Estate Planning and Tax Lawyer Blog

Well the end of the year is only a few days away. Although it may seem like it is too late to do anything from an estate planning standpoint, here are a few things to think about that you may be able to do in the next few days or get the fire started to get taken care of in the new year.

This is a great time of the year to make year-end gifts to your loved ones. Gifts of cash, stocks, bonds, portions of real estate, or forgiving debt on a family loan in an amount that doesn't exceed the annual gift tax exclusion, which is currently $13,000 per year per person. What is the purpose of these gifts? Some give the gifts to reduce their own possible estate tax obligations, others give gifts while they are alive so they can see their loved ones enjoy the gifts. The annual gift tax exclusion will remain at the $13,000 limit for 2012 as well. To explain the “$13,000 per year per person” think of it as you writing a check today to everyone who leaves church as it is clearing out. Then on January 1st, you do the same to the exact same people. The IRS allows this type of a gift without any taxes being owed. However, if you gift portions of real estate, make sure you have a good valuation done to backup the gift should you ever be audited in the future.

In addition, there are two types of unlimited "gifts" that also do not count against your annual gift tax exclusion:
1. Payments that qualify for the educational exclusion; and
2. Payments that qualify for the medical exclusion.
Types of payments that qualify for the unlimited educational exclusion are payments that are made directly to a qualifying institution as tuition for the education of an individual. What exactly does this mean? It means you can pay your child's college tuition in the amount of $80,000 and also give your child an additional $13,000 by December 31, 2011, and another $13,000 on or after January 1, 2012, without any federal gift tax consequences. You may also pay their tuition bill in 2012 and any successive years. But note that the payment must be made directly to the education provider and not to the individual receiving the education, and the payment must be for tuition, not for books, supplies, room and board, or other types of college expenses, otherwise the payment will be considered a taxable gift. It is very important that the money does not touch the beneficiaries hands and is given directly to the education provider.
Types of payments that qualify for the unlimited medical exclusion are payments that are made directly to a health care provider that provides medical care to an individual or to a company that provides medical insurance to an individual. That means you can pay for your grandchild's emergency surgery in the amount of $50,000 and also give your grandchild an additional $13,000 by December 31, 2011, and another $13,000 on or after January 1, 2012, without any federal gift tax consequences. Again, it is very important that the payment be made directly to the institution providing the medical care or company providing the medical insurance and not to the individual receiving the medical care or insurance benefit. If the payment for education or medical expenses touch the beneficiaries hands, the payment will be a taxable gift and will cause you to have to pay a gift tax.

Finally and most importantly, if you don't have an estate plan, then make it your new year's resolution to get one. Without an estate plan, you and your property will end up in a court-supervised guardianship if you become incapacitated and your property and your loved ones will end up in probate court after you die. Many folks (as high as 70% some polls say) do not have an estate plan. One reason is they do not want to talk about what happens when they die. Estate planning does not just deal with your death but also what happens to you when you are alive as well. Without instructions on how to dispose of your property, you could cause a large family dispute amongst your children because they are unaware of your wishes.

Continue reading " Year End Estate Planning Ideas " »

In Northeast Florida, you see stories in the news where a spouse kills another spouse so they may receive the life insurance benefit or receive the assets left to them under a Will. However, what is usually not talked about is the fact that they will never receive the money or anything else. Florida (and many other states) have what is called a "slayer statute", Florida statute 732.802.

The first part of the statute say that a surviving person who unlawfully and intentionally kills or participates in procuring the death of the decedent is not entitled to any benefits under the will and the property passes as if the killer had predeceased the decedent.

For jointly owned property, the rules are slightly different. Any joint owner who unlawfully and intentionally kills another joint tenant busts the joint ownership so that the decedent’s share of the property passes as the decedent’s property. Under normal rules, upon the death of a joint owner, the property passes to the surviving owner (unless the property was owned as tenants-in-common).

The statute also says that a named beneficiary of a bond, life insurance policy or other contractual arrangement who unlawfully and intentionally kills the principal is not entitled to any benefit and is payable as if the killer had predeceased the decedent.

A conviction of murder by a court is conclusive evidence in determining whether or not the killer receives any inheritance. In absence of a conviction, a court may determine by the greater weight of evidence whether the killer was unlawful and intentional.

Continue reading " The Law Punishes Wrongdoers " »

Just like everywhere else, Jacksonville, Florida has families that have family heirlooms and other personal property they wish to pass to specific individuals in their Will. But what happens to the gift or your Will when that person predeceases you and you do not change your Will? The answer depends on your state’s estate laws.

Florida has what is called an antilapse statute in Section 732.603. Antilapse statutes do away with the common law (law carried over from England) practice of holding that gifts made in a Will to a beneficiary who predeceases the maker of the Will lapse upon the death of the specified recipient. So under common law, if you left Bob your autographed Joe Montana football in your Will and Bob passed away before you, then the gift to Bob would lapse and the football would pass under other provisions of the Will, usually the residuary clause. So what would happen in Florida?

Florida law states that unless a contrary intent appears in your Will, if a beneficiary (who is a grandparent or descendant of a grandparent) (i) is dead at the time of the execution of the Will; (ii) fails to survive the maker of the Will; or (iii) is required by the Will to be treated as having predeceased the maker of the Will, a substitute gift is created in the predeceased beneficiary’s surviving descendants. I will explain this to you in plain English.

The first requirement of the antilapse statute is that the beneficiary must be a grandparent or the descendant of a grandparent. This means if you created a family tree with your grandparents at the top, then everyone below them in the family tree would be included under the descendant of a grandparent. Examples are your parents, your aunts and uncles, first cousins, siblings, nieces and nephews and your children. So in our example above, if Bob is your first cousin, he would be qualify for the antilapse statute as a beneficiary. If Bob is your best friend but not related, then he would not.

The second requirement of Florida’s antilapse statute is that the beneficiary you named must have predeceased you. If the beneficiary named is still alive, the antilapse statute never comes into play. So again, if your cousin Bob passed away 6 months before you do, then the Joe Montana autographed football would pass accordingly under the antilapse statute.

If the two requirements are met, then the antilapse statute will modify the gift you leave by making it a per stirpes gift. So if your cousin Bob passes away before you do, the antilapse statute will pass the autographed Joe Montana football to Bob’s children equally. So if Bob had more than one child, then the football would either be sold and the proceeds split or the child who takes the football would owe the other children some sort of compensation.

However, the three paragraphs written above can all be thrown out with the trash if you make a contrary intent clear within your Will. So if you want Bob and Bob only to receive the football, make sure the gift to him reads something like “my Joe Montana autographed football to my cousin Bob, not per stirpes. If Bob does not survive me, then this gift shall lapse and be passed as part of the residuary estate below.” If you only state “my Joe Montana autographed football to my cousin Bob”, then the antilapse statute will create a per stirpes distribution.

Continue reading " What Happens To A Gift When Someone Predeceases You " »

A Guardianship is a legal vehicle typically used to assist a person who has become incapable of caring for themselves and is governed primarily by Section 744 of the Florida Statutes. This incapacitated person is referred to as the “Ward”. Because Guardianships involve depriving an individual of their civil and legal rights, a Guardianship must be established in a court of law, typically a “Probate Court”. It is important to remember that not all Guardianships require the person to be incompetent, but for the sake of this article, that will be the focus.

How do I know if my mother is in need of a Guardianship? I came home for the holidays to find my mother’s living conditions have declined from those I had grown up with, as she was always neat and tidy. I noticed that she had been stashing receipts under her couch, the glass of milk she had just poured for herself came from a container in her refrigerator that was 2 weeks out of date. It appeared that her toilets hadn’t been cleaned in weeks and there were dirty dishes stacked up in her sink. Though she knew who I was when I came into the house, she kept asking me where my father was. I knew something wasn’t right because my father had been dead for ten years.

I began to investigate my mother’s finances and found that she had been paying the yardman every two days. When I questioned her about this, she became irritated and told me to mind my own business. She said that she had things under control and that I didn’t know what I was talking about because she only pays the yardman once a month. I knew something wasn’t right and knew my mother was going to need some help, but didn’t know what to do.

The above-scenario, while made up, is a typical indicator for a family to begin to consider the need for appointing a Guardian of their loved one.

Just exactly what is a Guardian and what will a Guardian be able to do for my mother? A Guardian is a person who has received Court appointment to act on behalf of the Ward. The Guardian is often times a family member or a close trusted friend. The rights that may be removed from the Ward and delegated to the Guardian may include the right:

(a) To contract.
(b) To sue and defend lawsuits.
(c) To apply for government benefits
(d) To manage property or to make any give or disposition of property.
(e) To determine his or her residence.
(f) To consent to medical and mental health treatment.
(g) To make decisions about their social environment or other aspects of their life.

A Guardianship should be considered after all least restrictive alternatives have either failed or are not in place. Carefully consider and evaluate all legal documents including Powers of Attorney, Living Wills, Health Care Surrogates and wishes of the Ward.

Continue reading " WHAT IS A GUARDIANSHIP AND WHAT DOES A GUARDIAN DO? " »

Has someone promised you that you will receive a specific item or an amount of money in their Will? Is that even enforceable? The simple answer is it depends (don't you love attorneys). In Jacksonville, Florida, I am asked often whether or not I can create a document ensuring that someone will receive a specific inheritance or not. You can create a contract that deals with an inheritance but you must treat it just like you do a Will when executing the contract.

Florida Statute 732.701 states "no agreement to make a Will, to give a devise, not to revoke a Will, not to revoke a devise, not to make a Will, or not to make a devise shall be binding or enforceable unless the agreement is in writing and signed by the agreeing party in the presence of two witnesses." Translating that into English, it means that you can make an agreement regarding a specific devise or create a will. It just cannot be a hand shake deal or a hush hush deal.

To make the agreement valid, it must be in writing. Again, it cannot be an agreement sealed with a hand shake like the old days. The agreement also must be signed by the agreeing party. This is required in general contracts as well. The person to be sued must have actually signed the agreement otherwise there is no proof they agreed. Finally, it must be signed in the presence of two witnesses who also signed the agreement.

Do these requirements sound familiar, they should? They are the same requirements to create a valid Will in Florida. And just like creating a Will, it is best to have an attorney involved when drawing up a contract or agreement to receive a specific devise or to create a Will. A very simple mistake could cost you more than you think.

So when executing a contract regarding your possible inheritance, please make sure you sign it in front of two witnesses.

Continue reading " Can I Make A Contract To Guarantee My Inheritance? " »

When I talk about “your stuff” I’m talking about jewelry, furniture, clothing, family heirlooms and collectibles. A lot of times it is this stuff that brings about hard feelings and arguments upon death.

One way is to give it away while you are alive. I have had family members give me family heirlooms while they are alive so that they know that I actually get the item. For instance, my grandfather gave me a retired police badge from my great-great uncle. He wanted to make sure I received it since I am in the law field.

Another way to pass “your stuff” is through a letter stating what item(s) go to whom. Florida Statute 732.515 allows you to pass your personal property through a writing that is signed. The best part about this is that you may change the letter as many times as you’d like without the need of any witnesses or notaries. I have a client who modifies her list every year after the holidays based upon who called her and how long they talked.

An important thing to remember though is that in order for the letter to pass “your stuff”, the letter must be referenced in your Will or trust. Without any reference in your estate planning document to the letter, “your stuff” will pass according to your residual clause in the document.

One last bit of information in regards to passing “your stuff”. As I stated above, it is the stuff that usually causes arguments among family members. One way to avoid this is to have your beneficiaries let you know what they may want should something happen to you. Next time your family gets together, give each person a different set of colored sticky notes and have them go throughout the house and put sticky notes on items they may want. Where multiple sticky notes exist, you will know to deal with those items so it is clear who is getting what.

Continue reading " How to Pass "Your Stuff" According to Your Wishes " »

I am often asked how you can revoke your current Will. There are several ways to revoke your Will under the Florida Statutes. Section 732.505 allows you to revoke your Will by writing in one of two ways. First you may expressly revoke the Will by signing a document, in front of two witnesses, stating you are revoking your Will. It is important that you execute that writing just like you would your Will. Second, you may create a new Will which is inconsistent with the old Will. However, the new Will will only control where the inconsistencies are, not overall. Essentially, you would be working under two different Wills. The easiest way by writing is to create a new Will and specifically state that you are revoking any and all prior Wills or codicils (changes to a Will). Section 732.509 states that revoking the original Will also revokes any codicils to that Will.

Section 732.506 allows you to revoke your Will by actions. The statute reads “A will or codicil is revoked by the testator, or some other person in the testator’s presence and at the testator’s direction, by burning, tearing, canceling, defacing, obliterating, or destroying it with the intent, and for the purpose, of revocation.” So this means that if you tear the Will in half, burn the Will in your fireplace or write all over the Will that the Will is revoked. However, please be weary that there is case law out there that states that if you tear or write on the Will, but the words of the Will are not impacted at all and only the margins are modified, then the Will is still in full force and effect. So if you wish to write on your Will to revoke it….act like a child and write all over the words of it!

So, the moral of the story is that if you really want to revoke your Will, ask an attorney how to properly handle the revocation. Most attorneys will offer to shred the Will for you, thereby completely destroying the Will.

As simple as this may sound, it is very important to revoke your old estate planning documents properly. Several years ago, I was involved in a probate, along with about 23 other attorneys, because someone passed away with 3, yes 3, different estate plans from 3 different attorneys. The problem is that none of the plans were revoked. About 5 years and $4M later, the probate was settled but it cost the estate dearly because a lot of property was sold in order to pay for all the legal fees.

Continue reading " How Can You Legally Revoke Your Will? " »

So your mother has always said that you were to receive her wedding ring upon her death. Then the unfortunate day comes where your mother passes away. In getting ready to probate her Will, you come to find out that she is passing her wedding ring onto your sibling and the Will was changed just a few months before she passed. You are mad and now want to fight the Will.

Well before you go out and hire an attorney to fight the Will, make sure you really want to fight. If you do fight, some states may say that you are now out of the Will totally through the use of what is called a “contest clause”. What a contest clause generally states is that if you contest the Will or file any other proceeding in relation to the estate, that you lose your rights as a beneficiary as a penalty. So your fight over the ring may cost you all of your other inheritance as well.

The policy behind the “contest clause” is to prevent lawsuits against estates where someone is unhappy with what they are getting. When someone passes away, some of the first emotions that arise are anger and greed. These are a recipe for disaster.

Some states, like Florida, have stated that contest clauses are unenforceable. Florida statute 732.517 states “A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.” So any estate planning document in Florida which includes a contest clause can be viewed as if the clause were not in the document.

So the moral of the story is…before you decide to file a lawsuit over something left to you in an estate plan, make sure you consult with an estate planning attorney as to whether your state validates or invalidates a contest clause.

Continue reading " You Want to Contest What You Are Getting As An Inheritance...Be Careful! " »

I recently was having breakfast with a friend and he asked me what would happen to his assets if he passed away. The twist to the question is that he is recently divorced and his Will stated that everything was to be passed to his wife.

Section 732.507 states that "after a dissolution, divorce, or annulment, the Will shall be administered and construed as if the former spouse had died at the time of the dissolution, divorce, or annulment of the marriage, unless the Will or the dissolution or divorce judgment expressly provides otherwise."

Applying this statute to my friend's scenario, his ex-wife will be deemed to have predeceased him since they are now divorced and all of his assets will pass as if she had already passed away.

Continue reading " What Happens To Your Will When Your Life Changes? " »

Section 732.504 states that any person who is competent to be a witness may serve as a witness. Further, it is important to note that a beneficiary of the will may serve as a witness to the will.

Although a beneficiary may serve, I do not believe it is a good idea as a witness may need to be called to serve as an actual witness in the probate proceeding. An interested witness's testimony may be seen as self-serving and not be worth much to the trier-of-fact. Whenever it is possible, it is best to have a non-beneficiary serve as the witness to your estate planning documents.

Continue reading " Who May Serve as a Witness to the Signing of a Will " »

Florida statute 732.502 describes how to validly execute a Will under Florida law. To be valid under Florida law, the Will must be signed by the Testator (creator) in the front of two witnesses.

The Testator must sign the Will at the end of the Will. The Testator must sign the Will in front of two witnesses and the two witnesses must sign the Will in front of each other.

Further, a codicil (an amendment to your Will) must be executed just as a Will is executed.

Continue reading " How To Validly Execute a Will under Florida Law " »

Florida statute 732.501 states who may make a will.

To create a valid will in Florida, the creator must be of sound mind and who be either 18 or more years of age or an emancipated minor. The will itself must meet certain requirements as well.

Continue reading " Who May Make A Will? " »

What happens when the person you were dependant on for every day support passes away?  Will you be left without any assets?  In Florida, the family allowance, discussed in Florida statute 732.403, comes to your rescue.  When your spouse passes away and their estate goes through the probate process, the law allows the surviving spouse and any dependent lineal heirs to claim a family allowance.  The maximum amount that is allowed to be claimed under the family allowance is $18,000.

The purpose of the allowance to ensure that a surviving spouse and any dependant lineal heirs, meaning parents, children and grandchildren, are not left without any resources during the probate process.  The probate process is a long process and the family allowance enables the family to have some money to live off of until the probate is closed.<

Continue reading " What Is The Family Allowance And What Is Its Purpose? " »