Estate Planning

June 9, 2015

How to modify an irrevocable trust in Florida

In Florida, courts are now permitted to judicially modify an irrevocable trust even when a trust is unambiguous.

Historically, courts held the belief that the intent of the settlor, the person who creates a trust, should only be determined from the actual language of the trust document. This belief led courts to only modify a trust when the trust’s purpose, or provisions within the trust, were found to be ambiguous. If no ambiguity was found the court was unable to consider any other evidence of the settlor’s intent, and the beneficiaries were stuck with whatever the trust says on its face. In Florida, this changed when Florida adopted the Florida Trust code in 2007.

Florida’s Trust code is modeled on the Uniform Trust Code (UTC). The UTC deals with modifications in a number of sections that Florida has mostly adopted. For instance, UTC § 412 allows a court to modify or terminate a trust when the following circumstances occur:

May 29, 2015

Florida’s Probate and Trust Codes, 2015 Amendments Regarding Attorney’s Fees

by David M. Goldman

In Florida, the Florida Probate Code and the Florida Trust code govern the administration of estates and trusts. These codes establish the rules and procedures for all probate matters such as the administration of a will. The Florida Legislature has recently amended the Florida Probate Codes.

Attorneys Fees and Costs

Both the probate and trust codes provide that an attorney who has provided services to an estate or trust may be awarded reasonable compensation. The latest update to the codes has been in response to inconsistent application of these laws which used to require there be a finding of “bad faith, wrongdoing, or frivolousness” in order to award a party attorney’s fees and costs. The codes have now eliminated this vague language and have enumerated a list of factors that a court should use when deciding to award attorneys’ fees in a case. These considerations allow a court to even direct, in its discretion, from which part of the estate or trust attorney’s fees and costs may be paid.

May 29, 2015

What are required minimum distributions during retirement and how much are they?

by David M. Goldman

The rules that surround our retirement plan accounts and IRA’s can be tricky, especially when it comes to determining an individual’s required minimum distributions, or RMDs.

RMDs are the minimum amounts that a retirement plan account owner must withdraw as required by the federal government. Generally, a person is required to take RMDs from an IRA or retirement plan account in the year when he or she reaches age 70 ½ or later. If the retirement plan is an IRA or the account owner is a five percent owner of the business sponsoring the retirement plan, the RMDs must start once the account holder is age 70 ½ regardless of whether he or she is retired.

The rules for minimum distributions can be confusing, but a person’s RMD for any year is the account balance as of the end of the preceding calendar year divided by a distribution period from the IRS “Uniform Lifetime Table.” This is the way most people will calculate their RMD. However, if a spouse is the sole beneficiary of an IRA, and is more than 10 years younger, the Joint Life and Last Survivor Expectancy table must be used. A person is also allowed to take penalty-free distributions from their IRA or retirement account plans at age 59 ½.

May 28, 2015

Why you should name a trust as the beneficiary of your life insurance

by David M. Goldman

Naming a trust as a beneficiary of life insurance policy can have a huge benefit for people with large estates that are not taxable. It is also a great way to protect the insurance proceeds from future creditors and to help beneficiaries better manage their assets

There are a few common types of trusts that can serve as the owner or beneficiary of a life insurance policy. These trustees might include: an irrevocable life insurance trust, a living trust, a special needs trust and a spendthrift trust.

Irrevocable Life Insurance Trust

This type of trust, often referred to as ILIT, is used to irrevocably purchase insurance on the life of the grantor of the trust. This means the trust will have actual ownership of the policy, rather than the person the policy is for. This is done usually to avoid the taxing of life insurance proceeds at death under the Federal estate tax. Since the person does not actually own the life insurance policy, the proceeds are not subject to estate tax or included in that person’s estate when he or she dies.

Once a person with an ILIT dies, the insurance proceeds will be deposited into the ILIT. Usually, an ILIT is set up to provide for the other spouse during his or her lifetime, and the balance passes to the children or other named beneficiaries.

ILITs are typically used to save money on estate taxes by ensuring the life insurance proceeds would not be included in the insured person’s estate. In 2002, the estate tax exemption was only $1 million. Since 2013, Congress has raised the estate tax exemption has been raised to $5.43 million, and $10.86 for married couples. This much higher exemption means a large number of estates are no longer facing estate taxes. However, those with larger estates can still benefit greatly from the use of an ILIT. In addition, some families are still using ILITs incase the estate tax exception is lowered in the future.

Living Trusts Continue reading

May 27, 2015

How did the court in Clark v. Rameker change estate planning in Florida?

by David M. Goldman

The U.S. Supreme Court recently ruled that an inherited IRA is not a “retirement account” for purposes of protection under the Bankruptcy code. This now means that inherited IRAs are available to satisfy creditor’s claims in order to pay off debt.

The court characterized an inherited IRA as money that is set aside for the original owner’s retirement rather than money set aside for a designated beneficiary’s retirement. The court reached this conclusion using three elements to differentiate an inherited IRA from a participant-owned IRA:

The beneficiary of an inherited IRA cannot make additional contributions to the account, while an IRA owner can.
The beneficiary of an inherited IRA must take required minimum distributions from the account regardless of how far away the beneficiary is from actually retiring, while an IRA owner can defer distributions at least until age 70 1/2.
The beneficiary of an inherited IRA can withdraw all of the funds at any time and for any purpose without a penalty, while an IRA owner must generally wait until age 59 1/2 to take penalty free distributions.

March 6, 2015

Florida Asset Protection: What is an IPUG™ Trust? How does an IPUG™ Trust work?

by David M. Goldman

Asset protection was previously out of reach for most Americans. Thanks to a new trust called the IPUG™ Trust, Asset Protection is affordable for the average family. In the past many families created trusts to avoid estate tax, but with the recent increases in the Federal estate tax exemptions, many use trusts to manage assets, avoid probate, and protect assets from creditors.

The iPug™ Trust not only provides advantageous tax benefits, but it also provides asset protection, while retaining Grantor control,” explains David J. Zumpano, CPA, ESQ., President and Founder of MPS and creator of the iPug™ Trust. “iPug™ Planning will apply to 99.5% of Americans.”

February 23, 2015

Facebook Account, Digital Assets and Estate Planning, what Happens when I die?

by David M. Goldman

Estate Planning for Digital Assets is becoming a more important part of our estate planning. While most online accounts simply expire when you die, Facebook has recently incorporated some changes to your account so you can specify what happens when you die.

Until recently, loved ones of the deceased only had two choices:

Keep the wall public so everyone could continue to post messages and thoughts on the wall, or
Request to have the page “memorialized,” which meant the profile was no longer searchable or visible to those who were not already friends of the individual.

What Facebook did not allow to happen was for someone to manage the profile of the deceased owner without having the password. That just changed with the Facebook Legacy Contact feature. A Facebook user can now choose a “legacy contact.” The Legacy Contact can manage your account or delete the account after you pass away.

Facebook’s Updated Options and Release Stated:

January 22, 2015

2015 Gift Tax: Can I Give My Kids $14,000 a Year?

by David M. Goldman

The amount you can give anyone without having to file a gift tax return in 2015 remains the same as 2014 at $14,000.

Remember that you can give your children, their spouses, your grandkids $14,000 each. In addition, if you are married, your spouse can also gift $14,000 to each person.

Generally, families use gifting to reduce the size of their estate do not need Medicaid long-term care coverage, but if you or your spouse need care and you have gifted money in the past, it may affect your ability to obtain coverage.

December 11, 2014

Why Not to Name Kids as a Beneficiary of your IRA

by David M. Goldman

If you have been told, don’t worry about your IRA it is protected because Florida has statutory protections for IRAs, you may have misunderstood or been mislead. While Florida does have statutory protection for inherited IRA’s, this protection only applies if your beneficiaries are residents of Florida at the time of your death.

Why take a chance with naming individuals as a beneficiary of your IRA. A properly designed trust should be the beneficiary of your IRA to protect the proceeds from the creditors of your beneficiaries at the time of your death.

In June of this year, the US Supreme Court in Clark V Rameker stated that children or other “non-spouse” individuals who inherit are at risk of loss to their creditors. This was not a close call, it was a 9-0 decision and clarifies that an inherited IRA is not protected from the creditors of its owners.

November 12, 2014

What is the iPug™ Trust Your Family’s New Best Friend

by David M. Goldman

We often get asked about the iPug™ Trust and how it can be so different than a traditional revocable trust or a standard irrevocable trust. The iPug™ takes the best parts of an irrevocable trust and mixes them with the best parts of a revocable trust to create a new type of irrevocable trust where you are in control and can make changes to the beneficiaries and management of the trust just like you can with a revocable trust.

Why Do People Love iPug™?

Because iPug™ Protects You and Your Family From:

Lawsuits
Nursing Homes
Those that want to take away what you worked hard for.
Children’s indiscretions, their spouses and divorce.