Florida Estate Planning Lawyer Blog

In Florida as with most states, Estate Planning is something that needs to be addressed when one has major changes in their life. This includes divorce and separation.

You only have to think about your spouse or ex-spouse getting all of your assets if you should die to realize the importance of addressing the issue.

In the last year I have seen a number of families who have been adversely affected because of a lack of planning. Several couples were separated for many years when one died and the estranged spouse received a significant portion of the estate. In Florida, even if you change you will to disinherit your spouse, the spouse is entitled to an elective share of your estate. This is equal to 30 percent of your entire estate. If you are divorced in theory, go ahead and file the paperwork to make it official.

When you get a divorce, be sure to change payable of death designations on your retirement accounts, life insurance, bank accounts.

Be sure to revoke any guarantees associated with credit established in both of your names. Change the way property is owned, even if you plan on selling it soon.

The 401(k)s is also a non-probate assets also, but be careful because ERISA, a federal law, protects a surviving spouse. I have seen children loose their parents life insurance because their parent never finalized the divorce and made changes when they separated from their spouse decades ago. If you are getting a divorce be sure that proper paperwork to change the designations is made part of the divorce or separation agreement.

Unless your Florida Divorce Lawyer is also a Florida Estate Planning Lawyer, it is best to have a Florida Estate Planning Lawyer Contact and work with your Florida Divorce Attorney.

As the second marriage becomes more popular, it becomes more important than ever to protect your life insurance for your children. I received a call today where the second wife had changed the life insurance benefits to her name, as might be expected. Five months later the father of two children died. The second wife will receive all the benefits of the life insurance and non will go to help support the fathers biological children. When the wife dies, it is likely that the money will go to her biological children and the fathers children will receive nothing. What this the intent of the father? Probably not? Can anything be done to protect your assets for your descendants? yes

How can you allow a portion of the money to be available for the benefit of a second or third wife and give part to your biological children. One way is through changes in the beneficiary designations. Although this can be difficult and some companies require the consent of the spouse, it is not impossible.

The better way, is to set up a revocable trust. The trust can designate who you would like to receive the proceeds and how you want the money distributed. Even better, once you create the trust, you can amend it.

It is best to create the trust before you get married, and amend it when you choose. Paul A. Rabalais of the Estate Planning Law Firm of Louisiana Blog recently wrote a similar article on this topic that you may want to review for more information.

If you need help creating a Florida Revocable Trust Contact a Florida attorney who is familiar with Florida Estate Planning Documents

A Florida Life Insurance Trust is an irrevocable trust that allows an individual to make the proceeds of a life insurance poliicy free from income taxes and estate taxes. Typical life insurance policies are income tax free, but many increase the value of one's estate to the point that the federal and or state income taxes are due. By using an ilit one can avoid these taxation issues.

In 2008 the Federal tax exemption is $2,000,000. Lets take a client with 1.5M in assets and a 1M life insurance policy.

If they were to die in 2008 their estate would be valued at 2.5M and 500,000 would be subject to estate taxes. The current estate tax rate is 45% so this estate would have to pay a tax of $225,000.

In 2011 the estate tax exemption is only $1M. With an estate valuation of $2.5M, 1.5M would be subject to estate taxes. Using the same tax rate, this estate would have to pay $675,000.

To find out if or how a Florida Life insurance trust can help you please Contact a Florida Estate Planning Lawyer.

Can I amend my life insurance trust?

A Florida Life Insurance Trust is an irrevocable trust and can generally not be amended. Although Florida's new trust code does allow for easier amendments of trusts when the primary purpose of the trust will not be accomplished by the current form. An example of this might be when the trust's beneficiary dies. This type of judicial modification is not certain and would depend on the circumstances and the court's willingness to agree.

One other way to modify a life insurance trust (ILIT) is to let the policy expire and create a new life insurance trust. Sometimes this is not practical because of a change in the health or age of the individual.

Most estate planning lawyers will plan for such contingencies in the original documents to avoid the necessity to modify, or create new trusts in the future.

Each set of circumstances is unique you should contact an Estate Planning Lawyer to review your needs and circumstances in dealing with changes with a Life Insurance Trust.

Wills

•A new Florida will is almost always advisable for the divorced client, especially if there are minor children.

•Florida Statute section 732.507 generally provides that after the dissolution the provisions for the former spouse in the will are treated as if the former spouse died at the time of the dissolution of the marriage.

• A subsequent marriage, birth, adoption, or divorce will not revoke a Florida Will.

•A Major Concern of Most Clients

-Former spouse will be appointed guardian of the property of the deceased client because they are the natural guardian of minor children and have the highest priority for appointment as guardian. The priority can be altered by naming another individual as guardian under a Florida will.

-Consider avoiding a guardianship of the property by having assets for minors held in a Florida trust. Someone other than the former spouse can then be named as trustee.

“Pour Over” Wills and Revocable Trusts

•If the client has established a revocable inter vivos (living) trust and executed a Florida pour over will (a will that distributes the residue to a trust) prior to the dissolution, the former spouse could potentially inherit the entire estate if the former spouse is the beneficiary of the trust. Florida Statute section 732.507 does not have any effect on inter vivos trusts.

•A new or restated Florida trust should be executed to remove provisions for the former spouse for the reasons stated above.

Estate Tax Planning

•If the client has a taxable estate, the fact that they no longer have a spouse could drastically change their estate tax planning due to loss of the marital deduction.

Life Insurance, Deferred Compensation, IRA’s, Annuities

•Beneficiary designations should be reviewed to assure that the former spouse is no longer a beneficiary.

•IRA designations need to be reviewed to make sure the effect of the chosen beneficiaries does not adversely affect one of the beneficiaries because of age, or ineligibility

If you or a member of your family was to have a crisis are you prepared? That is the question you should ask your Florida Estate Planning Lawyer or Attorney on a regular basis. Often we only look at significant events in our lives and do not consider the effects that a significant effect in our parents or children's lives will have upon us.

When you review your Florida Estate Plan you should also review or remind your parents and adult children to review their plans also. There are changes in the laws which may prompt updates to your estate planning techniques. In addition, significant changes in your life including births, deaths, marriages, divorces, and changes in assets should trigger an estate plan review.

Generally when an Florida Estate Planning Attorney creates Florida Estate Planning Documents their duty is over once the documents are prepared. The obligation is up to you to seek a regular review of these documents.

In addition to reviewing the documents you should consider the following:

1) Make sure you know where your parents documents are, and you tell your personal representative and beneficiaries know where the documents are. If you are concerned that the documents may disappear, you may keep them with an attorney. If you keep your documents with a Jacksonville Florida Estate Planning Lawyerr or Jacksonville Florida Probate Lawyer you should tell people who has them.

2)Check to see that the Florida Estate Planning documents are complete and reflect their current family and financial situation.

3)Make sure that the documents reflect your or your parents current mind set. Wills and trusts need to be reviewed for changes in their financial condition as well as the beneficiaries family and financial condition.

4) Make sure all Estate Planning Documents are signed and witnessed as necessary under the current statutes or those in place at the time of execution.

5)Make sure any Florida Durable Power of Attorney documents mention the current Florida Statutes, many durable power of attorney documents are not honored when they do not comply with the Florida Statutes.

6) Make sure your Florida Living Trust or Florida Revocable Trust or any Florida Trusts are funded. That means that the bank accounts, CD accounts, land, and other assets have been transferred to the trusts. Any deeds to this effect should be properly recorded.

If are not funded they will provide none of the expected benefits upon the death of the grantor.
If you have a Florida Durable Power of Attorney and would it reviewed free of charge by a Jacksonville Florida Estate Planning Lawyer use the contact form on this page.

When you die, someone has to know hot to determine or what the details of your financial life are

It is important to make a comprehensive list of assets, liabilities, life insurance policies, power of attorney, Florida will, credit cards, details of bank accounts and all other important financial information.

The problem is that once you pass away, an executor or personal representative has to go through all of your document to figure out where assets may be located.

Recently a range of self-help products have emerged. The paper, and computer based products are available in many office supply stores. Many people who have a Florida Will or other Florida Estate Planning Documents, do not have a system for keeping the other information organized so that after passing, the Florida Probate process can be simplified.

Think about someone unfamiliar with your filing system trying to figure out where you have banks, stocks, Cd's, private investments, loans, debts, and everything else you keep in your mind but not on paper. Often the lack of an organized system increases the cost of the Fees associated with using a Florida Probate Lawyer.

Your Florida Estate Planning Lawyer, should be able to give you advise on what you need to make a list to simplify the Florida Probate process.

Most Jacksonville estate planning attorneys or those in other locations, focus on your heirs (children and grandchildren). As your parents are aging it is also important to consider and evaluate your parent's estate planning. One you understand the value in creating your own estate plan, you need to understand what effects your parents estate planning will have on you. You may find that your parents should leave the maximum exempt amount to their grandchildren (GST Trust)instead of to you. This can help avoid an extra layer of Death taxes. Its also important to classify their assets and allow the Personal representative or trustee the flexibility and duty to find which assets have the most appreciation (lowest cost value) and allocate those as to be most beneficial to the estate. If you can discuss your parent's estate planning with them, you may want to. You should speak with an estate planning attorney who can help structure a multi generational estate plan to help you and your parents establish a plan that will pass their values and protect inheritance.

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.

A firm in Dallas has created a program to help widows deal with financial planning. They state that the average age of a widow in America is 56 and that offen estate planning was not created to provide for widows as they need. They do a preliminary evaluation and work on restructuring estates to provide the necessary cash flow to last for the remainder of the spouses' lives. See the above link for more details. They may be able to help or refer you to someone in your area who can provide similar services.

The following is a worksheet that should be competed as accurately as possible. The details on this sheet will help a life insurance professional and your Florida Estate Planning Attorney determine what is the appropriate amount of life insurance that is needed.

Life Insurance Worksheet

Life Insurance options with Florida Estate Planning
• Term Insurance - provides a preset amount of cash if you die while the policy is in force.
• Permanent Insurance - more expensive than term insurance, but it can never be cancelled.
• Whole Life Insurance - provides a set dollar amount of coverage which can never be cancelled, in exchange for fixed, uniform payments
• Universal Life Insurance - a combination of both term and whole life insurance. Usually a lower cost than Whole life
• Variable Life Insurance - invests the cash reserves in securities to allow for greater gains based on the markets performance.
• Single-Premium Life Insurance - a policy that is prepaid upfront in a single payment
• Survivorship Life Insurance - second to die or joint insurance is a new form of life insurance

The federal tax laws governing survivorship life insurance are somewhat ambiguous. Because this is a new and complex area, you need to check with a good estate planning lawyer who has current knowledge of the tax rulings on this type of policy. Also, discuss this issue with your insurance agent to ensure your survivorship policy will have the effect you intend. It may be best to have the policy owned by a life insurance trust.