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.

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.




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.

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.

rings.jpgCouples who are still married, even into their 70s or 80s are the lucky ones. They’ve made it through the hard times, the ups and downs of life, ]and still have their companion at their side. But even the most devoted of spouses is sometimes finds it necessary to exercise “Spousal Refusal” to pay the long-term care bills of their spouse when he or she has lost the ability to perform the activities of daily living.

Spousal Refusal refers to one spouse’s official and legal refusal to pay for long-term care expenses of the other spouse. In general, married couples have a legal obligation to pay for the healthcare costs incurred by either spouse if they are admitted into a nursing home. However, if your spouse has been admitted to a nursing home, and you have limited resources, you may fill out a form with Medicaid stating that you refuse to pay for your spouse’s care. This may sound cruel or selfish, but exercising Spousal Refusal can sometimes be the only way to save the healthy spouse’s small nest egg for his or her own needs in later years.

Spousal Refusal is not about turning away from a spouse in their time of need; in fact, many of the elderly individuals who exercise this option do so only after a long and painful decision-making process, and they do it not out of selfishness but out of necessity. Patients who need more than the first 100 days of nursing or rehab care covered by Medicaid can find themselves facing costs in excess of $100,000 per year. It is not uncommon for a couple to lose their house and all of their savings because of one extended stay in a nursing home.

happy_elderly_couple_americare.jpgAlzheimer’s is a disease that affects everybody it touches–husbands, wives, children and grandchildren–they all bear witness to their loved one’s slow demise.

Sadly, emotional stress is not the only stress that accompanies Alzheimer’s disease; those loved ones serving as caretakers may carry a huge amount of financial stress as well. The cost of caring for an Alzheimer’s patient can run anywhere from $64 a day to $77,380 a year, and because Alzheimer’s disease can be such a long-lasting disease (a person can suffer from Alzheimer’s for up to 20 years) the costs of care can end up being astronomical. It’s obvious that people can’t do it alone.

Long-term care insurance can be very helpful in paying for the costs of care necessary for a loved one suffering from Alzheimer’s… if your loved one has thought ahead and purchased the policy before they or their spouse began suffering from symptoms of Alzheimer’s. Some people may not have thought ahead and hope that government programs will be able to help with the high cost of care. Medicaid (or MediCal in California) can be helpful–although Medicare doesn’t cover the cost of long-term care–but only if you fall in the right category and know how to navigate the complex Medicaid system.

Many of our clients and readers in Florida are caregivers of elderly parents; they have chosen to take responsibility for their parents–whether it be physical responsibility, financial, or other. But what if instead of making that choice, you had responsibility for your aging parents thrust upon you? This is exactly what happened in the case of Health Care & Retirement Corporation of America v. Pittas, recently brought before the Pennsylvania appeals court.

This particular case states that “On or about September 24, 2007, after completing rehabilitation for injuries sustained in a car accident, Appellant’s [John Pitta’s] mother was transferred to a HCR facility for skilled nursing care and treatment. Appellant’s mother resided in the facility and was treated by HCR until March of 2008. In March of 2008 Appellant’s mother withdrew from the HCR facility and relocated to Greece.”

Following Pittas’ mother’s relocation, a large portion of her bill at the nursing home went unpaid. Mr. Pittas’ mother applied to Medicaid to cover her care, but while that application was still pending, the nursing home sought to hold Mr. Pittas responsible for the debt under the state’s filial responsibility law. Although the case went to an arbitration panel which initially ruled in favor of Mr. Pittas, eventually the Pennsylvania trial court ruled in favor of the nursing home, holding Pittas responsible for nearly $93,000 of his mother’s nursing expenses.

couple.jpgAccording to a recent article on, the importance of estate planning for married couples cannot be stressed enough. The seriousness of such forward thinking is even more critical in blended families which tend to present more opportunities for volatility following the death of a parent.

The first issue for all couples to resolve is whether to be represented jointly by the same estate planning lawyer or for you each to go it alone. While joint representation can be more cost-effective, it can mean that both parties don’t have the freedom to speak up about their individual concerns. Unless there is healthy communication between the spouses joint representation can be a recipe for disaster.

The following are some good rules of thumbs to consider when deciding whether you need your own or joint representation:

Thumbnail image for last-will-and-testament-document-with-gavel-and-pen-58750624.jpgWith a little careful planning, you may be able to avoid the probate question all together. Avoiding probate saves money and greatly reduces the strain placed on your family by time in court. A meeting with an estate-planning attorney can help you figure out how to structure your estate so that probate is not necessary, no matter how large the value of the estate. The following is a list of estate-planning tools that can help you avoid having to go through the probate process. Be careful replying on some of these because they may expose you to unnecessary risk of loss of the assets due to litigation. If you are interested in protecting assets and avoiding probate contact us to discuss your specific needs.

1. Living Trusts: Living trusts (also called an “inter vivos” trust) is a trust that is created while you are alive, rather than one created upon your death. Living trusts are great vehicles to avoid the lengthy and expensive probate process.

2. Joint Ownership: If you own property jointly with someone else, and this ownership includes the “right of survivorship,” then the surviving owner automatically owns the property when the other owner dies. An asset that is owned by two or more people in joint tenancy is not required to go through probate.

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