Estate Planning and Tax Lawyer Blog

Section 732.201 states “The surviving spouse of a person who dies domiciled in Florida has the right to a share of the elective estate of the decedent as provided in this part, to be designated the elective share.” This is the legal definition of the elective share. The elective share is 30% of the elective estate.

What this means to the everyday Florida resident is that you may not disinherit your spouse in Florida. The only way to disinherit your spouse is through a prenuptial or postnuptial agreement where the spouse waives all their inheritance rights in the deceased spouse’s property.

Continue reading " What is the elective share and what are the surviving spouse’s right in it? " »

Sections 732.301 and 732.302 describes what a pretermitted spouse and child are. A pretermitted spouse is a spouse who came into the family after the creation of a Will. For instance, if Bob made his Will and then married Jane. Since Bob was not married at the time to Jane, he most likely would not have included her in the Will.

A pretermitted spouse is entitled to what he/she would have received had the spouse passed away without a will unless:
(1) Provision has been made for, or waived by, the spouse by prenuptial or postnuptial agreement;
(2) The spouse is provided for in the will; or
(3) The will discloses an intention not to make provision for the spouse.

A pretermitted child, just like a pretermitted spouse, is one who came into the family after the creation of the Will. Just like the pretermitted spouse, a pretermitted child is entitled to receive a share equal to what he/she would have received had the parent passed away without a will unless:
(1) It appears from the will that the omission was intentional;
(2) The testator had one or more children when the will was executed and devised substantially all the estate to the other parent of the pretermitted child and that other parent survived the testator and is entitled to take under the will; or
(3) The child had received an advancement of their inheritance during the parent’s life equal to what they would have received at the parent’s death.

Continue reading " What is a pretermitted spouse and child? " »

If you pass away without a will, your assets will pass according to Section 732.103 of the Florida Statutes. However, Florida Statute 732.104 states that “decent shall be per stirpes.” What exactly does this mean? The very best way to explain it is with an example.

Assume Parent 1 has Child A and Child Z. Child A has two children b and c and Child Z has one child y. When Parent 1 dies, Child A and Child Z each get ½ of the property. If Child A predeceases Parent 1, upon Parent 1’s death, Child Z will still get ½ and children b and c will each get ¼ (sharing in Child A’s ½ share). If Child A and Child Z both predecease Parent 1, children b and c will each get ¼ (sharing in Child A’s ½ share) and child y would get ½ (Child Z’s share).

Continue reading " What Does the Term Inheritance per Stirpes Mean in an Intestate Estate in the State of Florida? " »

Section 732.103 of the Florida Statutes determines how property is distributed to the heirs of a decedent if they do not have a surviving spouse. The flow of the assets can get a little tricky but I will do my best to explain it in English (compared to the statute itself). The assets shall be distributed as follows:

1) To the descendants of the decedent (in equal shares).

2) If there are no descendants, then equally to the decedent’s mother and father.

3) If the father and mother both have predeceased the decedent, then equally to the decedent’s siblings or their siblings’ children.

4) If there are no siblings or nieces and nephews, then the property passes equally to the grandparents of the decedent (1/2 going to the paternal grandparents and ½ to the maternal grandparents).

5) If there are no grandparents, then equally to the aunts and uncles of the decedent or the children of the aunts and uncles (cousins).

6) If there are no aunts, uncles or cousins, then the assets shall pass to the deceased spouse of the decedent, if any, as if the spouse had survived the decedent and then passed away intestate – meaning it would be treated as if the predeceased spouse was still alive and then run through the analysis above as if the spouse had passed without a will.

Continue reading " What are the Shares or Rights of Heirs (Family Members) Other Than the Spouse in an Intestate Estate in the State of Florida? " »

The answer to this question can be found in Section 732.102 of the Florida Statutes, which was just amended and effective as of October 1, 2011. A spouse’s share is purely dependant upon the make-up of the surviving family members.

The new law states that if you pass away with a spouse and children, all of whom are children of your marriage with that spouse and neither spouse has other children, then all of the assets will pass to the surviving spouse. If you pass away with children from a previous marriage/relationship, then the surviving spouse gets 50% and the children from the previous marriage/relationship get 50%. If you pass away which children from your marriage but your surviving spouse has children from their first marriage, then the surviving spouse gets 50% and your children get 50%.

The last two situations ensure that the surviving children of the parent who passed away are not disinherited completely by the surviving spouse.

Continue reading " What is the Spouse's Share of an Intestate Estate in the State of Florida? " »

In Florida (and other states) there are two basic types of estates that are processed through the court system. A testate estate and an intestate estate.

A testate estate is one that is governed or controlled by the terms of the Will (also known as a Last Will and Testament). A court will be required to follow the terms of the Will to the extent that the Will is properly drafted and consistent with Florida estate planning and Florida probate laws.

There are many people who die without a Will or with an invalid Will, which is called dieing intestate. If there is no Will in place or the court deems a Will invalid, the probate process will be governed by Florida's intestate laws pursuant to Chapter 732, Florida Statutes. As stated in Section 732.101, Intestate Estate, Florida Statutes, any part of the estate of a decedent not effectively disposed of by Will passed to the decedent's heirs as prescribed in the following sections of this. The statute further states that the decedent's death is the event that vests the heirs' rights to the decedent's intestate property. See Section 732.101, Intestate Estate, Florida Statutes.

While it is far better to have a Will in place and proper estate planning that helps to avoid probate or most of the probate process, intestate estates are still quite common and can be handled through the representation of a Florida probate attorney. In an intestate estate, the heirs and beneficiaries are determined by statute by petitions of the Florida probate attorney and by order of a Florida probate judge.

Continue reading " What is an Intestate Estate in the State of Florida? " »

The IRS today announced its 2012 items which are adjusted for inflation. This list usually is not published until closer to Thanksgiving but came out early this year. Full details can be found in Revenue Procedure 2011-52. However, some of the highlights are:

1) The personal and dependent exemption will rise to $3,800.

2) The standard deductions for singles and married couples filing separately will rise to $5,950, for married filing jointly it will rise to $11,900 and for heads of household it will rise to $8,700.

3) The $2,500 maximum deduction for interest paid on student loans will not change for single taxpayers but will increase for married taxpayers filing joint returns. The phaseout will now begin at $125,000 and be completely phased out at $155,000.

4) The estate tax credit will rise in 2012 to $5,120,000 per person. Keep an eye on this one as it will be a hot topic in the Presidential race.

Continue reading " IRS Announces Its 2012 Inflation Adjustments " »

If you’ve experienced – or are about to experience – a big change in your life, chances are that change should also be reflected in your will.

There are two ways to change your will – by modifying it with a codicil, or by drawing up a new will.  It is usually easiest – and helps reduce any potential for confusion – to create a new will when something major happens in your life:

Marriage – both spouses should create new wills after they get married.  If the marriage brings stepchildren into the picture – and you want to include them in your will – you must specifically name them, unless you have legally adopted them.

Divorce – suffice it to say, if you’ve divorced someone, you probably don’t want them getting any (more) of your assets.  While a divorce judgment revokes a gift made to your spouse in your will in most states, you should make a new will after your divorce.  Not to mention to completely redo the beneficiary designations on life insurance and retirement plans.

Birth – you should establish guardianship for a minor child in your will.

Death – if someone you have provided for in your will dies before you do, a new will should be made to redistribute the asset.

In addition, you will need to create a new will if you have disposed of any property that you gifted in your will or if you change your mind about a beneficiary.

Continue reading " When Should You Change Your Will " »

Confused when your estate planner asks if you want the distribution to be per stirpes or per capita?  You are not alone.  Most people, including some attorneys, do not know the difference between a per stirpes distribution pattern and a per capita distribution pattern.  The very best way to explain it is with an example.

Assume Parent 1 has Child A and Child Z.  Child A has two children b and c and Child Z has one child y.  Under either a per capita or per stirpes distrubtion, when Parent 1 dies, Child A and Child Z each get ½ of the property.  Also under each system, if Child A predeceases Parent 1, upon Parent 1’s death, Child Z will still get ½ and children b and c will each get ¼ (sharing in Child A’s ½ share).

The difference between the two distribution patterns is shown if Child A and Child Z both predecease Parent 1.  In a per stirpes distribution pattern, children b and c will each get ¼ (sharing in Child A’s ½ share) and child y would get ½ (Child Z’s share).  In a per capita distribution pattern, children b, c and y each would get a 1/3 share.

Continue reading " Per Stirpes v Per Capita " »

When potential clients come into my office to talk to me about estate planning, some of them have certain goals in mind.  Others have no idea what they want or need while others have one goal but leave with other goals in mind.  This blog hopes to get you thinking about what you really want to accomplish in your estate plan.

Some clients’ goal is to avoid the probate process.  Probate here in Florida is a pain because it costs a lot of money, is public record and takes a long time.  Some clients come in just wanting to save money in estate taxes.  While that is not a big problem this year that will definitely change whether Congress acts this year or not. 

One frequent goal is to pass on a family business or a secondary residence that has been in the family for years.  That can easily be obtained with proper planning.  Finally, and probably the most frequent goal, is to make sure that the assets stay in the family and do not go to the in-laws in a divorce.

One goal that I usually have to bring up with the client is to make sure that they themselves are taken care of.  Clients get so caught up in worrying about everything else that they forget about themselves.  I feel clients need to be focused on the present while they are alive and well, when and if they become disabled and then finally what happens upon their death. No matter what your goals are, a proper estate plan can take care of all of them while taking care of you at the same time. 

Continue reading " Estate Planning Goals to Keep in Mind " »

As the late Al Davis once said about his beloved Raiders "just win baby", Al is still winning after his recent passing. For those of you who do now know who Al Davis was, he was the controlling shareholder of the Oakland Raiders, valued at around $761 million.

Without any estate planning in place, Al's family could have owed a hefty tax bill causing them to have to sell the team in order to pay the estate tax. Instead, it has been reported that Al did thorough estate planning and will be keeping control of the team within his family. It is unknown what exactly Al did for his estate planning but one could assume that he had one or more trusts in place for tax planning and probate avoidance.

In Al's final game versus the IRS, Al won.

Continue reading " Power of Proper Estate Planning Through the Eyes of Al Davis " »

Clients have come to me and asked me why avoiding probate is such a big deal and is it really that bad. Yes it is that bad. If you can avoid probate, do so. Here are the top reasons why.

1. No Immediate Access to Cash: It can take weeks or often times months to gain access to the deceased person's cash as the account is frozen upon their death. During that time you'll be having to pay all the bills out of your own pocket, including the attorney's fees. Avoiding probate allows family members to have immediate access cash to pay bills and move on with their lives - or at least pay the bills.

2. A Probate Judge Can Get in the Way: During a probate proceeding, a judge usually has to sign off on dealing with the sale of assets, payment of large bills, etc. Avoiding probate avoids interference in family and financial matters by a probate judge.

3. Ever Increasing Probate Fees: Court filing fees are constantly increasing. The fee for opening a formal probate estate has raised from $285 to $400.

4. Probate Records Are Public Records: Probate cases are state court proceedings, which makes all of the information about the deceased person's assets, liabilities, beneficiaries, and Personal Representatives a public record. This means that anyone can go to the court house or go online to view.

Continue reading " Top Reasons to Avoid Probate " »

A study conducted by Harris Interactive for Lawyers.com shows that around half of Americans have no estate planning documents in place.  The biggest reason for that was that many were deterred by the legal cost and erroneously believed that without a large amount of assets, they had no need to plan at all.

First, the legal cost of setting up an estate plan is, in most cases, going to be less than your heirs have to spend in legal costs.  Your heirs will have to hire an attorney to probate their estate.  The legal fees usually end up being much higher to probate the estate than they would have been to have a proper estate plan in place which completely avoids probate.

Second, most mistakenly believe also that your surviving spouse automatically gets all your assets, no matter how much or how little, upon your death.  Actually, only 16 states allow a surviving spouse to inherit everything.  Most states have some sort of split between the surviving spouse and the decedent’s children.  This can get messy with blended families.

Continue reading " Study Shows Most Americans Do Not Have An Estate Plan " »

The IRS recently offered a new program to allow employers to reclassify their workers from independent contractors to employees. The program is entitled the Voluntary Classification Settlement Program (VCSP).

The program allows employers to reclassify their workers who they currently (and incorrectly) deem to be independent contractors as employees. Prior to the program, employers would be forced to reclassify their workers and then pay all the owed employment taxes they should have collected, plus interest and penalties. The VCSP allows employers to lower their back taxes owed to 10% of the liability owed, forgiveness of all interest and penalties and not be subject to an IRS employment tax audit. For employers who enroll in the program, all monies due will be due immediately upon signing the agreement with the IRS.

Continue reading " IRS Offers Employers Program To Correct Worker Classification " »

Do you have a beneficiary that you want to leave something to but it may not be exactly what they are expecting?  If so, you may worry that they may fight their inheritance in court.  To eliminate this worry, many estate planners insert what is a called a "no contest" clause into your will or trust.  

A no contest clause is a statement in your will or trust that states that a beneficiary contesting or objecting to their inheritance will received nothing under the will or trust.  Essentially what you are telling the beneficiary is that if they throw a fit over their inheritance and attempt to fight it in court, they get NOTHING. No contest clauses are completely dependent upon state law.  In Florida, they are not valid.  Florida law specifically states that a no contest clause is unenforceable.

One way to get around this worry is to let your beneficiaries know before you pass away exactly what they are getting and why. This is make it clear to everyone why your estate plan reads the way it does and not cause any surprises to arise upon your death.

Continue reading " No Contest Clauses: What Are They, Are They Valid And If Not, Ways To Get Around That Hurdle " »

In Florida, there are requirements that must be met in order for a last will and testament will to be valid. The person writing the will, also known as the testator,  must be at least 18 years old and competent when he or she signs the will; the will must be written and witnessed by two individuals, both of whom must sign the will in the presence of the testator and each other; and the testator must sign the will at the very end of the will itself and in the presence of the two witnesses.

If a will is not executed according to Florida law, a probate court will not approve the will and the estate will be distributed under the state's intestacy laws, which means that the state has set up a will for you but usually will not distribute the assets according to your wishes. While Florida requires that a will be written, it does not have to be typed and can be handwritten. A handwritten will, sometimes referred to as a holographic will, is valid as long as it is properly executed under Florida law (two witnesses, signed at the end, etc.).

Continue reading " Requirements of a Valid Will in Florida " »