcy statute of limitations in regards to trusts was upheld. This was an Alaskan case using an Alaskan DAPT but similar results should be expected in other jurisdictions.

If you are interested in Florida Asset Protection or Asset Protection in Jacksonville, contact a Florida Asset Protection Lawyer to discuss your circumstances and options that are available to help protect your assets from creditors or increase the ability to negotiate with creditors.

October 6, 2011

Steve Jobs Will Reading and His Estate Plan

steve jobs.jpgToday there is much speculation about what Steve Jobs' will reading will reveal about his life. Steve Jobs has always been very quiet and protective about his personal life and we all know that he has been very good at protecting business secrets.

I was interviewed today about what Steve Jobs's will and the potential huge estate tax that will be paid. I think if you look at how he managed his life and businesses, it is likely that if Steve had a will, it will not be read and there will be no probate. I believe that none or almost none of his assets will pass under a traditional probate and that there will be no boom to the economy from his huge estate. Steve was married at the time he died and as such jointly held assets or those in a joint trust will probably not be subject to any estate taxes.

It is unlikely that we will hear anything in the next few months and may never know about Steve's estate.

Forbes is reporting that Steve Jobs's estate will probably not owe taxes also

September 9, 2011

Protecting the Family Vacation Home

Florida asset protection for homestead- House.jpgOften families have vacation property that has been owned for may years or generations. It would be virtually impossible for most children to acquire or maintain these types of properties in today's market.

We often use business entities or trusts to hold title to the property and other assets to help provide for the management and expense of owning and operating a vacation home. When the property is going to be inherited by more than one child or family. An operating agreement or trust agreement can provide rules for handling allocation of time, and expenses among the children and their families.

If you have a family beech or lake home or a ski lodge you may want to talk with a Florida Estate Planning Lawyer about how to protect the property from your creditors, the creditors of your children, and disputes between your children regarding the use and expense sharing of the home in the future.

August 14, 2011

What is an IPUG Trust?

While most people feel they have to be super rich to use Asset Protection trusts an IPUG™ Trust is a Self-Settled Asset Protection Trust for that makes sense for regular people and offers Medicaid compliance that works in all states. It protects client assets from creditors, predators and nursing homes, while permitting the grantor to be trustee and have customized access.

The iPug™ Trust was created by utilizing universal, fundamental trust and common law principles dating back to the statute of uses and are not reliant or dependent upon state or federal specific asset protection laws. "In essence, the iPug™ Trust is an Irrevocable Grantor Trust for income and estate tax purposes.

Why is this important to most Americans? The IPUG™ Trust not only provides advantageous tax benefits but it also provides asset protection. Most Irrevocable trusts do not provide the beneficiaries with a full step-up in basis and allow the grantor to control the funds.

With the increase in the estate tax exemption to $5 million the iPug™ will be usable by more than 99.5% of Americans.

July 23, 2011

Using an ILIT For Your Life Insurance Policy in Florida

To hedge our bet against dying and to financially protect our families in the event death happens, we generally have a life insurance policy. This policy becomes part of our estate and can help our family with after death expenses such as funeral costs. You may already have a life insurance policy or need to get one. In either case, switching your current life insurance policy to a Florida Irrevocable Life Insurance Trust (ILIT), or setting the life insurance policy up in the name of the ILIT, can be done by hiring the services of a Florida Trust lawyer to prepare a Florida Irrevocable Life Insurance Trust.

When you pass away and have a Florida life insurance policy, the insurance payment is deemed to be included in the insurer's (the person who is now deceased) estate. By passing to your heirs under your estate, the insurance payment can be subject to federal and state estate tax, which can be about 40% for the portion which is in excess of the Federal Estate Tax figures. The following example assumes that the entire amount of the policy was subject to the Federal Estate Taxes. So if you have a $5,000,000 life insurance policy, your heirs receive the payment after taxes, which, in this case, would be $3,000,000 ($2,000,000 in estate taxes).

However, this does not have to be the case. If you were to set up a Florida Irrevocable Life Insurance Trust the amount of the policy would not be included in your estate, and you would not have Federal Estate Taxes which could save you more than $2,000,000 based on a $5,000,0000 insurance policy. Talking to a Florida Trust lawyer or Jacksonville Estate Planning attorney will allow you to see if your estate or life insurance is subject to estate taxes or might be subject to them in 2012 after the current exemptions expire.

June 2, 2011

Creating a Florida Dynasty Trust

asset-protection-cash.jpgFlorida Dynasty Trusts are generally used to keep assets within your family members or descendants. The person who creates this type of trust usually has significant assets which are far in excess of $1,000,000 which they want to protect from the misuse or dissipation of family members. A Florida Dynasty Trust can also protect the assets within the trust from the reach of future creditors of your born and unborn family members.

Florida is a great state in which to create a Dynasty Trust. This type of trust is regulated by state law, so where a person decides to create the trust will govern which state's law will regulate the trust. Florida's state law allows for a person to create a Trust for the benefit of another (usually children or grandchildren) plus 360 years after that benefited person has died. This is a longer than many states that have a limit of 21 years after the death of the beneficiary who was alive at the time the trust was created.

There are many options that need to be considered when creating a Florida Dynasty Trust such as who the trust's assets (income and/or principal) should vest in and which state law the trust should be interpreted under. A Florida Dynasty Trust may be able to protect your assets from creditors even though you live in another state. To contact a Florida Irrevocable Trust Attorney. For more information on Florida Trusts please contact us to discuss your specific goals and circumstances or visit the Florida Estate Planning Lawyer Blog for general information.

January 31, 2011

No Florida WIll Contest Can Fix This Problem.

When you have a blended family or children from different marriages it is very important to have estate planning that deals with the various possibilities. All to often the standard will or generic documents can produce undesired results.

Take for example a Husband and Wife who each have children from a prior marriage. Husband and wife each want to support each other in the even they pre-decease each other. The problem is created when the Husband dies first, and leaves everything to the wife. Now the wife dies and leave everything to her children, essentially disinheriting the husband's children.

There are several ways a Florida Estate Planning Lawyer can address these issues and achieve the desired results of the husband and wife.

July 8, 2010

Has Your Florida Trustee Provided an Accounting of the Florida Trust?

With Florida Trust Litigation on the rise, it is important that trustees preform their duties properly.

One of the primary duties of a Florida Trust trustee is to keep accurate records of all acts performed by him in regards to the trust estate. In Florida, trustees have this duty, known as an accounting, which requires providing these records to the trust beneficiaries. The trustee's accounting should be a reasonably understandable report from the date of the last accounting, or from the date on which the trustee became accountable, that adequately discloses the information required.

Fla. Stat. § 736.08135(2) states the requirements of an accounting:

a) The accounting must begin with a statement identifying the trust, the trustee furnishing the accounting, and the time period covered by the accounting.

b) The accounting must show all cash and property transactions and all significant transactions affecting administration during the accounting period, including compensation paid to the trustee and the trustee's agents. Gains and losses realized during the accounting period and all receipts and disbursements must be shown.

c) If feasible, the accounting must identify and value trust assets on hand at the close of the accounting period. For each asset or class of assets reasonably capable of valuation, the accounting shall contain two values, the asset acquisition value and the estimated current value.

Not everyone is entitled to an accounting and while if the grantor is the trustee, the accounting can be waived. There are many other provisions of the Florida Statutes that deal with accountings. If you are a trustee of a Florida trust or a qualified beneficiary of a Florida Trust and want to find out about your rights, you should contact a Jacksonville Estate Planning Lawyer or Florida Estate Planning Lawyer to discuss you options.

June 12, 2010

Can a Trustee Resign? And how under Florida Law

When a Florida Trust is created, the creator of the trust designates a trustee to monitor the trust. There is great responsibility that comes with being the trustee because this individual, or group of individuals handles the distributions to the beneficiaries according to the terms of the trust document. The terms may place numerous restrictions on the distributions made to beneficiaries or the trust may give broad discretion to the trustee to make the distributions. In addition, Florida law places additional requirements on a trustee that may not be apparent from the reading of the document. Circumstances can arise where a trustee wishes to resign their position as trustee.

In order to resign your position as trustee in Florida, you must comply with Florida statutory law. Florida Statute § 736.0705 governs the resignation of a trustee. It says that a trustee may resign if at least 30 days notice is given to all qualified beneficiaries, the settlor (creator) of the trust if still living, and all co-trustees. A trustee can also petition the court for resignation and then may be relieved of their position with the courts approval.

This does not mean that the trustee will escape liability for acts done before the trustee's resignation. If the resigning trustee has committed some breach of their duties to the beneficiaries, they can still be held accountable for those acts. For more information on your Florida Revocable Trust or if you have any trust administration questions contact a Florida Trust Lawyer today.

March 13, 2010

Toyota Diminution of Value Lawsuits: Toyota Class Action Lawyer

Whether you live in Florida, New York, California or any state and are the owner of a Toyota car, truck, or SUV, your Toyota Automobile may have just dropped in value. We all know there will be many Class Action Lawsuits against Toyota. Here is one class action that you may not have considered. Even if Toyota fixes the problems and no one is injured from a defect in your Toyota car, the recent bombardment of news has caused your automobile to decrease in value. You may ask, why is this on a Florida Estate Planning Lawyer's website? What if you are the PR of an estate that owns a Toyota vehicle, a trustee of a trust that owns a vehicle, or the guardian of someone who owns a Toyota car subject to the recall? You may have a duty to investigate what claims of action you might have to avoid liability. Remember that by failing to investigate a claim or pursue one, you may be violating your fiduciary duty.

The good news that whether to pursue these types of claims is a simple one as they are almost always done on a contingency basis. If you have a potential claim you might want to contact Florida Toyota Class Action Lawyer Mike Ossi at (904) 399-0606 to talk about a claim.

July 14, 2009

When Do It Yourself Asset Protection Goes Wrong

Attorney Kevin W Davidson of the Green Bay Wills, Trusts & Estate Planning Blog wrote an article on the pitfalls of Do it yourself asset protection where he talks about some of the problems with trying to protect your own assets.

Over the last 6 months the number of inquiries for asset protection have significantly increased. Unfortunately most of these people did not take action when they had significant assets without potential liabilities, but are only now beginning to consider it as the liabilities become a certainty. While there are things that can be done at this stage to protect, reduce the risk of loss, or increase the ability to negotiate one's debts, it is always best to address these issues prior to problems arising.

If you would like to discuss Florida Asset Protection you should Contact a Florida Asset Protection Lawyer.

February 11, 2009

Automobile Trust and Florida Asset Protection

Auto, Motorcycle, Car TrustMost residents of Jacksonville and Florida could benefit from a Florida Vehicle Trust if they have children who drive their vehicles or in the case that a judgment is in excess of their insurance limits.

A Florida Vehicle Trust protects your assets by holding title in a specifically designed trust. In Florida the owner and the driver of a Car, Motorcycle, or other vehicle is liable for any damage done by the driver of the vehicle.

Many parents are concerned about damage that their child, or a friend of their child's may do when loaned the vehicle. Using a Vehicle Trust can protect your assets from excess liability that is created when the damage done by the driver and/or vehicle is in excess of the insurance on the automobile.

To find out more about how a Florida Vehicle Trust can protect you, Contact us by email or phone a Florida Estate Planning Lawyer at (904) 685-1200.

February 3, 2009

Medicaid Asset Protection Trust

One very useful Medicaid planning technique involves the creation of an irrevocable Medicaid Asset Protection Trust. With a Medicaid Asset Protection Trust a person or couple can transfer some of their property to the trust to hold and manage for their benefit during their live with the remainder paid to their family after their death.

Example: David and Beth have assets in their savings and stock accounts of $250,000. They currently live off income from their investments, social security, and other retirement benefits. They are concerned that if they need nursing home care they will not have enough money to support their lifestyle and pay for the medical expenses for the remainder of their life.

Solution: David and Beth decide to transfer $150,000 to a Medicaid Asset Protection Trust. The trust provides that all income is paid to them while alive and in the event one needs nursing home coverage under Medicaid the income is paid to the other. Upon the death of the surviving spouse, the trust will terminate and distribute the remainder to their children. By using this type of irrevocable trust their assets are protected and they receive an income stream for their lives.

Potential Problems: The gift to the Medicaid Asset Protection Trust can cause a period of ineligibility for Medicaid benefits. The length of the ineligibility period depends upon 1) the value of the assets given away and 2) The date the assets were given away. After the ineligibility period, the assets in the Medicaid Asset Protection Trust should be protected and not counted as a disqualifying asset for Medicaid planning purposes. In addition, this removes the assets from the reach of the spouses.

A Medicaid Asset Protection Trust is not for everyone, but it can be a means of protecting a family's financial security. These trusts can be complicated and must be tailored to the families resources and needs. It is important that you use a Florida Elder law attorney who is familiar with the Florida Medicaid laws and who has experience in creating this type of trust.

Please note: The Irrevocable Medicaid Asset Protection Trust is not the same as a "revocable trust", "revocable living trust" or "living trust" that is currently being sold through Trust Seminars.

Contact us by email or at (904) 685-1200 for more information.