Florida Estate Planning Lawyer Blog

Only five weeks before his death Leonard R. Brener made a change to his will. He decided to change his beneficiaries form four local charities to his niece and her husband who took care of him while he was dying.

The non-profits were stunned and file a suit to battle over the money. The case took more than five years that the state appeals court recently ruled that Brener was mentally competent and his decision to leave the money to his family should stand.

The charities tried to argue that his change was unnatural because it would trigger significant estate taxes which he had previously stated he wanted to avoid.
(Estate taxes on 8M today are 2.7 Million Dollars) with proper estate planning its possible to have reduced the tax to 1.8 Million or less) Although the estate taxes from 2001 were significantly more than they are today.

This lengthy estate battle could have been avoided with the privacy afforded by a Florida Revocable Trust and some explanation within the will as to why the changes were being sought. In addition a Florida Revocable Trust would help to avoid the costs associated with a Florida Probate. If you would like more information on how a Florida Revocable Trust could benefit your or your family, Contact a Florida Estate Planning Lawyer for more information.

Florida residents should start the New Year off right, here are ten important Florida estate planning and Florida probate and tips for the New Year.

1. If you don’t have a Will, get one.
Florida estate planning and Florida Probate tip #1: Have a Florida Will. If you don’t have a Florida Will, get one. In particular, married couples with children from prior relationships should always have a Florida Will. Otherwise, the state will decide who gets the money at death.

2. Get a Medical Power of Attorney and Advanced Medical Directive.
Florida estate planning and Florida Probate tip #2: Along with a Will, everybody should have a Florida medical power of attorney and an advanced medical directive. A Florida medical power of attorney designates an individual to make health care decisions for you should you be unable to do so. An advanced medical directive, commonly called a living will, states in advance what you want in the way of life sustaining treatment when death is imminent or when you are in a persistent vegetative state.

3. Review all beneficiary designations on life insurance, retirement accounts, and other financial accounts.
Florida estate planning and Florida Probate tip #3: Review all beneficiary designations on life insurance, retirement accounts and other financial accounts. You may be surprised at what you find. Do not settle for a verbal confirmation. Make sure you see the documents.

4. Get a permanent life insurance policy.
Florida estate planning and Florida Probate tip #4: Evaluate the need for permanent life insurance. Liquidity is important in life and at death. The lack of liquidity at death can increase legal fees and cause property to be sold for less than its actual value – far less. Even a small amount of life insurance is better than none.

5. Put your permanent life insurance in a life insurance trust.
Florida estate planning and Florida Probate tip #5: If you have substantial, permanent life insurance, consider putting the life insurance in a life insurance trust. Moving your life insurance into a life insurance trust removes the insurance from your gross taxable estate for federal estate tax purposes and protects the insurance policy from creditors. This can save you 45% or more of the policy value.

6. Put your inheritance in an irrevocable trust for asset protection.
Florida estate planning and Florida Probate tip #6: Get it and give it in trust. When you give an inheritance in an irrevocable trust, you also give some level of asset protection. If you are the potential recipient of an inheritance and if you have the ability to speak openly with the person making the gift, consider suggesting that the gift be made in some form of irrevocable trust. There is some cost to a gift in trust. However, the asset protection benefits typically outweigh the cost.

7. Put all your estate planning documents in a safe deposit box.
Florida estate planning and Florida Probate tip #7: Obtain a safe deposit box and put your original Florida estate planning and other important documents in the box. Fire safes and file cabinets are certainly better than nothing if you let somebody know where to look. However, many Wills vanish or are lost shortly before death. If the original cannot be found and the original was last seen in your possession, Florida courts presume that you destroyed or revoked the Will. While a copy of a Florida Will can sometimes be probated in a Florida probate, it can be expensive and not always successful.

8. Protect your heirs against local expensive probate proceedings.
Florida estate planning and Florida Probate tip #8: If you own real estate outside of the state where your Will is to be probated, make sure that transferring the real estate to your heirs will not require a local, expensive probate proceeding. This can be accomplished several ways. Some states have a simplified probate procedure for making the transfer without opening a local probate proceeding. Other states allow for beneficiary designations through something called beneficiary deeds. In most states, the probate process can be avoided by transferring the real estate into a revocable trust. Otherwise, be prepared to spend several thousand dollars to make the transfer after the death of the owner. Note: Property in a foreign country can be very expensive to transfer upon death. Also pay attention to foreign estate tax. Unlike the United States, the estate tax can vary greatly based upon whom you give the property to at death.

9. Leave property to your husband or wife in trust.
Florida estate planning and Florida Probate tip #9: Consider leaving property to your spouse in trust instead of outright. The trust accomplishes three goals.

1. Avoiding estate tax.
2. Protecting the assets from the surviving spouse’s creditors.
3. Controlling how the remaining funds are distributed.

Many family estates have been lost when the surviving spouse remarries and leaves the family assets to the new spouse or his/her family. We see more money lost to shifting bloodlines than we have ever seen paid in federal estate tax.

10. Know if your state has state or estate/inheritance taxes.
Florida estate planning and Florida Probate tip #10: If you have a tax planning estate plan, know whether your state has estate tax. Florida does not have any estate tax, but if you become domiciled in another state your estate may be subject to estate taxes. Many states are implementing estate or inheritance taxes.

Often the first thing that comes to mind with Florida Estate Planning is a Florida will or Florida living trust. Although these are valuable documents they do not have any effect on the distribution of many assets.

We recommend that our Jacksonville residents make sure their beneficiary designations are updated as these control the distribution of many assets. When a Florida Living Trust is part of an estate plan, you can designate your trust to be the beneficiary of most assets. It is important to make sure that the trust is the proper beneficiary. With some assets like retirement plans, you may not want your trust to be the beneficiary as it can have adverse consequences when charities are named as beneficiaries of the trust.

Your beneficiaries need to be updated on a regular basis and in the event of a life event (birth, death, marriage, divorce...). We recommend naming contingent beneficiaries in these documents.

You should review your Florida Estate Planning Documents with a Florida Estate Planning Lawyer to make sure your intentions are fulfilled.

Many Florida residents include language in their Florida estate planning documents which leave either a fixed sum or a percentage of their estate to one or more charities.

The most common gift is an outright bequest of property to a named charity from a Florida Will or Florida Revocable Trust. The gifts can be any type of property and often consultation with a tax adviser as to which property to leave can produce additional tax savings. Analysis of the size of the estate, and the cost basis of various assets can make significant differences.

In addition, careful attention needs to be made to the selection of the asset and how it is described in the documents. Contingencies can be made for a change in assets if the person wants to make a gift even if that asset does not exist.

One major area of concern is making a charitable gift from a Florida Living Trust if there are retirement assets included in the trust. As a charity is a non qualified beneficiary, it can a negative effect on the ability for other beneficiaries to take the proceeds over a prolonged period of time.

For more information on these issues you should consult with an Estate Planning Lawyer in your state and your accountant. To contact a Jacksonville Estate Planning Lawyer follow this link

You have just been asked to be a successor trustee for a Florida Living Trust. What will your trustee duties and responsibilities be? Do you want to accept? Are their downsides? I ran across an interesting article and have applied some of it to Florida law. This note will help you to understand what some of the common issues are and will help you to discuss your options with a Florida Estate Planning Lawyer. Remember that all Florida trusts are different, and that many of your duties, responsibilities may not be contained in the document. Therefore your document will need to be analyzed with the New Florida Trust code.

First Lets discuss some of the background information that will be necessary to understand your duties and responsibilities.

A Trust is a legal entity. When assets are contributed to the trust, the trust separates the legal ownership (possession) from the beneficial ownership (the principal and income). Often trusts look very much like wills because they include instructions for whom your your assets will benefit after our death. Some trusts are created during the life of the person who creates them ( the settlor or grantor) and some are created after their death (testamentary).

Florida Living Trusts work by separating the equitable ownership (the trustee)from the beneficial ownership (the beneficiary).

Who are the people involved in a Trust? The grantor (also called settlor, trustor, creator or trustmaker) is the person whose trust it is. Married couples who set up one trust together are co-grantors of their trust. Only the grantor(s) can make changes to his or her trust.

The trustee manages the assets that are in the trust. Many people choose to be their own trustee and continue to manage their affairs for as long as they are able. Married couples are often co-trustees, so that when one dies or becomes incapacitated, the surviving spouse can continue to handle their finances with no other actions or steps required, including court interference.

A successor trustee is named to step in and manage the trust when the trustee is no longer able to continue (usually due to incapacity or death). Typically, several are named in succession in case one or more cannot act. Sometimes two or more adult children are named to act together. Sometimes a corporate trustee (bank or trust company) is named. Sometimes it is a combination of the two.

The beneficiaries are the persons or organizations who will receive the trust assets after the grantor dies.

Continue reading "Successor Trustee: Duties and Responsibilities" »

As a Jacksonville Living Trust Lawyer, I have noticed many changes that effect the administration of Trusts, even those which were already in existence when on July 1, 2007 when the Florida's New Trust Code became effective. If you are an estate planning attorney in another state and have clients who have trusts in Florida, it is most likely that their trusts must be managed differently than their trust document would imply.

1) A trustee has a duty to act in good faith in the interest of the beneficiaries and in accordance with the terms of the trust, imposed in part by sections 736.0801 and 736.0802.

2) There is a new 6 month statute of limitation sunder section 736.1008 with regard to any item set forth in a trust disclosure statement which contains a limitation notice containing the six-month period of time under 736.0604 within which to contest the validity of the terms of the trust.

3) The court has the power to take action and exercise jurisdiction as necessary " in the interest of justice."

4) The court has the power to modify or terminate a trust under sections 736.0410-04115, 0413, 0415, and 0416. Judicial modification in the best interest of the beneficiaries under section 736.0415(3) is not mandatory as to (i) any trust created prior to January 1, 2001 and (ii) any trust created after December 31m 2000 if it is subject to the Traditional RAP (90 years vs the expanded 365 Year RAP that Florida permits) or the trust expressly prohibits such judicial modification.

5) Nonjudicial modification with unanimous agreement of the trustee and all qualified beneficiaries under 736.0412 is not mandatory as to (i) any trust created prior to January 1, 2001, (ii) any charitable trust until the termination of all charitable interests, and (iii) any trust created after December 31, 2000 if it is subject to the Traditional RAP unless the trust expressly authorizes such nonjudicial modification.

6) New Spendthrift protections which affect the rights of creditors and assignees to reach a trust under part V of the Trust Code.

7) Trustee's duty under section 736.0503 to pay expenses and obligations of a settlor of a revocable trust upon death.

8) Trustee's duty under section 736.05055 to file a notice of trust with regard to a revocable trust upon the death of a settlor.

9) Trustee's duties under section 736.0813 to provide to qualified beneficiaries (or their designated representatives under 736.0306) (i) notification of the existence of an irrevocable trust, the identity of the trustee and their rights to trust accountings, (ii) a copy of the trust agreement and to account, and (iii) respond to requests for relevant information about the assets, liabilities, and particulars relating to the trust administration

10) Rights of third parties other than the trustee or beneficiary under sections 736.1013-736.1017

In Florida there are limitations on Pet Trusts and the courts would likely find that $12 Million for a dog would be excessive and strike all or part of the trust.

Leona Helmsley's Dog was left a $12 Million dollar trust fund. In addition the Maltese, named Trouble will be buried alongside her and her late husband in a mausoleum. Leona also left 3 Million for the perpetual care of the mausoleum.

While the press and blogs are making a big deal over the dog getting $12 million, everyone fails to see the costs she is incurring because of probate. She left the majority of her money and property (rumored to be in excess of 1 billion dollars) to a Family charitable trust. The legal fees on handling this administration could be in excess of $60 Million dollars. If she would have put this money in a Revocable Trust or Living Trust there would be no probate fees to transfer the Billion dollars to the charity.

If you or a loved one has a billion dollars they want to give to charity, make sure its in a Living trust to avoid the costs and delay of probate.

Often the Break even cost with a Florida Living Trust is less than $100,000 in assets. To determine if you or your family needs a trust, speak to a Florida Estate Planning Lawyer.

For more information on Florida Pet Trusts.

In Florida a Successor Trustee is the person or institution named in the Revocable Trust agreement or other trust agreement who will assume control of the trust if the original trustee dies, resigns, or becomes unable or unwilling to act. There can be several layers of back-up trustees that take over in the order you designate. This person is like a backup agent for a power of attorney or Living Will

Fiduciary: This refers to a person (or entity) that serves in a representative capacity. Personal representatives, trustees, guardians, conservators, and agents under powers of attorney are all fiduciaries. A fiduciary stands in a position of confidence and trust with respect to each heir, devisee, and/or beneficiary. They are subject to a responsibility to act in the best interests of the person that they are serving on behalf of and can be sued if they act improperly.

Florida Residents can use a variaty of Charitable Trusts with the Estate Planning and to help reduce estate taxes in their Florida Probate.

Charitable Lead Unitrust (CLUT): Income goes to charity and remainder to one's heirs or beneficiaries. Generally for the very rich and for those whose children won't need the income until years later when the trust ends. For example Jacklyn Kennedy Onassis used this to save taxes when she was seeking to benefit John Kennedy Jr. and Carolyn Kennedy.

Charitable Trust - One of several different types of charitable trusts, including Charitable Lead trusts and Charitable Remainder Trusts, established to benefit a particular charity or the public. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of Federal (and some states') estate and gift taxes and/or to save capital gains tax. It can be a win win situation since the donor is able to achieve a tax reduction while still providing for a very worthwhile charity that provides a great service to the public. When this is done during life an income tax deduction is available then the property is out of the estate for estate tax purposes or will generate a deduction to remove it. Some of this tax saving is often the put into the premiums for a life insurance policy as a wealth replacement technique. The insurance policy can be designed so the payment of the premiums will not result in a gift and the value of policy is not included in the estate. Used in this combination the donor is able to provide for a gift to charity through the charitable trust they can still receive income from the trust and despite their gift to charity their children can end up with as much and in some cases more money then if no charitable trust planning had been taken.

Charitable Remainder Trust (CRT) A trust funded with assets that go to charity upon death. The donor/trust creator can sell the assets without paying capital gains taxes and receive an annual income. Will also receive a tax deduction for the charitable gift and eliminate appreciated assets from one's estate.

Charitable Remainder Annuity Trust A charitable remainder trust in which the trust donor is paid an annual fixed dollar amount.

Charitable Remainder Unitrust: This pays an annual fixed percentage of the fluctuating value of trust assets.

A general power of attorney will not be effective when the principal, the one who wrote and signed it, becomes incompetent, but a Florida durable power of attorney will still be valid after a person becomes incompetent or incapacitated.

One of the primary tax purposes of a durable power of attorney is to provide a mechanism for reducing a person's estate by making gifts of his or her assets. A similar objective in a smaller, nontaxable estate may be to make the principal eligible for Medicaid planning or assistance. In either case, it is prudent, and good practice demands, that the attorney at law who drafts the power of attorney includes the power to make gifts.

If the gift-making power is not included, the validity of the gift may be challenged. The IRS has successfully challenged gifts that were made when there was no specific authority in the document.

A power of attorney is not the same as a trust, a will or a living will. But it is a separate legal document that is an important part of a Florida estate plan.

Please make sure when creating Powers of Attorney, trusts, or wills they are setup correctly. Often fill in the blank forms can provide a framework, but they are not able to take into condideration the particulars need of individuals. Its best to have an attorney prepare these documents and have them reviewed yearly by your Florida Estate Planning Attorney for changes in your status, and the law.