Estate Planning and Tax Lawyer Blog

Retirement should be a time that people can enjoy life without the stresses of employment or money. However, about 39 percent of Americans do not save enough for their retirement when they participate in 401(k) plans. Some ways to avoid the worries associated with money all begins with a plan.

Avoid a mid-life crisis by saving money early. Many people do not start saving money for retirement until later in life. Although retirement may seem like it is far away, it comes quicker than most think. Do not wait to save until you are middle-aged. Start early. Do not invest and then never look at those investments again. The market is always changing. Make sure to look at, or acquire an advisor to look at, the various intervals throughout the year and make adjustments according to the economy and market.

Do no invest just the minimum amount. Instead of always investing the amount your company will match, increase contributions into retirement account according to the progression of your career and income. Do not make the mistake of spending most of your retirement savings early in retirement. Remember that without a job there is now more time to spend money. Also, be realistic. The money in a retirement savings account is the money that you will have for the remainder of your life. Do not forget about factoring in an increased amount of medical bills as well.

To read more on this article, visit Four fool-proof tips on planning the perfect retirement from Smart401k.

Continue reading " Retire Comfortably by Making a Plan Now " »

Change is a part of life – unfortunately, it is also a factor in derailing many estate plans that have not been updated to account for new circumstances.

The most common mistakes that effect estate plans of any size include:

Heir Designation – estate plans should be reviewed annually to ensure that the proper beneficiaries are designated.  Too often ex-spouses or even those who have already pre-deceased the benefactor are listed as beneficiaries in estate plans that have not been updated for years.

Titling Assets – failure to properly title assets in the name of the trust has resulted in the unnecessary payment of additional estate taxes that the trust was established to prevent in the first place.  Failing to designate the proper beneficiaries on retirement account plans has also brought about many unpleasant and unintended consequences.

Heirs Cannot Pay Taxes – many times the heirs to a wealthy estate cannot afford to pay the taxes on their inheritance, which is due nine months after a benefactor’s death.  The assets left to them may be illiquid, leaving them to sell at a loss or borrow to pay the taxes.  Purchasing life insurance to cover the taxes is a simple solution to this problem.

Wrong Executor – unless a family member is a skilled legal or financial advisor, it’s usually best to name someone with those skills as your executor, especially for a large estate.

For more information on asset protection trusts as well as retirement and estate planning, contact our Jacksonville Florida estate planning law firm.

The death of child actor Gary Coleman should serve as a reminder to us all of the importance of having an advance medical directive.

After suffering a major brain hemorrhage sustained in a bad fall, Coleman was placed on life support at a Utah hospital while doctors consulted with the woman they believed to be his wife – but who, it turns out, had been divorced from Coleman in 2008.  She was no longer legally able to provide direction for his care.

Luckily, Coleman had drafted an advance medical directive, no doubt because of his long history of health problems.  Medical authorities followed his wishes as laid out in that directive, and he was removed from life support and died shortly thereafter.

Advance medical directives include:

Living Will – a document that specifies what kind of medical treatments should take place in case you are incapacitated.

Health Care Proxy – a document that designates a person who can make health care decisions for you in cases where you cannot.

Durable Power of Attorney – a document that gives the power of attorney to others to make financial transactions for you in case you are medically incapacitated.

For more information on advance medical directives and Florida estate planning, contact our Jacksonville Florida estate planning law firm.

Surprisingly yes. Oral trusts, although rare and not adviseable, may be enforceable in Florida. Many states prohibit or hold oral trusts as void. Florida statute 736.047 governs the validity of oral trusts created in the state of Florida.

The statute does state that an oral trust must be proven by clear and convincing evidence in order to be enforceable (if challeneged). It is never recommended to rely on an oral trust. Such an important estate planning tool should be reduced to writing and you should use and experienced estate plannning attorney to construct it. Reducing the terms to writing will save you a lot of trouble in the long term.

Continue reading " Are Oral Trusts Valid in Florida? " »

A local Jacksonville state lawmaker is proposing just that. Rep. Charles McBurney has proposed a law imposing a retaliatory estate tax on non-residents who inherit property which is located in Florida.

The estate tax rate would be equal to what a Florida resident would have to pay in another state if the Florida resident inherited property located in that state.

Rep. McBurney’s intent is to try and protect Florida residents from taxation in a state which imposes a state estate tax. He feels it may discourage states from imposing their own separate estate tax. It is unclear however if the bill would ever make it through the legislative process or survive a court challenge.

To read more on this proposed bill, read Jacksonville representative Proposes Retalitory Estate Tax.

Continue reading " Could Florida Impose a Retaliatory Estate Tax? " »

Most young adults do not give a second thought about estate planning. But most young adults like to travel and go on adventures. So what will happen if an unfortunate accident occurs on one of these adventures? There may be no children or home to leave behind, but there should still be something in place if anything unforeseen happens.

A durable power of attorney and a health care power of attorney should be in place for everyone. Both give power to an individual that you choose to make decisions for you when you are unable to do so yourself. The durable power of attorney, which deals with assets, grants power to an agent to make financial transactions on your behalf. The health care power of attorney, which deals with your medical care, grants power to an agent to make decisions on the medical care to be received. Without these two very useful documents, family members must go to court to request guardianship. Financial affairs may become frozen when payments are not made. As for the medical care, state law may name parents as agents.

To avoid these default circumstances, it is advisable to contact an estate planning attorney and obtain the power of attorney documents so that any decisions made will be the decisions that you made.

To read more on this article, visit Durable power of attorney eases mountain of worry.

Continue reading " Power of Attorney Helps with Unforeeable Events " »

Dynasty trusts are long-term trusts that are created to benefit generations of descendants – some can last as long as a century.

Usually funded utilizing a benefactor’s estate tax credit ($2 million per individual, $4 million per couple), a dynasty trust allows assets to accumulate for years free from federal gift and estate taxes.

While the dynasty trust is in force, distributions can be made to the benefactor and his or her heirs with no federal taxes due.  Since estate taxes are applied to each generation, the savings can be tremendous over multiple generations.

Another benefit of a dynasty trust is “spendthrift clauses” which can restrict a beneficiary’s access to the trust income or principal.  This is usually put in force by wealthy parents whose children or grandchildren might not be financially responsible or where access to great wealth might be a negative influence on their lives.  Having a spendthrift clause still allows the parent or grandparent to provide for those heirs in a reasonable way.  It can also prevent creditors from attacking trust assets for debts of the beneficiaries, and prevent an heir’s ex-spouse from laying claim to the assets of the trust.

Need to learn more about protecting your assets through careful estate planning?  Contact our Jacksonville Florida estate planning law firm.

Prior to the 2010 Tax Relief Act, various tax deductions and incentives were set to expire at the end of 2010, or had already expired at the end of 2009. Due to the 2010 Tax Relief Act, employees can continue to exclude up to $5,250 of education assistance provided by an employer through the end of 2012. Deductions for student loan interest and Coverdell Education Savings Accounts are extended through the end of 2012. State and local sales tax deduction, higher education tuition deduction, and teacher’s classroom expense deduction are all extended for two years and will expire at the end of 2011. The Joint Committee on Taxation estimates that the cost for the state and local sales tax deduction will total $5.5 billion. There is no individual projection for the other deductions and extenders.

Continue reading " Individual Tax Deductions and Extenders " »

The world of technology has effected another area of law, estate planning. Your online existence includes your email accounts, usernames, passwords, social networking accounts such as Facebook, MySpace, or LinkedIn, and more. Whether you pay bills online, shop, or even date, today, almost everyone has some sort of online account. What happens to these accounts after your death depends on the actions you take while living.

It is smart to have passwords to your online accounts only you know. However, this protective measure may pose problems at your death. For example, it depends on the provider of the service as to who owns your account when you die: Yahoo Mail will not divulge the decedent’s account information to their family without serious legal action; Google’s Gmail requires a copy of both the death certificate and power of attorney or birth certificate, as well as a e-mail sent from the decedent’s account – a not so easy task; and MySpace’s terms of agreement state that when you die, your profile dies.

Some steps you can take in order to avoid these types of obstacles:

1. Keep your passwords and usernames on a portable flash drive and pass the device onto a friend or family member at your death.
2. Companies, such as Legacy Locker, serve as a safety deposit box for passwords and other account information. These companies also provide personalized instructions on how to handle your online identity.
3. If you wish for your online identity to dissolve with you at death, an option is to do nothing and some accounts will be deleted by the providers as a result of inactivity on the account.

However, if you would like your online identity to continue after your death, it is important to plan for this as you would any other facet of your life. Planning your estate should include your online existence. An Estate Planning Attorney should be contacted so you can discuss these novel legal issues in order to ensure your interests and wishes are carried out after your death.

Prior to the 2010 Tax Relief Act, 50% bonus depreciation was extended for qualifying assets placed in service in 2010. Due to the 2010 Tax Relief Act, bonus depreciation increased to 100% for qualifying assets placed in service between September 9, 2010 and December 31, 2011. Fifty percent bonus will apply for any assets placed in 2012. The Tax Policy Center estimates the cost of this provision will be $20.9 billion. This will allow businesses to take considerable federal deductions on qualified capital purchases. Many states may continue to “decouple” from the bonus and Section 179 provisions at the federal levels. While the 100% bonus depreciation may make Section 179 expensing less valuable, there may still be a benefit to maximizing a Section 179 expense that is allowable in a certain state if they do not recognize the full amount of bonus depreciation.

Continue reading " Bonus Depreciation " »

The IRS’ marital deduction allows a spouse to pass on his or her assets to a surviving spouse without those assets being taxed.

A marital deduction trust is created to protect the assets of both spouses from federal estate taxes when they die.  So how does a marital trust work?

When the first spouse dies – let’s say the husband – his assets pass not to his surviving wife but to the marital deduction trust and no federal estate taxes are due.  While the wife is still living, the trust generates income for her.  When she dies, the assets in the marital deduction trust are not part of her estate, so are therefore not subject to federal estate taxes.

To qualify for a marital deduction trust:

• The surviving spouse must be the only beneficiary of the trust during his or her lifetime


• The surviving spouse must have unrestricted power over how the trust assets are bestowed upon his or her death


• All trust income must be given to the surviving spouse on an annual basis during his or her lifetime


• The trust must specify who will receive the trust assets upon the death of the surviving spouse

A trustee must also be appointed, and all the assets in the trust must be specified in the trust document.

For more information on marital deduction trusts and Florida estate planning, contact our Jacksonville Florida estate planning law firm.

Prior to the 2010 Tax Relief Act, various tax credits were about to expire or return to reduced levels on December 31, 2010. Due to the 2010 Tax Relief Act, the child tax credit at the current $1,000 level per child will be extended two years. The refundable part of the credit is also extended through the end of 2012. At higher levels, the child and dependent care credit is extended through 2012. The maximum amount of eligible expenses remains at $3,000 for an individual and $6,000 for two or more individuals. The American Opportunity Tax Credit (AOTC), which replaced the Hope education credit in 2009, will also be extended through the end of 2012. Other credits, like the enhanced earned income credit and adoption credit, are also extended at the 2010 levels through the end of 2012.

The Joint Committee on Taxation estimates that the cost of the child tax credit at higher levels will total $71.7 billion, with the refundable portion adding another $19.7 billion. The extension of the child and dependent care tax credit and AOTC’s estimated cost will total $600 million and $17.6 billion, respectively.

Continue reading " Other Individual Tax Credits " »

The Florida Court of Appeal for the Third District issued an opinion in October 2010 about a marital trust issue. A husband and wife devised a trust that "wholly" owned a condominium which was also their homestead.

The husband passd away and the terms of the trust stated that the Trustee shall pay wife (widow and now life benficiary) whatever she reasonably needs for maintenance and support out of the trust, including principal payments.

The wife was paying insurance and taxes individually because she thought she had an interest in the property as a result of a quitclaim deed. The married couple's children were remainder beneficiaries of the trust. In addition, the wife had the discretion to use the same trust property for income generating purposes.

The wife sought reimbursement from the trust for the expenses she incurred in maintaining the condominium and opposed actions taken by the Trustee in trying to sell the condo. The court agreed with the wife and ordered she be reimbursed by the trust for expenses incurred and that she is allowed to keep the condominimum.

Continue reading " Florida Court Rules in Favor of Widow on Homestead Issue " »

In 2009, individuals over the age of 70.5 were allowed to make tax-free charitable contributions of up to $100,000 per year, per taxpayer, from their retirement accounts. The contribution would not be subject to income tax and would count towards the individual’s required minimum distribution. This incentive had expired in 2010. Due to the 2010 Tax Relief Act, this provision was extended for two years through the end of 2011. Because the provision was enacted in the latter part of 2010, taxpayers are allowed to make charitable transfers during January 2011 as if they were made December 31, 2010. The Joint Committee on Taxation has not disclosed the separate cost of this provision.

This provision can be useful for those individuals who have charitable intentions and large IRAs. One thing not quite clear, however, is the impact that having a January 2011 distribution be treated as a December 2010 distribution. Watch for more assistance and discussion on the topic.

Continue reading " Individual Charitable Contribution Incentives " »

Prior to the 2010 Tax Relief Act, the credit for nonbusiness energy efficient property was at a credit amount of 30% of the expenditure for authorized property and the maximum lifetime credit was limited to $1,500. Some examples of qualified property include furnaces, water heaters, insulation material, and other items. Due to the 2010 Tax Relief Act, the energy credit will extend through the end of 2011, reducing the maximum lifetime credit of $500 and lowering the value of the credit to 10%. The Joint Committee on Taxation has not disclosed the separate cost of this provision. Individuals have been given an extra year to make energy efficient improvements, but now the lifetime credit has decreased to $500. Any individuals who have previously received a credit of $500 or more in 2006-2010 will not be qualified to receive any additional credit.

Continue reading " Energy Efficient Improvement Credit " »

Prior to the 2010 Tax Relief Act, individuals would have had to pay Social Security tax of 6.2% in 2011 on wages up to $106,800, with the employer paying the same amount. Self-employed persons are subject to taxes of 12.4% for social security. Due to the 2010 Tax Relief Act, the employee, not employer, portion of the tax is reduced from 6.2% to 4.2% for 2011, with the maximum amount of wages subject remaining at $106,800. This could result in savings of up to $2,136 per individual. Those individuals who are self-employed will also receive the 2% tax reduction. The Joint Committee on Taxation estimates that the cost will total $111.7 billion. The “Payroll Tax Holiday” has no income limitation, meaning all workers who are subject to social security taxes will receive a benefit. Although this benefit is not for businesses, tax incentives were enacted in March 2010 for potential payroll tax savings.

Continue reading " Payroll Tax Holiday " »

If you started and/or own a family business, chances are that you spend a lot more time thinking about running the business than you do about leaving it.  However, having a business exit strategy in place – whether you plan to retire or go out feet first – is an essential part of estate planning.

A business exit strategy usually involves the transfer of ownership interest to other family members or key employees, or the sale of the business.  As part of your business exit planning, you will need to prepare a list of assets and have the business valued by conducting a professional appraisal or valuation.

You will then need to confer with your estate planning attorney to examine all the potential alternatives available and the legal and tax consequences of each for your estate.  Once a business exit plan has been designed, it must be implemented carefully following the proper legal and business steps to accomplish your end goals.

Having a documented business exit strategy in place ensures that you protect the business you’ve spent years building, as well as a secure future for your heirs.

If you need more information about business exit strategy planning, contact our Jacksonville Florida estate planning law firm.

Remember that the Florida Supreme Court in Olmstead ruled that a single member LLC gives no asset protection to the LLC owner and a creditor may obtain the LLC owners interest in the LLC. The charging order was not an exclusive remedy. Having stated the foregoing, here are a few ideas moving forward:

1. Add other members to the LLC making it a multi-member LLC. The Olmstead case stated that the charging order was not the sole remedy against a single member LLC. However, the court ruling also left open to interpretation the charging order as a sole remedy against a member of a multi-member LLC.

2. Move your LLC to another state. Just because you do business in Florida doesn’t mean you have to have a Florida LLC. You can move your LLC to another state such as Wyoming or Delaware whose state law specifically states that the charging order is the sole remedy against a member’s LLC interest. However, those state laws have never been challenged and could always be overturned.

3. Hold the LLC interest as tenants by the entirety between husband and wife. Make sure the stock certificate issued states that the interest is owned as tenants by the entirety and draft the operating agreement clearly so that it states that it is a single-member LLC. The only way a creditor could get the membership interest in that instance would be to sue both the husband and the wife. The drawback with this technique is that if the spouses separate, then the interest is no longer owned as tenants by the entirety.

4. Convert the LLC to an LLLP. However to do this, you have to add another member to the entity since it takes more than one person to form a partnership.

As stated in previous blog articles, the Florida Bar is working with the Florida legislature to come up with a new law to patch the hole created by the Olmstead case. However, the single member LLC may still be vulnerable under any new laws.

To learn more about which business entity may be best for you, please contact Wood, Atter & Wolf to set up an appointment to discuss your business needs.

A senior editor of CNNMoney.com wrote an article suggesting 3 ways to money and build a bigger nest egg:

1. Use a hands-off approach:
You may be trying to save your money but there always seems to some current need competing for your money. Before you even realize it, your paycheck is already gone and future saving is a distant memory. CNNMoney.com suggested arranging things so money automatically flows into a savings account before you’re able to get your hands on it.

2. Give yourself incentives:
We live in a society of instant gratification; a bigger bank account in the future is not as immediate as that luxury new car or exotic vacation. Set goals for yourself and stay disciplined. Once you accomplish your goals, reward yourself with a nice dinner or concert tickets.

3. Focus on the big stuff:
A lot of advice on saving focuses on how much a little adds up to a lot over a long period of time. For example, say you save $10 a day b giving up on tasty lattes and other snacks. You could potentially save a total upwards of $50,000 after 10 years, assuming a 6% return. However, this strategy takes a tremendous amount of discipline and elimination the small pleasures in life can result in a grim attitude toward saving. This may be a reason holding off on bigger items seems like a better idea-opt for a used car instead of a new one.

To read more about this article see Advice on saving money.

Saving money for your future is difficult because it is hard to think 20+ years into the future. However, saving now will leave in you’re a better position for retirement as well as build your estate to have more to give to your family and loved ones after you pass.

Most estate plans include a variety of assets: investment accounts, bank accounts, property, life insurance and IRAs or other retirement accounts. Many people may consider IRAs to be among the least of those assets because they intend to deplete their IRAs during their lifetime. But if someone dies with a substantial amount still in an IRA, it can become a major inheritable asset if the right steps are taken to protect it.

And the most important step is to designate beneficiaries for your IRAs. Because if you don’t name a beneficiary – or if you name your estate as the beneficiary – you may have made a big mistake that could cost your heirs a huge tax saving.

Here are the rules on inherited IRAs:

A spouse can roll over an inherited IRA as he or she wishes.

Any other heir must separate an inherited IRA from their own retirement funds and must start taking withdrawals right away, no matter what age they are at the time they inherit. These distributions do not suffer a 10% withdrawal penalty, but they do count as taxable income.

Here’s the important part about naming a beneficiary: if your heir is named, they can spread the withdrawals over their lifetime. If not, they have to take it all within five years. Which can put them in a higher tax bracket and cut the growth of the inherited IRA.

Taking a few minutes to fill out a beneficiary designation form for each of your IRAs is a small price to pay so your heirs don’t have a big price to pay later.

Prior to the 2010 Tax Relief Act, the marriage penalty would return at the beginning of 2011, due to the virtue of the difference between the value of the standard deduction and the size of the 15% income tax bracket between joint and single filers. Due to the 2010 Tax Relief Act, the marriage penalty relief will be extended through 2012. The Joint Committee on Taxation estimated the cost to be $26.9 billion. The marriage penalty continues to pop up in proposals being made and some parts of laws that were enacted.

Continue reading " Marriage Relief Penalty " »