September 11, 2006

Estate Planning: Wills

With a Florida Wills you can appoint guardians for your children and arrange to manage their property for them until they're legal adults. Making a will is a critical first step in your plan.

But in Florida a will must go through the probate process, a lengthy and expensive court procedure in which a judge determines that your will is valid and supervises the distribution of your property. In most Florida counties including Duval, Clay, and St. Johns it can take 6 to 18 months and cost up to 3% of your non exempt portion of your estate. There can be additional fees for dealing with non-probate assets (that includes your Florida Homestead when you die, even if the bank really owns it).

If you have a house worth $300,000 and $200,000 worth of other assets, probate costs could be close to $7,000 and could easily be even higher. An estate of 500,000 could be looking at fees around $15,000. You can avoid probate costs by establishing a Florida Living Trust, Make sure you use a Florida living trust attorney to ensure that you comply Florida laws and regulations.

September 10, 2006

Estate Planning Basics- Why make a Plan?

Estate planning is something that most parents want to avoid. But it doesn't have to be.

Understanding how to make the most of your estate for your children can actually be interesting, and even fun. Taking a few simple steps now will save your children thousands of dollars later that they'd otherwise spend on estate taxes and lawyer's fees. Wouldn't you rather that they had that money?

Both the Wills and Living Trusts that FamilyWorks drafts create tax-saving trusts that will allow you to pass up to $2 million tax-free (as of 2006-2008) to your children and create a property management system to manage your children's money until they're well into adulthood and able to manage it on their own.

September 9, 2006

Probate and Estate Terms

Florida Trust Terms

Crummey Letter A written notification to the beneficiaries that contributions of money -- typically to an irrevocable life insurance trust -- have been received on their behalf. The beneficiaries then have a period of time to withdraw the funds. If the beneficiaries do not withdraw the money, they are regarded as having received a gift. The funds can then be used to pay the premium on insurance on the grantor's life. Use of a Crummey Letter can avoid certain potential tax problems arising from the gift of a future interest.

Grantor: The designation for a person who is transferring their property through a trust or a deed.

Grantor Trust : For income tax purposes this is a trust, in which the grantor or a third party, because of certain rights to income or principal or certain powers over the disposition of income and principal, is treated as the owner of the trust and taxed on the income thereof. Consequently, a grantor trust is not treated as a separate entity for income tax purposes. A grantor does not need to get a separate id number for a revocable trust until the trust becomes irrevocable.

Incidents of Ownership Includes a variety of rights and powers that an insured decedent may have held over a life insurance policy; the possession of one or more of these incidents of ownership within three years of death will bring the policy proceeds into the insured's gross estate. This may subject them to estate tax if the estate has more money then the applicable exclusion amount under current law. As of 2004 this amount is $1.5 million.

Income Beneficiary: The beneficiary of a trust who is entitled to receive the income from it.

Inter Vivos Trust: A trust that takes effect while a grantor is still living.

Irrevocable Trust - A trust that is not amendable or revocable by the grantor. Can be created during a grantor's lifetime, often called an "inter vivos" trust, or upon a grantor's death, often called a testamentary trust. Some common types of irrevocable inter vivos trusts include life insurance trusts, gift trusts, generation skipping trusts, Qualified Personal Residence Trusts (QPRT) Grantor Retained Annuity Trusts ("Grat"), Intentionally Defective Grantor Trusts, Charitable Remainder Annuity Trusts (CRAT) and Charitable remainder Unitrusts (CRUT), Charitable LEAD Annuity Trusts (CLAT) and Charitable Lead Unitrusts (CLUT). Some common types of testamentary trusts include, unified credit exemption trusts, marital trusts, generation skipping trusts, testamentary charitable remainder trusts and charitable lead trusts.

Insurance Trust: An irrevocable trust established to own an insurance policy or policies and thereby prevent them from being included in the insured's estate. The insured must not retain any incidents of ownership. These trusts are typically used just by those who anticipate they may have more property then the applicable exclusion amount would allow them to shelter upon their passing or the passing of their spouse so it can save money from potentially having to pay estate taxes on the proceeds. There are additional administrative costs and responsibilities involved with this but with the estate tax starting at around 41% it can be a very useful way to save on estate taxes.

Intentionally defective grantor trust - An irrevocable inter vivos trust created by a grantor for beneficiaries other than the grantor that attributes all income tax to the grantor. Generally used when the grantor wants to irrevocably gift the property to the beneficiaries and exclude the property from the grantor's taxable estate for estate tax purposes, but intends that the transfer be ignored for income tax purposes. Often used in conjunction with a sale of discounted assets by the grantor to the trust, to avoid capital gain on the sale of the assets.

Section 2503(c) Trust for Minors A trust designed to comply with Section 2503(c) of the Internal Revenue Code so that a gift placed in such a trust for the benefit of a minor will qualify for the gift tax annual exclusion although they are not gifts of a present interest.

Special Needs Trust/Supplemental Needs Trust: A trust established for the benefit of a disabled person to provide supplemental support without disqualifying the beneficiary from eligibility for governmental assistance programs such as Florida Medicaid. It is a discretionary trust that a person other then the disabled person serves as trustee for.


Step Up In Basis A decedent's property that passes to others escaping capital gains tax when sold by the person who inherits the property. Persons inheriting the property receive it at date-of-death fair market value. (Internal Revenue Code section 1014) In effect, the basis in this property is deemed to be "stepped up" and does not reflect the decedent's original cost basis for determining applicable capital gains tax on the sale of the property.


Tax basis The owner's cost of an asset for income and estate tax purposes as determined under the Internal Revenue Code and IRS regulations.

Unified Credit amount also known as the Applicable Exclusion amount is an amount of assets that can pass without imposition of an estate tax or gift tax on the transfer. The estate tax now has an applicable exclusion of $1.5 million that can pass upon death if there have not been prior taxable gifts or this amount subtracted from the amount of prior taxable gifts. $1 million in taxable assets may be gifted during one¿s lifetime (in addition to annual exclusion amounts and other non taxable or otherwise exempt amounts such as payment of educational or medical expenses directly to the provider for a child) The estate tax exemption amount will remain $1.5 million next year then rise to $2 million until 2009 when it is $3.5 million for a year. In 2010 the estate tax is repealed and there will be no estate tax although under current law it returns to $1 million.

Unified Credit amount also known as the Applicable Exclusion amount is an amount of assets that can pass without imposition of an estate tax or gift tax on the transfer. The estate tax now has an applicable exclusion of $1.5 million that can pass upon death if there have not been prior taxable gifts or this amount subtracted from the amount of prior taxable gifts. $1 million in taxable assets may be gifted during one¿s lifetime (in addition to annual exclusion amounts and other non taxable or otherwise exempt amounts such as payment of educational or medical expenses directly to the provider for a child) The estate tax exemption amount will remain $1.5 million next year then rise to $2 million until 2009 when it is $3.5 million for a year. In 2010 the estate tax is repealed and there will be no estate tax although under current law it returns to $1 million.

Applicable Exclusion Amount: an amount that can pass free of estate tax. Currently this amount is $1.5m and is scheduled to progressively rise to $2m in 2006 $3.5m in 2009 and unlimited in 2010 prior to returning to $1m in 2011. When there is a husband and wife the estates need to be properly planned though or the exclusion amount of the first spouse to die may be wasted. The Gift Tax Exclusion amount remains at $1m and is not currently scheduled to change.

Cost Basis: The amount originally paid for property. The Tax Basis is the value that is used to determine gain or loss for income tax purposes. Generally, the tax basis will equal the cost basis plus the cost of capital improvements, less depreciation. Once the property is transferred upon the owner's death, it is revalued as of the date of death; this is called the Stepped-up Basis for Federal Income Tax purposes.

Fair Market value: This is what a willing buyer will pay a will seller with neither being under a compulsion to buy or to sell and both having knowledge of all relevant facts.

Escheat: Property that passes back to the state of Florida because there was no will or trust validly directing the property and no heirs at law who it would pass. This is very rare as the intestate laws of Florida have numerous options if property is not validly devised to anyone.

Intangible property Property that only represents real value such as bonds, stock certificates, promissory notes, certificates of deposit, bank accounts, contracts, leases, and other similar items.

Intestate succession: The distribution of property to heirs according to the statutes of the State of Florida upon the death of a person who owned the property but did not leave a valid will.

Income in Respect of a Decedent (IRD): Income earned by a decedent or income to which the decedent had a right prior to death, but which was not properly includible in his or her gross income prior to death (This is Internal Revenue Code section 691).

Individual Retirement Account (IRA) A tax-deferred retirement account for an individual that can be established by a person with earned income and the spouse who files a joint return. Earnings accumulate tax-deferred until the funds are withdrawn beginning at age 59.5 or later and are required to be started by the age of 70.5 (or earlier then 59.5, with a 10% penalty). A Roth IRA does not provide an initial tax deduction for the money but both the money and the subsequent appreciation grow tax free and will pass tax free when the property is withdrawn. Distributions are not required to be started upon reaching 70.5 and it can continue to accumulate tax free.

Inventory: A list of the assets of the decedent or disabled person that is prepared by an attorney and signed by the fiduciary (personal representative or conservator/guardian). This is required to be filed in Probate court.

Joint tenancy: A form of joint asset ownership by two or more persons in which each person has an equal undivided ownership interest that passes directly to the surviving joint tenant(s) upon the death of any joint tenant. Any joint tenant can petition the court seeking to compel partition of a joint tenancy asset but they cannot do so with tenancy by the entireties. (A form of joint tenants only available to husband and wife). If the joint tenants are not husband and wife and the intention is that it pass with right of survivorship in Florida it is important that the deed specifically provide that it shall pass with the rights of survivorship.

Kiddie Tax Unearned income (dividends, rents, interest, etc) Unearned income of a child under age 14 will be taxed to the child at the parent's income tax rate.

Lack of Marketability Discount: When the value of an asset is less than its initial or expected fair market value due to unusual circumstances that make it not readily saleable. For example, a limited partnership interest.

Gift: A voluntary transfer of property for which nothing of value is received in return. If Internal Revenue Service is to recognize a transfer as a gift, the donor(s) must unconditionally transfer all title and control of the property to the recipient(s) at the time the gift is given. It is not a completed gift if full control over the property is not given away. With adequate disclosure of the gift the Internal Revenue Service is not allowed to revalue the gift after 3 years.


Heir: person, who inherits property from the estate of a deceased person who died without a will.


Limited Liability Company (LLC) An entity formed under state statute that has the legal characteristic of limited liability similar to that of a corporation, while it may qualify to be treated as a partnership for tax purposes. In Florida there is a 5.5% state tax on Limited Liability Companies. Limited Liability Companies are covered by Florida statutes chapter 609.

Limited Partner A partner in a partnership who can't participate in the management of the partnership's business. A limited partner's liability is limited to the loss of his or her investment in the partnership.

Limited Partnership: Form of partnership composed of both a general partner(s) and a limited partner(s); the limited partners have no control in the management of the company and are usually financially liable only to the extent of their investment in the partnership.


Living Will A legal document in which an individual states, in advance of final illness or injury, his or her wishes regarding which procedures and equipment designed to extend life they choose to avoid. Basically it is a document that says if extraordinary measures are needed and they will merely extend the time but not the quality of life that the person chooses to have the plug pulled and to have a natural death. This is very important that it be done and not leave your fate to the government or the court who may act contrary to your desires.

Marital Deduction A deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free of estate and gift tax. This is usually just a deferral of tax and an exemption from it so it is usually not advisable to have everything pass outright in a manner that would qualify for the marital deduction. In the spouses revocable trust should be a credit shelter trust to make sure each spouse is able to use their exclusion amount.

Marital deduction trust - A trust that qualifies for the marital deduction for estate tax and gift tax purposes. Several types of trusts so qualify, including: general power of appointment marital trusts, qualified terminable interest property trusts, and qualified domestic trusts. Unless the property is then deferred from tax but unless it is spent or is the spouse is under the exclusion amount upon the passing of the surviving spouse the marital property is subject to estate tax on the death of the surviving spouse.

Minority Discount: A discount applied to the value of an interest in a corporation, limited liability company or limited partnership that is not publicly marketable to reflect the fact that a minority interest in the company has less value than a controlling interest, since the holder of the former cannot control business actions.

Minor: In Florida, a person who is under the age of 18 who is not married or legally emancipated.

Notary is a person with a state commission to attest to the validity of the signatures on documents. A will, trust and power of attorney are all required to be notarized.

Pay on Death (POD) Designation is the selecting of a beneficiary to receive an account balance on one¿s death. This can also be referred to as Transfer on Death or (TOD).


Per Stirpes: A way of distributing an estate so that the surviving descendants will receive only what their immediate ancestor would have received if he or she had been alive at the time of death. State law definitions can vary. This means that if a decedent dies with two children one of who had predeceased him and the predeceased child left two children each of them will receive 1/4 of the property or collectively 1/2 of the property that was to go to the children and the other child would receive the other half.

Pour Over Will This is a Will used to transfer (pour over) into a trust any property that is left in a person's estate after death.

Postnuptial agreements - Contracts entered into by a husband and wife after marriage, defining the rights of each spouse in their marital, non-marital and jointly-owned property in the event of divorce, legal separation or the death of one of the parties.


Prenuptial (Antenuptial) agreements - Contracts couples can enter into prior to marriage in order to govern their respective rights in marital, non-marital, and jointly-owned property in the event of divorce, legal separation, or the death of one of the parties. It is advisable to execute these documents well in advance of the marriage to avoid the potential claim of duress as a means to attack the document. Each side should have independent attorneys of their own choosing.


"Prudent Investor" Rule : Legal term that refers to the duty of the fiduciary to invest and manage assets in the best interests of another.

Testamentary Trust: A trust that is part of a person's will. It does not become effective until the person passes away.

Testate: This occurs when a person dies with a valid will in existence.

Testator: The person who makes a will.

Trust: A written document which provides for the management and disposition of assets. It normally involves three parties: the person who establishes the trust (In Florida usually called a grantor sometimes could also be called a donor, settlor, or trustor), a trustee, and one or more beneficiaries.

Trustee: A financial institution or adult who has mental capacity and has not been convicted of a felony that is designated to be responsible for the administration of a trust. There may be more than one trustee (co-trustees), and an individual and a financial institution may serve as co-trustees.

Qualified Domestic Trust (also known as a QDOT) A trust arrangement which allows property transferred to a surviving spouse who is not a U.S. citizen to qualify for a special exclusion instead of the regular marital deduction; and which ensures that, at the death of the surviving spouse who is not a United States citizen, the assets placed in such a trust will incur federal estate taxation since the tax was avoided at the first spouse's death

Qualified Personal Residence Trust ("QPRT") - An irrevocable inter vivos trust under which a grantor transfers his/her interest in a personal residence to the trustee to hold for the grantor's use and occupation during a specified term of years, and, upon expiration of the term, the residence passes to the remainder beneficiary or beneficiaries. Primarily used to gift the residence to the remainder beneficiary that is susceptible to application of valuation discounts and actuarial discounts based on the grantor's age and the term of the trust, and is most beneficial if the residence is expected to significantly appreciate in value. It is allowed for a primary residence or one vacation home. Although it could be helpful to put a home in this trust from a tax perspective it is possible it could destroy the homestead exemption for creditor purposes since the home is no longer owned by a natural person as required in Article X section 4 of the Florida Constitution.

Qualified Terminable Interest Property (QTIP) Property qualifying for the marital deduction at the election of the donor or the decedent's personal representative. The spouse retains a qualified income interest in the property for life, with the income payable at least annually. The corpus ultimately passes to a specified remainderman, under a special power of appointment given to the spouse. This can be especially helpful in second marriage situations where the donor wants the spouse to receive the income from the property but then have the property itself actually pass to their children (or in some other designated beneficiary).

S Corporation: A corporation whose income is generally taxed to its shareholders, thus avoiding a corporate level tax. An election available to a corporation to be treated as a partnership for income tax purposes. To be eligible to make the election, a corporation must meet certain requirements as to kind and number of shareholders, classes of stock, and sources of income. The rules for S Corporations are in Internal Revenue Code Sections 1361-1378.

Tenants in common: A form of asset ownership in which two or more persons have an undivided interest in the asset, where the ownership shares are not required to be equal, and where ownership interests can be inherited.

Tenancy-by-the-Entirety : Ownership of property only available between husband and wife. Each owns an undivided interest in the property which will pass with right of survivorship to the survivor. Creditors of just one of the spouses can not reach the property for claims. If the properties divorce it ceases to be tenancy by the entireties. While it is tenancy by the entireties joint action is needed to sell it.

Uniform Gifts To Minors Act: A method to hold property for the benefit of a minor, which is similar to a trust but the rules are governed by state law and the child has to receive the property upon becoming an adult.

Witness A will requires two witnesses and a notary. Each witness must be in the presence of each other, the notary and the testator at the time the time that the testator signs the will, the notary acknowledges it and the other witness signs the document. Unless the witnesses are personally known to the notary they should provide identification such as a Florida Drivers license.

401(k) Plan
A qualified profit sharing or stock bonus plan under which plan participants have an option to put money into the plan or receive the same amount as taxable cash compensation. Amounts contributed to the plan are not taxable to the participants until withdrawn. Generally funded entirely or in part through salary reductions elected by employees. Salary reductions are subject to an annual limit.

403(b) Plan A tax-deferred annuity retirement plan available to employees of public schools and certain nonprofit organizations.

September 7, 2006

Florida Probate Process -

In Florida probate is a court-supervised process that is designed to determine how to transfer the assets of a decedent upon their death. Property subject to Florida probate administration is that owned by a person at death, which does not pass to others by operation of law, contract or designation (such as life insurance policies, retirement accounts and transfer on death bank or brokerage accounts)

Probate administration transfers legal title of property from the estate of the decedent (the person who has died) to his or her proper beneficiaries as determined by a will, if no will by the state laws of intestacy and if there was a surviving spouse they may receive some statutory rights not provided for in the will such as homestead or an elective share.

The term probate means to prove. In the probate administration process the petitioner / personal representative seeks to prove the existence of a valid will or to determine and prove who the heirs are if there is no Will so the property passes by intestate succession.

Continue reading "Florida Probate Process -" »

September 6, 2006

Florida Probate:Executors-Claims

Within one to four months (depending on the particular state) after the executor has been appointed, he is required by law to file a "complete" inventory of the estate's assets. A Florida Probate Inventory is required to be filed within 120 days. The inventory is submitted to the court and, like all other papers submitted to the court, becomes a matter of "public record" (available to anyone who wants to look at it). Briefly, there are two reasons for the filing of the inventory. First, to indicate to the court the items of property for which the executor will later "account" to the court (tell the court in detail what he did with all these items when the estate is settled), and to let the beneficiaries, creditors, and all other interested parties know just what is included in the deceased's probate estate. If the executor delays or refuses to file an inventory, any interested party may ask the court to order him to file one, although if there are no disputes or contests, executors often file their inventories late.

The inventory will include any type of property (stock, bonds, real estate, furnishings, jewelry, copyrights, claims against others, etc.) that belonged to the deceased at the time of his death. Normally, this only includes property that stood in the deceased's name alone, but could very well also list property that was being held by someone else, such as property, for example, that the executor believed should be a part of the deceased's probate estate. Otherwise, nonprobate property, such as jointly held property, life insurance or retirement plan benefits payable to a named beneficiary, or assets in a living trust, will not be mentioned in the probate inventory.

Continue reading "Florida Probate:Executors-Claims" »

September 5, 2006

Making Final Arrangements -- Ceremonies

When formulating a Florida estate plan, you should contemplate body disposal and ceremonies. Writing out a statement of your preferences will likely save money and save your loved ones from additional heartache. Typically, at least one ceremony occurs when a person dies. Sometimes several ceremonies are held, either before or after burial or cremation. Most loved ones are likely to be comforted by attending a ceremony that reflects the wishes and personality of the deceased person.
Pre-Burial or Pre-Cremation Ceremonies

Pre-burial and pre-cremation ceremonies have many concerns in common. For either type of ceremony, you may wish to address:

1. the location of the ceremony
2. whether clergy should be invited to participate
3. specific music you would like played
4. preferences for a eulogy and the name of the person you would like to speak
4. directing survivors to send flowers or monetary donations.

For a pre-burial ceremony, you can also instruct whether you want your body to be present in a casket, whether you would like the casket open or closed, and whether you want your body to be wearing any particular clothing or jewelry. For a pre-cremation ceremony, you can also direct whether you want your remains present at the ceremony, either in a casket or other container, or whether you would like a photograph displayed.

Informal Gatherings

Before your body is buried or cremated, you may wish to have a simple gathering of family and friends in a casual setting. This may be either at a private home or at a social establishment such as a restaurant or an organization's quarters. If you would like to have an informal ceremony held after your death, you should ponder the concerns mentioned above.

Funerals

A traditional funeral is a brief ceremony and is most often held in a funeral home or a church. The body of the deceased person is usually present, either in an open or a closed casket. Other than these generalizations, there are no requirements in order to constitute a funeral. If the deceased person followed a specific religion, the funeral may include a blessing, mass, or prayer service. In addition to the concerns mentioned above, pallbearers and transportation also should be addressed in planning a funeral. Pallbearers are the people that carry a casket, which is usually needed to and from the place where the ceremony is held, and from a transportation vehicle to a grave site. Although you may choose as many pallbearers as you wish, the number usually ranges from four to eight. If you have a preference about the type of vehicle that will carry your body to the cemetery from the funeral ceremony, you should express that in the statement.

Graveside Ceremonies

In addition to or instead of holding a ceremony before burial, it is common to hold a short ceremony at the grave site. During such a ceremony, a religious leader may say a few prayers or a loved one may say words of farewell. If this is something you want, you should include it in your statement by describing who should be there, who should speak, and what they should say.

Memorial Ceremonies

A memorial ceremony is an informal ceremony held to remember and celebrate someone who has died. The body is not usually present because the ceremony happens some time after burial or cremation. There are no restrictions as to where memorial ceremonies may be held.

September 4, 2006

Florida Probate-Notice

Notice to Heirs and Interested Parties -- Time to Contest

In most states including Florida, after the petition for probate is filed, the Probate Court will order that notice of the petition be given to the heirs and other "interested" parties (those who may not be heirs but who may be named in the will) and, in some cases, that "publication" must be made. Publication is the placing of legal notice in the local newspaper to the effect that John Smith, a resident of Jacksonville, Florida, has died and a petition has been submitted to the court asking that his wife Jane be appointed as the executrix (or administratrix if there was no will) of his estate. The publication will also suggest that if you wish to object to the allowance of this petition, you or your attorney should file an appearance on or before a certain date. In those states that require notice, this designated date (sometimes called the "return date") is very important because if no objections to the petition are received by that date, the court will allow the petition. This does not mean if you miss the date or later discover that you should have objected that you cannot, but an objection filed after the date designated by the court as the "deadline" will be accepted by the court only if there was a good reason for the failure to file the objection within the allowed time. If adequate notice is not given as required by the state's laws, no probate may be allowed.

About a third of our states take the reverse approach and immediately allow the petition for probate and appointment of executor as soon as the will is filed, without notice to the beneficiaries. This does not mean, however, that no one can object. In fact, in those states that allow the will without notice, a person who wishes to contest the will or the appointment of an executor often has a much longer period within which to do so-usually until the estate is settled and the executor is discharged by the court.

In those states where notice and/or publication is required, the information in the newspaper publication will also be sent directly to you if you are an heir or an interested party in the estate. Obviously it must be sent to you sufficiently before the return date to give you adequate time to object to the allowance of the petition if you wish to do so.

The filing of an objection to either the allowance of the will or the appointment of the executor (or administrator) is surprisingly simple. All you (or your attorney) need to do to begin the contest is notify the court that you object. That's it. A simple letter to the appropriate court would suffice, saying something such as, "I object to the allowance of the petition of Jane Smith requesting that a certain document be allowed as John Smith's will and that Jane Smith be appointed as Executrix," (signed), Jesse smith. Naturally, you will at some point ,.from thirty to sixty days in some states, much longer in others) be required to specify just what it is you object to and why, and the laws at this stage begin to be somewhat more complex, so it would be foolhardy to attempt to go much beyond this point without an experienced lawyer. Judges are generally not sympathetic to people who try to represent themselves in will contests.

September 3, 2006

Donating One's Body to Science

Donating One's Body to Science

A dead human body is usually disposed of by burial or cremation. One alternative that benefits people outside of the funeral industry is to donate one's dead body to science. Donation to science (also know as donation to medical science) is turning over a dead body to doctors, medical students, and/or other scientists for use in their studies. The charitable goal is the advancement of science. Donation to science is usually to a medical school. The most common use of a dead body by a medical school is to teach human anatomy to the next generation of doctors and other medical professionals.

Continue reading "Donating One's Body to Science" »

September 2, 2006

Florida Spendthrift Trust

Florida law specifically authorizes Spendthrift provisions in a revocable living trust or irrevocable trust. A spendthrift clause in a trust prohibits transfers of a beneficiary's interest in the trust. In some jurisdictions, all income interests are automatically given limited spendthrift protection meaning that they cannot be transferred by a beneficiary or reached by his creditors unless a provision is inserted in the trust document allowing such transfers. If there is no provision allowing the beneficiary to transfer his interest, it can be reached: by a creditor that furnished necessities such as food, clothing, shelter, or medicine; in suits to enforce child support or alimony; to collect a federal tax lien; to the extent of income beyond that reasonably needed by the beneficiary for support and education; and by creditors who have a judgment against the beneficiary and can levy upon 10 percent of the income due. There is no spendthrift protection where the trustor is also the beneficiary.

September 1, 2006

Totten Trust

Under a Totten trust, a trust-like arrangement is created by a person who deposits money in a bank account and names a beneficiary. Because the depositor owes no duties to the beneficiary, a real trust (Florida Revocable trust)is not formed. However, upon the depositor's death, the account will not go through the Florida probate process but will be distributed by the bank directly to the beneficiary. Although the account belongs to the beneficiary, it can be reached by the depositor's creditors. A Totten trust is revoked if the beneficiary dies before the depositor. Revocation can also be by will, but only if the will expressly refers to the account and to the bank.

August 30, 2006

Life Insurance Proceeds, Retirement Plan Benefits

A trustor can name the trustee of a living trust or of a testamentary trust created in a will as beneficiary of his life insurance proceeds. However, if the trustee of a living trust is named beneficiary, the trust must exist at the time that the beneficiary is named. These principles also apply to retirement plan benefits.

August 29, 2006

Florida Revocable Living Trust

In many jurisdictions, Florida revocable trusts cannot be revoked unless the trustor expressly retains the right to revoke. Revocable living trusts allow a trustor to manage his assets, to plan for his incapacity, and to avoid probate. The beneficiary of the Living trust or Revocable Living Trust gains interest in the assets during the trustor's lifetime and gains possession upon the trustor's death.

A trustor can devise assets in his pour-over will to the trustee of his revocable living trust or to a trust created by someone else. Such a devise is known as a pour-over gift and is valid only if the trust was in effect prior to the will or was created at the same time as the will. The pour-over gift is made to the trust as the trust exists at the trustor's death, which includes any amendments made to the trust after the will is executed.

August 13, 2006

Living Trust: Florida Estate Planning Basics

You can avoid probate in Florida, and pass your property to your children within only a couple of months by creating a Florida Living Trust. A Living Trust is a legal entity that is separate from you as an individual. You transfer title to your major assets to this trust—like your house and your brokerage accounts. During your lives, you and your spouse serve as the trustees of the trust, which gives you the power to buy, sell, and otherwise transfer any of the assets in it. When both of you die, the assets in the trust are transferred to the beneficiaries of the trust, usually your children, without going through probate at all.

Though it costs some money now to set up a Living Trust, and takes some time to manage it, it costs about 1/10th of what the probate process will cost your estate and allows you to craft an estate plan that maximizes what you've got for the people who need it most, your kids.

April 30, 2006

Florida Estate Planning

Florida Estate Planning:

The process of preparing and planning for a persons financial, health care and personal affairs. It includes documents to designate an agent in the event of a future disability such as a Living Willl or health care surrogate to assist with health care matters if one is unable to do so, a power of attorney to help with financial matters, and wills and trusts to pass financial property to family, friends and possibly other organizations. Estate Planning can ensure that a person is able to pass their property exactly as they desire instead of how Florida law or their home state would dictate it pass and then if trusts are prepared they can direct how the property will be handled long after the grantor is dead. Estate Planning is critical for all people and not merely those with a large estate. It determines who the guardian of minor children would be, who the personal representative/trustee (if there was also a trust) would be that handles the affairs and a guardianship from having to be imposed where the court would take control. Florida probate could be avoided as well through the use of trusts and or proper designations for the way that property is held saving time and money. Also if it is a large estate money could be saved that would otherwise have to be paid for estate taxes. Once all the persons assets exceed a certain exemption amount the estate is taxed at over 40%. With proper planning substantial amounts of money can be saved.

April 24, 2006

Florida Probate Domicile Definition

Domicile is important when creating a Florida Estate Plan as well as when dealing with Florida Probate matters.

Domicile: The place that a person presently lives with the intent to remain. This is usually a persons permanent residence but if they are merely away on military service, to receive medical care or go to college for example but intend to return home to another place that they intend to return to will be the domicile. The law governing the state and county of domicile will control the disposition of the person's property upon their death. One's Domicile is important in figuring out which county a Florida Probate case is filed.