August 20, 2012

What is a Florida Will and what can will do in Florida?

Thumbnail image for will and testament.bmpIn Florida a Will does more than you may at first realize. Florida Wills are not just for leaving specific items to specific people. The main function of a Florida will is to provide for the distribution of property owned by you at the time of your death in whatever manner you choose.

Wills take on various degrees of complexity and can be used to achieve a wide range of financial and family objectives. If a will provides for the outright distribution of assets, it is sometimes characterized as a simple will. Wills can also establish one or more trusts to help manage the assets after you are gone. A will in Florida may also leave assets to a trust that was created while you were alive (known as an inter vivos trust), in which case it is called a Florida pour over will. In either case, the purpose of the trust arrangement is often to ensure continued property management and creditor protection for the surviving family members, to provide for charities, and to minimize taxes.

Aside from providing for the intended disposition of your property., there are a number of other important objectives that may be accomplished in a Florida will.

• A will allows you to designate a guardian for your minor children if you survive the other parent so that the state does not decide who will raise the child. • A will lets you designate who will inherit which of your assets. • A will lets you specify when your children will receive what and under what conditions. Otherwise, a teenager could end up receiving his entire inheritance before he's mature enough to handle the responsibility. • It lets you name a Personal Representative of your estate and can allow you to save money by waiving the probate bond or PR fees, which will otherwise be required. • It can permit a business to continue operating. • It can save you some money in taxes.

While a will in Florida can help with many things, it does not do everything. For instance, a will does not govern the transfer of certain types of assets, called non-probate property, which will automatically pass to someone else upon your death. For example, real estate and other assets owned with rights of survivorship or with enhanced life estate deeds pass automatically to the surviving owner(s) or named beneficiary. Likewise, an IRA or insurance policy payable to a named beneficiary passes outside the will. While a Florida homestead also passes outside a will, often a probate is necessary to clear the title.

A trust can do almost everything a will can but has additional flexibility and can help in the case you become incapacitate. A Will in Florida will have no effect on assets if you become incapacitated.

If you have other questions about wills or trusts in Florida contact a Florida Estate Planning Lawyer at the Law Office of David M. Goldman PLLC today at (904) 685-1200.

August 18, 2012

Can you control your heirs from beyond the grave?

The Wall Street Journal ran an interesting article this weekend examining the extent to which gift givers can exert control over their heirs once they are dead and gone. The article reveals several things that might surprise you given the scope of control that can be included in the language of Florida trusts and Florida wills.

The Journal explained that the issue is of special importance given the unusually favorable estate and gift tax rules that are set to soon expire. Currently, the exemption is $5.12 million per person, and twice that for a couple. The top tax rate applied to amounts beyond that number comes in at 35%. Not for long, the article warns, as the current exemption is scheduled to drop to $1 million and the top tax rate will jump to 55% come January 1, 2012. Given the state of affairs, expert recommend acting now, especially when it comes to giving gifts, as such moves made now can be grandfathered in if the law later becomes less favorable in the future.

There are limits to what a person can do when laying out their estate plan and one example includes provisions that are contrary to public policy. This includes requirements that promote divorce or demand criminal conduct and has been expanded to include racial discrimination. Provisions that discourage marriage have also historically be deemed unacceptable as well as any that are ambiguous, illegal or essentially impossible to implement. Religious restrictions are usually OK, like those leaving money to pay for a religious education, though they can, at times, be viewed with more suspicion.

While it may not be permissible to require marriage to a person with a specific religious background to keep inheritance, extra money if that occurs would seen not to violate public policy. One takes something away and one gives something extra. It is important to make sure your requests are properly worded as to not violate public policy.

When setting up a trust or messing with a will, there are some important things to consider. First, the devil is in the details. Make sure you clearly spell out who is to be included. For instance, consider carefully what you mean when you say "spouse" and come to a decision about whether that can include same-sex partners. Descendants can also be a tricky issue: adopted kids, stepchildren, children from a surrogate and even those conceived from frozen sperm. Though the examples sound wild, they certainly aren't unheard of. You have no way of knowing what shape your family will take in years to come and it's best to cover all your bases.

One tool for watching over future generations that the Journal discusses is what is known as an "incentive provision." Such provisions are meant to promote your descendant's productivity by doing things like matching their income (to encourage working and not laying around) or providing money to get a new business off the ground. Gift givers have to think about the goals they have for their family and if certain gift strategies would help achieve their ends. Giving money to stay-at-home moms may help strengthen a family, but it's important to realize how hard it is to think through every eventuality.

Another way of maintaining control once you're gone is to set up an "heirloom asset" trust. These are designed to protect important family assets, such as a house that has been in the family for generations. Experts recommend that the trust be given enough money so that heirs don't have to fight over who pays for maintaining the old homestead.

Not every kind of activity can be effectively governed from beyond the grave. Experts caution about inserting a requirement to test heirs for drugs, because it can be hard to find a trustee willing to undertake this intrusive supervision.

If you have other questions about estate planning or creating a will or a trust, please contact the Law Office of David M. Goldman PLLC to talk with a Florida Estate Planning Lawyer today at (904) 685-1200.

For more on the Journal's article see "How to Control Your Heirs From the Grave," by Laura Saunders, published at WSJ.com.

August 17, 2012

Florida Disinterment - Digging up the Dead?

civil_digging600.jpgAs a Jacksonville Estate Planning and Elder Law Lawyer, not much comes as a surprise anymore, not even the few requests for un-burying the deceased. It may sound like a B rated movie, but the reasoning behind the requests I have received are heartfelt and compelling.

One family wanted to remove their beloved father from a nondescript cemetery to a Veterans cemetery. One family wants to bring their grandfather (who was married to their grandmother for 50 years) home to the family plot, where their beloved grandmother lies in wait for him. The reasons are varied, but most meaningful to the families making the requests.

Florida disinterment is governed by Florida Statutes Chapter 497, Funeral, Cemetery and Consumer Services. The statute prescribes the authorization, notification, and other procedures that must be followed to enable one to disinter a family member. The process of Florida Disinterment is further governed by the Florida Department of Financial Services, Board of Funeral and Cemetery Services, found in the Florida Administrative Code, Chapter 69K.

There are several criteria that must be addressed before a cemetery will perform a disinterment (exhume, digging up or removing from a grave or tomb). The presence of a licensed funeral director is required (unless the re-interment is to be made in the same cemetery).

There are several permits and written authorization releases that are also mandated. An authorization must be signed by the individuals who, at the time of disinterment, would be permitted to authorize the burial of the decedent. Also required, is a written release from the individual(s) who currently own the burial (interment) rights for the burial space from which the disinterment of the decedent it to take place.

Unless a cemetery is provided with all the proper documentation, they shall not perform the disinterment unless and until such time as they receive a court order instructing them to do so.

If you have any questions about a Florida Disinterment, contact a Jacksonville Estate Planning Lawyer, who has researched the issue and who has gone through the process of disinterment.

August 16, 2012

$100 Million Estate Plan and 2010 Estate Laws

If you have more than 1 million dollars or 2 million dollars of January 2013, you may find that part of your estate will be subject to an estate tax of 55% and in some states subject to additional estate taxes and or inheritance taxes. (Florida does not have either state tax).

Many estate plans have been written with formulas that remove a portion of the assets when the first spouse dies. Those formulas are often based on the current federal estate tax exemption. They either pass the amount of the exemption to the spouse, and remove the excess or remove the amount of the exemption and give the rest to the spouse.

In 2010, these formulas were often broken because there was no estate tax. One family who had sold their stores to Best Buy a few years before was affected by this issue.

The lawyers scrambled to try to fix it at the last-minute but someone failed to comply with the requirements of witnesses and a notary for the modification to be valid. The surviving spouse would have lost the entire estate to the children because of the way the formula worked out.

This type of mistake can make a huge difference in the estate planning outcome and as a result we should each have our estate plan reviewed on a regular basis. Over the past few years there has been less need for life insurance trusts to stop the value of the insurance from being included in one's estate. With 2013 changes, irrevocable life insurance trusts will become more important than they have been in many years.

While life insurance is generally not subject to income tax, it value is added back into one's estate for estate tax purposes. This means that for many of us who have life insurance, it could be subject to a 55% tax and not provide as much to our family as we would like.

An ILIT or irrevocable life insurance trust can remove the life insurance from your estate so that it is neither subject to estate tax nor income tax.

August 15, 2012

Free Will Forms can have bad results

On a regular basis we handle probate cases for families where the decedent tried to make their own will or tried to modify it themselves. Below is an example of a will that was created from a form or copied from someone else. While the will was validly signed as required in Florida and created a valid will, the person forgot to dispose of all of their property. It appears that of the provisions made, the person wanted to take care of their spouse first, then distribute $100 to one child and everything else to the other child.

Unfortunately the biggest asset in the estate, the decedent's home was not devised in the will and thus would pass under the state's intestate statutes. This will give the child that was to be disinherited 1/2 of the homestead.

Click to see a copy of theBad Florida Will

August 14, 2012

Important Issues to Consider Before You Sign a Power of Attorney

Thumbnail image for signhere.jpgThe following are a list of some critical issues to consider before you make the big decision to sign a power of attorney:
  1. Asset Protection - Nursing home costs in Florida can be outrageously expensive. Make sure that you really feel comfortable authorizing your agent to protect your assets from those costs. If you do, the agent may need to transfer ownership of certain assets to your spouse or children. Such authority must be clearly laid out in the power of attorney, and standard forms typically do not include this provision. Special powers need to be included to make these types of transactions.

  2. Health Care Issues - A health care power of attorney can allow your agent to make all kinds of health and personal care decisions for you whenever you are incapacitated. You can include instructions not only regarding end-of-life care, but also other situations that may arise. With a power of attorney your agent will be able to act for you even if you are not terminally ill or permanently unconscious. It is a good idea to give your agents some indication as to what your preferences are for daily activities. Without such instructions, you may not be doing what you want to do or participating in activities that you would prefer not to.

    Your agent should be someone who understands your values and who will be willing to advocate for your wishes in whatever situation may arise. Your agent can review the circumstances, consult with the health care providers, consider the prognosis, and then apply your wishes as set forth in the document when making decisions.

    Given the importance of such a document, it's critical that you discuss your views on health care decisions with your agent and other loved ones. No document can anticipate the exact health circumstances that will arise in your future. Your family may have to make difficult decisions in ambiguous circumstances. Help them by talking with them now about your philosophy of life and death.

  3. Preventing Abuse - In the wrong hands, a power of attorney can be an excellent way to engage in financial abuse. The danger of abuse is especially great when the document includes the authorization to make transfers of your assets or to make changes to beneficiary designations. The best protection from such abuse is to choose someone as an agent who is completely trustworthy and will follow your wishes. But protective provisions can also be incorporated into your power of attorney. These include: 1) naming joint agents, 2) requiring approval by third parties for certain actions, such as transfers of assets, 3) limiting the persons to whom transfers can be made, and 4) requiring the agent to file regular accounts with third parties.

  4. Successor Agents - Just as you may someday be unable to make financial and health-care decisions, there is always a possibility that the person you choose as your agent may become unavailable to serve their role. Make sure you deal with this possibility by appointing more than one agent, either jointly or as a successor. Also, consider giving your agent the power to appoint a successor.
The power of attorney may someday become your most important legal document. A well-drafted power of attorney can be of enormous value to you and your family. A shoddy document can lead to disaster. If you have questions about estate-planning or creating a will or a trust, please contact a Florida Estate Planning Lawyer today or call (904) 685-1200.

Source:
Helping Elderly Parents with Their Finances," by Ryan P. Zacharczyk, published at Dummies.com.

August 13, 2012

ABA Seeks Nominations for Blawg 100 - Support requeted

vote.jpgDear Reader,

The American Bar Association is working on the list of the 100 best legal blogs.

If you enjoy this estate planning blog, I would appreciate your support by completing a very short form.

Thanks for your support,

David

August 13, 2012

TRANSFER OF HOME OWNERSHIP DOES NOT REPLACE AN ESTATE PLAN

We see many problems with how homes are titled. Most are in attempt to avoid probate or make it easier on family members. Unfortunately, many of these cause real problems for family members in the future. Here is one example of something we see regularly.

Imagine this: You're retired, your only significant asset is your home, you're very close to your child or children, and you don't want the cost of creating an estate plan. In such cases, what's the harm of simply putting your home in the name of your child to avoid probate and then be done with it?
We've gotten this question more than once at our office, and we almost always advise against it. There are a number of reasons to keep your home in your own name, the biggest ones are, loss of control, loss of stepped up basis leading to increased income taxes the kids will pay, failure to use gift tax exclusions resulting in huge penalties to the IRS, increased property taxes and your child's liabilities. These aren't the only reasons to keep your home in your own name, however. Other reasons include:

  • Your relationship with your child may not be as great as you think it is. Once the home is in their name they have no obligation to continue to let you live in it one, two or ten years down the line.
  • You have more than one child. Putting your home in one child's name can cause a rift of bad feelings between siblings. The alternative, of putting the home in the names of all your children, only makes it more vulnerable to liabilities and paperwork errors.
  • There are other, safer ways to avoid probate. One of those ways is with a Revocable Living Trust. A Revocable Living Trust is flexible and reliable, and doesn't have to be expensive. In fact, a Revocable Living Trust can actually end up saving your family money in the long run.

Don't make a mistake that could end up causing you to lose your home. Contact our office to discuss how we can help you protect your family and your assets from probate and liabilities.

August 12, 2012

SOME INHERITANCES ARE BEST BESTOWED IN DIFFERENT BUT EQUAL WAYS

Most parents want to love and treat all of their children the same, but when it comes to estate planning, not every child should be treated the same. In fact, insisting on treating all children exactly the same in an estate plan can often lead to disastrous consequences.

Each of your children is unique, and their circumstances may grow increasingly different, especially as they become adults and acquire jobs and extended in-law families. Each child should accordingly be treated as a unique individual.

Here are a few ways that wise parents might consider treating their children differently in an estate plan, but sill equally:

  1. Not naming all of your children as successor executors.
  2. Gifting the annual gift exclusion of $13,000 outright to some children while putting it in trust for another child.
  3. Leaving one child's inheritance outright while leaving another child's inheritance in trust--possibly even skipping a generation to help children or grandchildren.
  4. Some children will benefit from structured payments and others can deal with a lump sum of money or assets

The fact of the matter is that all of your children will be different people, with different strengths and weaknesses. While one child may love the trust and challenge that comes with being named executor, another might feel crushed under the weight of responsibility. One child might take an outright inheritance and invest it for retirement, while another child may want to do that, but have an ex-spouse or creditors who would seize an unprotected sum of money, leaving the heir with nothing.

Regardless of how you leave assets to a child or loved one, you should consider the ability you have to help them protect the assets from the reach of current or future creditors. There are new affordable asset protection trusts that can help protect assets from your creditors as well as your families creditors after you are gone.

Every parent knows that it is impossible to treat all of their children exactly the same. But it is possible to know your children, to be aware of their circumstances, strengths and weaknesses, and give them an equal inheritance in different ways.

August 11, 2012

AN ESTATE PLAN CAN HIGHLIGHT RELIGIOUS VALUES... WITHIN LIMITS

religion.jpgMany parents hope to pass their values onto their children and grandchildren. Often one of the most important values that they hope to pass on are values based on religion and spirituality. In some cases, religious values are so important to a parent that they will even include mention of these values in their estate planning documents. Our firm strongly believes that an estate plan is not just about money, but about leaving a legacy, and we often encourage our clients to include mention of their values--religious or otherwise.

Formalizing a legacy of values is not always as easy as leaving a financial legacy, however; and there is a limit to how far a parent or grandparent can go in dictating religious values to their heirs. Being too restrictive in an estate plan in an effort to pass on religious values--choosing to disinherit children who marry outside the faith, for example--can often create divisions within a family and spark extended, costly legal battles, all while failing to have any true impact on your heirs' beliefs. In addition, many of these clauses have historically been poorly drafted and violate the public policy of the freedom to marry and are stricken by courts.

One of the most common value-imposing strategies used by parents in estate planning is to require that children marry within a certain faith in order to receive their inheritance. This strategy has worked in some instances, for example, in 2009 the Illinois Supreme Court overturned the decisions of lower courts and unanimously ruled that Max Feinberg, and his wife, Erla, could legally cut off their grandchildren who chose to marry outside of the Jewish religion.

While this strategy may be accepted by the courts, it is often hurtful, and quite frequently expensively controversial, causing some heirs to challenge the will or trust; a process which can take many years and thousands of dollars to resolve. It is often better to explore other options as far as passing on values. One alternative to strict religious provisions that may penalize heirs who choose a different faith is to instead leave money for children and grandchildren in trust, and give your trustee discretion to make distributions based on the values you highlight when creating the trust. In this way you can provide guidance on how you would like your money to be distributed, but you leave some leeway for the trustee to consider special circumstances that you may not have anticipated and to weigh the potential consequences of each decision.

A trusted and sensitive estate planner can talk to you about what is important to you and your family, and help you choose the best and most respectful way to pass on your wealth and your values while not violating public policy and creating a costly will or trust contest after your gone.

August 10, 2012

FACEBOOK FOUNDERS USE GRATS TO AVOID EXCESSIVE TAXATION; YOU CAN TOO

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.

August 10, 2012

Reasons to make an Estate Plan

Here are three compelling reasons to make an estate plan. We all know people similar to those portrayed below. While estate taxes and probate are often compelling reasons to create estate plans, sometimes it is the family dynamics that drive the necessity of estate planning.

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August 4, 2012

Are Cars Exempt from Medicaid in Florida?

Thumbnail image for senior-caretaker-thumb14146522.jpgTypically a single automobile and one over 7 years old is exempt but there are some conditions that could cause a vehicle not to be exempt

1640.0591 Automobile (MSSI, SFP)

One automobile, regardless of value or use, is excluded as an asset.
Unless otherwise excluded, any other automobiles are treated as non liquid assets and counted to the extent of their equity value. The equity value is the average trade-in value of the vehicle minus any indebtedness.

When there is more than one vehicle, apply the automobile exclusion in the manner most advantageous to the individual. That is, the automobile with the highest equity value may be the one vehicle totally excluded, leaving the automobile with less equity value to count as an asset to the individual.

Any automobile over seven years old is an excluded asset except for the following instances requiring development:1. Luxury cars (for example, Jaguar, Mercedes-Benz, Cadillac, Lincoln, Corvette);
2. Automobiles or trucks that are 25 model years or older (because they may have value as classics or antique vehicles); or
3. Customized or specially modified automobiles, except for those modified for use by a handicapped person.

1640.0592 Verification of Vehicle Value (MSSI, SFP)
Information containing the name(s) of the owner(s), make, model, and year of the vehicle is required for all vehicles. The amount of indebtedness is required on all included vehicles.

Sources of documentation include:

1. title,
2. tag registration,
3. Department of Motor Vehicle records,
4. purchase contract,
5. payment schedule, or
6. lien holder.
Use the average trade-in value listed in the National Automobile Dealers' Association (NADA) book with no adjustments for any special equipment as fair market value in determining equity value (fair market value minus indebtedness).

If a vehicle is not listed in the Southeastern Edition, National Automobile Dealers' Association (NADA) book, the Official Used Car Guide or the NADA Older Car Guide, the individual must obtain an appraisal or produce other evidence of the vehicle's value, such as a tax assessment or a newspaper advertisement indicating the amount for which like vehicles are being sold.

August 1, 2012

Florida Personal Representatives (Executors) Beware your Fiduciary Duty

Personal-Representative-Bond.pngIn Florida, a personal representative (PR)is a fiduciary who shall observe the standards of care applicable to trustees. A personal representative is under a duty to settle and distribute the estate of the decedent in accordance with the terms of the decedent's will and the Florida Statutes, always considering the best interests of the estate.

A personal representative has responsibility to administer the estate of the deceased, and his or her tasks encompass taking possession of and managing both real and personal property.

The personal representative is also responsible for ascertaining and paying the legitimate claims of creditors against the estate. Although there may be provisions set out in a Will which appear to absolve a personal representative from any financial liability, this may not always be enforceable or hold true.

In a recent federal district court case in Texas, U.S. v. MacIntyre, 4:10-cv-02812, June 2012, it was held that a personal representative is personally liable for paying the decedent's remaining tax bills. This includes current as well as back taxes owed by the Decedent. In this particular case, the decedent owed the IRS millions of dollars in gift taxes. The Personal Representatives were advised that the IRS could not collect on the estate's unpaid gift-tax liability and so, the PR distributed estate assets without paying the tax. Unfortunately, for the PR, the IRS did not heed the incorrect advice given, and went after the PR personally, for the estate's unpaid taxes.

The Tax Court recited the elements of liability under the United States Code at 31 U.S.C. Section 3713 as: a fiduciary who distributes the estate's assets before paying a claim of the United States; and knew or should have known of the United States' claim. The knowledge requirement is the key, and is satisfied by either actual knowledge of the liability, or notice of such facts, as would put a reasonably prudent person on inquiry as to the existence of the unpaid claim of the United States.

The case revealed that a decedent's unpaid creditors, including the IRS, have standing to sue a PR for breach of a fiduciary duty. Failing to pay taxes is deemed to be an action that is a breach of a fiduciary duty. Thus, in the above reference case, the PR was not only on the line for the unpaid gift taxes but was also sued for breach of his fiduciary duty.

Under the Florida Probate Code, a personal representative's fiduciary duty is the same as the fiduciary duty of a trustee of an express trust, and a personal representative is liable to interested persons for damage or loss resulting from the breach of this duty.

Although a frightening and eye-opening tale, don't be fearful of being appointed and acting as personal representative of a decedent's estate. However, it is in your best interest to contact and consult with an experienced Jacksonville probate lawyer who can guide you through the process.

July 26, 2012

Can Life Insurance be subject to Creditors in Florida?

While traditionally in Florida the proceeds from a life insurance police are exempt from the claims of a creditor, what happens if the beneficiary designations fail or the proceeds are directed back to an individuals probate estate or revocable trust?

In a recent Florida case, life insurance benefits were directed to the descendants revocable trust upon his death. This could have only happened intentionally unless a revocable trust was the owner and the beneficiary designation failed because it was improper or the beneficiary died before the grantor of the trust.

When the grantor of the trust died, the trusts instructions told the successor trustee to pay the settlor's death obligations. Even if such language was not in the decedent's revocable trust, they are presumed under Florida Law.

Normally under Florida Statute 222.13(1) Whenever any person residing in the state shall die leaving insurance on his or her life, the said insurance shall inure exclusively to the benefit of the person for whose use and benefit such insurance is designated in the policy, and the proceeds thereof shall be exempt from the claims of creditors of the insured unless the insurance policy or a valid assignment thereof provides otherwise.

While the mere fact that life insurance proceeds are payable to a trust, rather than directly to a natural person, does not deprive them of their exempt status,4 section 733.808(1), Florida Statutes (2008), makes it clear that life insurance proceeds payable to a trust "shall be held and disposed of by the trustee in accordance with the terms of the trust as they appear in writing on the date of the death of the insured."

The court stated that
In other words, the exemption rendering life insurance policy proceeds unavailable to satisfy estate obligations can be waived. The very statute that creates the exemption makes this clear:

Notwithstanding the foregoing, whenever the insurance, by designation or otherwise, is payable to the insured or to the insured's estate or to his or her executors, administrators, or assigns, the insurance proceeds shall become a part of the insured's estate for all purposes and shall be administered by the personal representative of the estate of the insured in accordance with the probate laws of the state in like manner as other assets of the insured's estate.
§ 222.13(1), Fla. Stat. (2008). Section 222.13(1) does not prohibit life insurance proceeds' paying the insured's estate's debts and other "death obligations," nor does it prohibit directing payment of policy benefits to a trust for that purpose.

An insurance policy is a contract. The right to select the beneficiary of a life insurance policy is an aspect of the freedom to contract. The statutory exemption does not purport to restrict that freedom. The owner of an insurance policy may waive the section 222.13 exemption merely by designating the insured or one or more of the insured's creditors as a beneficiary or beneficiaries, by naming the insured's estate as a beneficiary of the policy or, as here, by naming as beneficiary a trust whose terms direct distribution of the trust assets to the personal representative, if requested.

In this case, there was an attempt to reform the trust under FL statute 736 but his requires clear and convincing evidence that both the accomplishment of the settlor's intent and the terms of the trust were affected by a mistake of far or law.

In this case they were unable to prove the intent necessary to reform the trust.

If you have a life insurance policy or a revocable trust in Florida you may want to review the terms of the beneficiary designations as well as what the policy directs the successor trustee to pay. It was unfortunate that the life insurance policy became subject to claims of the creditors because of the poor choice of wording.