Estate Planning and Tax Lawyer Blog

As the Republican primaries really hit their stride with “Super Tuesday” on March 6th, I wanted to take a chance to go over the tax policies of both Rick Santorum and Ron Paul. The Santorum information comes from his website and the Tax Policy Center and Ron Paul’s information comes purely from the Tax Policy Center as I could not open up the tax information section of Ron Paul’s website. Again, my goal, just like it was with Romney and Gingrich, is to try and consolidate the information in an unbiased manner.

Rick Santorum has proposed to (i) permanently extend the 2001-10 tax cuts; (ii) further reduce the individual income tax rates; (iii) cut the corporate income tax rate in half; (iv) repealing the estate tax; and (v) repealing the AMT and taxes enacted in the 2010 health reform bill.

At the individual level, Santorum wishes to permanently extend the 2001-2010 tax cut scheduled to expire in 2013. To reduce income tax rates, Santorum has proposed to take the current 6 tax bracket system and consolidate it into two tax brackets, a 10% bracket and 28% bracket. (Assumed that the 10%, 15% and 25% brackets become the 10% bracket and the other three brackets become the 28% bracket.) Santorum also proposes tripling the exemption for dependent children, cutting the long-term capital gains rate and qualified dividends rate to 12% and fully repealing the AMT tax. Finally, he would also like to eliminate any and all marriage tax penalties and retain deductions for charitable giving, home mortgage interest, healthcare, retirement savings and children. He has said he wants to repeal the federal estate tax but has not stated if he would further repeal the related gift tax.

At the corporate level, Santorum wants to reduce the corporate income tax level from 35% to 17.5% and a 0% tax for manufacturers. He will increase the research and development tax credit to 20% and make it permanent and allow full expensing of all equipment. Finally, his corporate plan would allow businesses to repatriate profits held overseas tax-free if the funds are invested in plant and equipment. Otherwise, the repatriation tax will be 5.25%.

Finally, Santorum seeks to permanently repeal the .9% tax on wages and 3.8% tax on investment income that was enacted under the 2010 health reform bill.

Santorum’s proposals would cut taxes for about 81% of taxpayers by an average of about $9,700 but would lower the federal government’s income anywhere between $900 billion and $1.3 trillion.

As far as Ron Paul’s tax plan, I went onto his website and clicked onto the “on-the-issues” page and then the tax page and it comes up to a blank page. So I obtained my information on Paul’s tax plan from a summary on the Tax Policy Center’s website. Ron Paul seeks (i) to also extend the 2001-10 tax cuts; (ii) exempt capital gains from being taxed; (iii) eventually institute a fair or flat individual tax system; (iv) fully repeal the AMT tax; (v) repeal the tax provisions of the 2010 health care act; (vi) exempt Social Security benefits from taxation; (vii) reduce the corporate income tax rate to 15%; and (viii) allow the repatriation of corporate profits 100% tax free. I really can’t go more into detail on Ron Paul’s plan since all of the information was taken directly from a chart summarizing his plan with very little detail.

Continue reading " What Are The Tax Policies of Rick Santorum and Ron Paul? " »

For those of you who watched the tv show “Chuck”, the titles of every show were Chuck vs… Well this time it is Congress vs Stretch IRAs as is proposed in Senate bill 1813. I will first discuss the concept of stretching an IRA and then why it is being attacked in this bill.

The concept of stretching your IRA is nothing new. However, it is somewhat new when it comes to stretching it out among the lives of your beneficiaries. Currently, tax laws allow the owner of an IRA to defer taking payments until you are 70 ½ years old. You may begin taking it out at age 59 ½ but do not have to take it out until age 70 ½. If you take a withdrawal from an IRA prior to 59 ½, you must pay a 10% penalty unless you fall within several exceptions, which are outside of the scope of this blog.

Upon your passing, if you name your spouse as the beneficiary, your spouse may roll over the IRA and treat it as if they had created it and also defer it until age 70 ½. The same rules apply from the paragraph above. The IRS treats the surviving spouse as if they had set up the account themselves.

Currently, once the IRA rolls down to the next generation, the child beneficiary may then stretch the IRA out among their life expectancy. The difference is that the child must start taking out RMDs (required minimum distributions) right away and not defer them until they are 70 ½. This allows the beneficiary, if they so choose, to stretch the income from the inherited IRA out over their entire life. The beneficiary can also always get to the principal of the IRA at any time should an emergency occur without any penalties. They will only owe income taxes on the amount withdrawn.

Sounds too good to be true, right? It isn’t…currently. I’ve always said that one day that Congress will try and find a way to generate tax revenue through qualified plans. That day may be coming sooner than expected. As I stated earlier, Senate bill 1813 has a provision to drastically restrict the use of stretch IRAs.

The primary focus of the bill is a highway bill. The official title is the Highway Investment, Job Creation and Economic Growth Act. However, within the bill, in order to pay for the spending needed to invest in highways, the bill attempts to require beneficiaries of an inherited IRA to pay taxes on inherited IRAs over 5 years instead of their lifetimes. The exception to this rule is a surviving spouse, a minor children who are beneficiaries or disabled beneficiaries. The bill would allow those exceptions to continue the stretch IRA. The bill, if passed, would apply to all IRAs inherited after December 31, 2012. Senator Max Baucus introduced the bill recently but has promised, due to the immense pushback he has received, to remove the provisions of disallowing the stretch IRA from the bill. However, as of today, the provisions remain in the bill.

Ed Slott, an IRA guru and writer on the power of stretching out your IRA, recently said that Congress sees IRAs, especially inherited IRAs, as a pot of gold that has never been tapped. Congress’s rationale behind this could be that the allowance of deferring an IRA for the owner until 70 ½ is because the account is to be used to fund one’s retirement, not to be used as an asset to benefit the next generation upon inheritance.

I will keep you up to date on this as more information becomes available.

Continue reading " Congress vs. The Stretch IRA " »

Incapacity of a potential ward is determined under Florida statute 744.331. This statute is quite long and so I will walk you through it should you ever find yourself in the middle of a guardianship proceeding.

If a guardianship proceeding is brought to determine that someone is no longer able to take care of their own finances, a notice of the filing of the petition to determine incapacity and a petition for guardianship but be served on and read to the alleged incapacitated person, their attorney and all next of kin identified in the petition. The notice must give the time and place of the hearing, that an attorney has been appointed to represent the person and a guardian will be appointed if it is determined that the alleged incapacitated person does in fact lack capacity.

The attorney appointed by the court for the ward must be pre-approved by the court to serve as the attorney for wards in guardianship cases. Once an attorney is appointed, the ward may substitute his or her own attorney for the appointed attorney. The attorney representing the ward may not serve as the attorney of the guardian or the guardian due to a conflict of interest. The attorney must have completed at least 8 hours of legal education in guardianship.

After the petition for determination of incapacity has been filed, the court then appoints an examining committee consisting of 3 members. One member must be a psychiatrist or other physician. The remaining members must be either a psychologist, gerontologist, another psychiatrist, another physician, a registered nurse, nurse practitioner, licensed social worker or another person with knowledge, skill, experience, training or education may advise the court in the form of an expert opinion. One of the three members must have knowledge in the area of the alleged incapacity. Unless good cause is shown, the primary care physician of the ward may not be appointed to the committee. However, the committee may consult with the primary care physician. Finally, none members of the examining committee can be related to the ward, petitioner, attorney or anyone else on the examining committee.

Each person on the examining committee must examine the potential ward and determine what rights under 744.3215, if any, need to be taken away from the potential ward. The report of the examining committee member is due to the court within 15 days of their appointment. The examining committee may use all reports available to them in determining what rights to take away.

Each committee member shall perform an examination on the alleged ward which shall include (i) a physical examination, (ii) a mental health examination and (iii) a functional assessment. If any of the three aspects of the report cannot be accomplished, then the committee member must state why they could not accomplish that aspect. The written report must also include:

1. If possible, a diagnosis, prognosis and recommended course of treatment;
2. An evaluation of the potential ward’s ability to retain their rights;
3. The results of the comprehensive examination and the committee member’s assessment of the information provided by the attending primary care physician, if any;
4. A description of any matters with respect to which the person lacks the capacity to exercise rights, the extent of that incapacity, and the factual basis for the determination that the person lacks that capacity;
5. The names of all persons present during the examination. If anyone answers a question other than the potential ward, the report shall say who gave the answer and what the answer was; and
6. The signature of the committee member.

If a majority of the committee determines that the potential ward still has capacity, the proceeding is over. If the committee determines the potential ward lacks capacity, the court shall enter an order determining such incapacity.

Continue reading " How is incapacity determined in a Florida guardianship? " »

Most Americans will take their car to get their oil changed or will change the interior of their homes when it gets a little out dated. Why don’t they do the same with their legal needs? Although most Americans do not have an estate plan, those who do have an estate plan set up their estate plan and then forget about it for at least 20 years. What could happen in 20 years? Laws, family and the attorney changes in 20 years.

Here are a series of questions to ask yourself to make sure that your estate plan still does what you want it to. If you answer “No” or “I don’t know” to any of the questions, you need to schedule a consultation with an estate planning attorney so that your estate plan may be reviewed with you to either tell you what it says or update it so that you have an estate plan that works for you and your needs.

1. Do you have a current Health Care Power of Attorney that has the required HIPAA authorizations to permit someone to make emergency health care decisions for you in the event you are unable to do so.
2. Do you have a current Durable Power of Attorney that is less than 4 years old to permit someone to handle your financial affairs in the event you become disabled.
3. Are you certain that your current estate plan will minimize possible federal estate taxes at your death, including taxes on your home, life insurance and IRAs.
4. Have you taken steps to avoid possible disputes at your death.
5. Have you taken steps to protect your children’s inheritance in the event your spouse chooses to remarry.
6. Have you recently checked the beneficiary designations of your retirement plans and life insurance policies.
7. Does your current plan provides creditor and lawsuit protection for your spouse and children’s’ inheritance.
8. Do you have a plan to protect your children’s inheritance from a divorcing spouse.
9. Are you satisfied with the persons you named as guardians of your minor children.
10. Are you satisfied with the persons you named as executor or trustee in your current plan.
11. Are the persons you named as executor qualified to serve under Florida law.
12. Are you aware of all future estate planning fees and expenses; including an understanding of those involved at the time of my death.
13. Has your family met with your attorney and fully understand their roles and responsibilities upon your incapacity or death.
14. Does your Revocable Trust, if any, and Power of Attorney specify an understandable test to determine your disability.
15. Does your Revocable Trust, if any, give instructions for your care and the care of your loved ones if you become mentally disabled.
16. Is your Revocable Trust, if any, fully funded so that your family can avoid the delays, publicity and expenses of probate.
17. Do you and your spouse, if applicable, own everything jointly.
18. Have you put your personal property into my Revocable Trust, if applicable.
19. Have you created a personal property memorandum to dispose of your personal property.
20. Do you own property in another state which has already been dealt with in your estate plan.

Continue reading " Time for a Tune Up? " »

Ever thought of becoming a Florida resident? There are many great reasons…the weather….great beaches….golf courses galore…Disney…and favorable laws. Yes, favorable laws. Especially when it comes to taxes and asset protection.

Florida has no income, estate, inheritance, gift, intangibles or generation-skipping tax. (The intangibles tax was repealed back in 2007.) Most states, but not all, impose at least one of the above taxes on its residents. It has become increasingly more common for states to repeal their state estate taxes on their residents but some still tax the property of residents of other sate. Some taxes Florida does impose are business, sales and real estate taxes. Florida’s legislature has allowed a “tax holiday” in the past on back to school items and hurricane preparedness items to help out Florida residents.

The second reason to become a Florida resident is that Florida has favorable asset protection laws to protect its residents. The most widely used asset protection technique is the homestead. Only a few states even recognize some sort of homestead protection to protect ones home from a forced sale (subject to some exceptions in Florida such as mortgage holders and mechanic lien holders). In order to qualify for the homestead exemption, you must 1) intend to permanently reside in Florida; 2) have legal or beneficial title in equity to the real property on the 1st of January; 3) reside on the property; and 4) in good faith make the property their personal residence. There are land limitations on the homestead though. If the land is within a municipality, the protection is limited to one-half. If located outside a municipality, then the limitation is to 160 contiguous acres. Further, due to the Bankruptcy Act of 2005, for the first 1,215 days your own your homestead, you only have a limited homestead exemption. This prevents someone from moving to Florida, putting all their money into their homestead and then filing bankruptcy.

Life insurance proceeds are also exempt from the creditors of the insured unless the policy or a valid assignment provides otherwise. (This does not mean that the life insurance proceeds are exempt from the creditors of the beneficiary once the beneficiary has the death benefit in their hands) The cash surrender value of insurance policies insuring the life of a Florida resident and the proceeds of an annuity contract issued to a Florida resident are exempt from the reach of creditors. Assets, including cash, payable from a qualified retirement or profit-sharing plan are exempt from claim of creditors of the beneficiary and participant. Further, once a participant in a qualified plan passes away, the inherited qualified plan is also asset protected from the claims of the beneficiary’s creditors. Assets set aside in a medical saving account, college trust fund or 529 plans are protected from creditors. Finally, assets titled as tenants by the entirety, which is only available to husband and wife, are exempt from the creditors of one spouse. If the creditor is a creditor of both spouses, this protection does not exist.

Becoming a Florida resident is easy as Florida is an intent state, meaning if you intend to be a Florida resident, then you can be. The bigger problem is having the state you have left no longer claim you as a resident. A few simple steps can allow you to show your intent and hopefully break any connection you may have with your old state of residency. All of Florida’s exemptions may be found in Chapter 222 of the Florida Statutes.

Continue reading " Now is a great time to become a Florida resident " »

A few days ago, President Obama released his proposed 2013 fiscal year budget. Remember, this is only a proposal and not a budget that has been passed by Congress. There will be quite a bit of negotiating and compromising that will come to pass aspects of this budget. However, I wanted to lay out some of the tax aspects of the proposal. They are as follows:

1. Extend the Bush tax cuts for all but the top 2 income tax brackets. The current top 2 brackets (33% and 35%) would increase to 36% and 39.6% respectively.
2. Increase the long-term (held for longer than 1 year) capital gains rate to 20% for single taxpayers who make over $200,000 per year, $250,000 for married couples who file jointly, and $125,000 for a married person filing separately.
3. Tax rates for qualified dividends would increase to ordinary income rates for the same tax payers as described in #2 above. A qualified dividend is an ordinary dividend that is subject to a lower tax rate equal to long-term capital gains. However, certain conditions must be met in order to qualify:
a. The dividends must have been paid by a U.S. corporation or a qualified foreign corporation. Generally, a qualified foreign corporation is a foreign corporation traded on any of the US stock exchanges;
b. The IRS does not list them as not qualified; and
c. You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date.
4. Tax carried interests as ordinary income. Carried interests are a share of any profits that the general partners of private equity and hedge funds receive as compensation, despite not contributing any initial funds. This type of compensation seeks to motivate the fund manager to work toward improving the fund's performance.
5. Reinstate the personal exemption phase-out for upper income taxpayers. A lot of deductions and exemptions begin to phase out once your income hits a certain level.
6. Enact a permanent patch to the AMT tax. This has been debated for many years but has never been permanently fix.
7. Restore the estate, gift and GST tax to 2009 rates. Remember that back in 2009, the estate tax and GST tax exemptions were $3.5M each with anything above that being taxed at 45%. The gift tax exemption was $1M per person with anything above that amount taxed at 45%.
8. Require the minimum term for a GRAT to be 10 years. A GRAT, also known as a Grantor Retained Annuity Trust, is a trust set up to give the trustmaker an income stream for a term of years and then passing any remainder onto the beneficiaries of the trust (usually their children). The goal is that that trust will grow faster than the income being distributed so that the assets will appreciate and all the appreciation will pass onto the beneficiaries.
9. Limit the duration of the GST tax exemption to 90 years. This is the first time I’ve seen this proposal. This would prevent someone from setting up a Dynasty trust to benefit his heirs for a term of years that is longer than 90 years.
10. Modify the rules on valuation discounts. This is used to transfer value in business interests to children and grandchildren at discount rates due to lack of marketability and lack of control.

The above are just a few of the proposals in the fiscal budget announced. Only a small handful will have an actual chance to be passed when it is all said and done. Keep watching the news for updated information.

Continue reading " Tax Aspects of President's Fiscal Year 2013 Budget " »

Once a ward has been determined to lack mental capacity in Florida, there are certain rights they retain, certain rights the guardian is given, certain rights the guardian must specifically petition the court for and certain rights that are given to no one. This blog will discuss these rights as specified in Florida Statute 744.3215.

The ward, once determined to be incapacitated, retains the right to:
1. Have an annual review of their guardianship report and plan;
2. Have a continuous review of the need to restrict their rights;
3. Have their capacity restored at the earliest possible time;
4. Be treated humanely, with dignity and respect, and be protected against abuse;
5. To have a guardian who is qualified to serve;
6. To remain as independent as possible;
7. To be educated;
8. To receive proper financial management and be informed of how their property is being managed;
9. To receive services necessary to maximize the quality of their life;
10. To be free from discrimination due to their incapacity;
11. To have access to the legal system;
12. To proper counsel (having a competent attorney);
13. To receive visitors and have communications with others;
14. To receive notice of all proceedings relating to their guardianship; and
15. To privacy.

The above rights may never be taken away from the ward, no matter the degree of their incapacity.

The following are rights that may be removed from the ward but not delegated to anyone:
1. The right to marry;
2. The right to personally apply for government benefits;
3. The right to have a driver’s license;
4. The right to travel; and
5. The right to be employed.

These rights, once taken away from the ward, disappear until the ward is deemed to regain their capacity.

The following are rights that may be removed and delegated to the guardian:
1. The right to contract;
2. The right to sue and defend lawsuits;
3. The right to apply for government benefits;
4. The right to management property (including gifting or selling property);
5. The right to determine their residence;
6. The right to consent to medical or mental treatment; and
7. The right to make decisions about their social environment.

These rights do not automatically go to the guardian. The court, depending on how incapacitated the ward is, will allow the guardian to possess the above as needed.

The following are rights that a guardian may obtain after asking for authority from the court:
1. Commit the ward to a facility;
2. Subject the ward to any experimental biomedical or behavior procedure;
3. Initiate a dissolution of marriage;
4. Consent on behalf of the ward to terminate parental rights; and
5. Consent on behalf of the ward to the sterilization or abortion procedure on the ward.

These rights are only given to the guardian upon the guardian specifically requesting permission from the court. The court does not automatically grant them to the guardian.

Remember, a guardianship is supposed to be in the least restrictive form possible. A court will only take away and grant rights as needed. A lot depends upon the findings of the physicians appointed by the court to observe the proposed ward and report their findings back to the court.

Continue reading " Rights of An Incapacitated Person in Florida " »

In Florida, guardianships are quite common due to the size of our elderly population. One question often asked is who may serve as the guardian of an estate. Florida law allows many different types of people and organizations to serve as the guardian of someone’s estate. This blog’s intent is to summarize who may serve as the guardian.

Any resident of Florida who is competent and at least 18 years of age or older is qualified to serve as the guardian of the ward. A nonresident of Florida may serve as guardian if he/she is (i) related by blood or marriage to the ward or (ii) a legally adopted child or parent of the ward. This means your brother or brother-in-law may serve as your guardian.

More importantly, you may not serve as a guardian if (i) you have been convicted of a felony, (ii) you are incapable of discharging the duties of a guardian, (iii) you have been found guilty of committing abuse, abandonment or neglect against a child, (iv) you have been found guilty of any offense under Florida Statute 435.04 (I have provided the link to this list as it is quite long), or (v) if the court finds that a conflict of interest could occur.

A bank, savings and loan or trust company may serve as the guardian of the property as long as they have the ability to exercise fiduciary powers within the State of Florida. A nonprofit corporation may be appointed as the guardian of the ward. If the nonprofit charges fees to the estate of the ward, they must employ at least one professional guardian. Finally, a health care provider may not be appointed as the guardian unless the court specifically finds that there is no conflict of interest with the ward’s best interest.

In considering who to appoint as the guardian of the ward, the court will give preference to someone (i) who is related by blood or marriage to the ward, (ii) educational, professional, or business experience relevant to the nature of the services being sought, (iii) has the capacity to manage the financial resources involved or (iv) has the ability to meet the requirements of the law and the unique needs involved in the matter. The court will also consider the wishes expressed by the incapacitated person expressed in their preneed guardian. If the person is a minor over the age of 14 years, the court will consider their preference as well. Finally, the court will consider as guardian anyone who is named in a last will and testament in which the ward is a beneficiary.

Anyone interested in serving as the guardian must complete an application to serve as guardian of the ward and list their qualifications to serve as guardian. A court may then require any nonprofessional guardian to undergo a criminal and credit background check. To start that process, the guardian must have their fingerprints taken by the Department of Law Enforcement. The person who applies to be the guardian must pay for all the expenses of the screening out of their own assets, not the ward’s assets.

Finally, once a guardian is appointed by the court, they must receive a minimum of 8 hours of education which covers (i) the legal duties of a guardian, (ii) the rights of the ward, (iii) the availability of local resources to aid the ward and (iv) the preparation of habilitation plans and annual guardianship requirements.

Continue reading " Who May Serve as a Guardian in Florida " »

There are several types of guardianships in Florida enumerated in Part III of Chapter 744 of the Florida Statutes. The purpose of this blog is to identify the different types of guardianships available in Florida and summarize what each type entails.

Natural Guardians: the mother and father are natural guardians of their biological children and their adopted children. If one parent dies, the surviving parent remains the sole natural guardian, even if they remarry. If the mother and father divorce, then the parent with primary custody is the natural guardian. If the parents share custody, then both parents remain natural guardians. If a child is born out of wedlock, then the mother is the natural guardian unless a court order states otherwise. The natural guardian may not use the child’s property for the guardian’s benefit or to satisfy the guardian’s support obligation to the child.

Guardian of Minors: the parent, sibling, next of kin or other person interested in the minor’s welfare may petition the court for guardianship. If appointed by the court, the guardian will have the authority of a plenary guardian (i.e. no limitations). The court may appoint a guardian ad litem for a minor in a case where the minor has a claim which is being settled for more than $15,000. However, the court must appoint a guardian ad litem for the minor if the gross settlement equals or exceeds $50,000. The guardian ad litem’s duty is to protect the minor’s claim and interest in the case.

Emergency Guardian: the court may appoint an emergency temporary guardian for the person and/or property of the ward is there appears to be imminent danger that the physical or mental health or safety of the person will be seriously impaired or that the person’s property is in danger of being wasted, misappropriated or lost unless immediate action is taken. The powers and duties of the emergency guardian must be specifically enumerated by a court order. The authority of the emergency guardian expires 90 days after the earliest of (i) the date of appointment or (ii) when a guardian is appointed.

Standby Guardian: a standby guardian is a backup guardian. They are empowered to assume the duties of a guardian on the incapacity, death, removal or resignation of the currently serving guardian. Upon assuming the duties of a guardian, the standby guardian shall petition the court for confirmation of appointment and letters of guardianship.

Preneed Guardian for Adults: any adult may name a preneed guardian by making a written declaration that names such guardian to serve in the event of their incapacity. The declaration must reasonably identify the declarant and preneed guardian and be signed by the declarant in the presence of at least two attesting witnesses present at the same time. The preneed guardian may be filed with the clerk of court. Should a guardianship ever arise in the future, the clerk will present the preneed guardian to the court. However, a court is not bound to name the preneed guardian as guardian if they are unqualified to serve. However, there is a rebuttable presumption that the preneed guardian is entitled to serve.

Preneed Guardian for Minors: The preneed guardian for a minor is the same as the preneed for adults except that the parents of the minor make the declaration and the declaration must be filed with the court. This is usually taken care of in the Last Will and Testament of the parents.

Guardian Advocate: the court may appoint a guardian advocate for a person with developmental disabilities if the person lacks the capacity to do some, but not all, of the tasks necessary to care for themselves or their property. Parents who have children with mental disabilities use this type of guardianship frequently. It is a less restrictive means of obtaining a guardianship.

Continue reading " Types of Florida Guardianships " »

Florida Statutes, Chapter 744 contains all the provisions under Florida law for the guardianship of a ward. A “ward” is the person whom a guardian has been appointed. A “guardian”, just to be clear, is a person appointed by a court to act on behalf of a ward’s person, property or both.

The State of Florida has gone out of its way to make it clear what their intent is behind setting up a guardianship. Specifically, in Florida Statute 744.1012, it states:

“The Legislature finds that adjudicating a person totally incapacitated and in need of a guardian deprives such person of all her or his civil and legal rights and that such deprivation may be unnecessary. The Legislature further finds that it is desirable to make available the least restrictive form of guardianship to assist persons who are only partially incapable of caring for their needs. Recognizing that every individual has unique needs and differing abilities, the Legislature declares that it is the purpose of this act to promote the public welfare by establishing a system that permits incapacitated persons to participate as fully as possible in all decisions affecting them; that assists such persons in meeting the essential requirements for their physical health and safety, in protecting their rights, in managing their financial resources, and in developing or regaining their abilities to the maximum extent possible; and that accomplishes these objectives through providing, in each case, the form of assistance that least interferes with the legal capacity of a person to act in her or his own behalf. This act shall be liberally construed to accomplish this purpose. “

I have quoted the entire statute as I feel it is important to see the State of Florida’s intent behind passing all the laws pertaining to guardianships. In setting up a guardianship, courts have taken the route to set up a guardianship in the least restrictive means possible to the ward. This is important to keep in mind when dealing with a guardianship.

Florida statute 744.105 allows all costs to be paid out of the ward’s estate (ward’s property). If the ward owns many different types of property, the court may direct what specific account(s) the costs are to come out of.

The court may also appoint a person known as a “monitor”. A monitor is a person appointed by the court to provide the court with information concerning a ward. The monitor, once appointed, may investigate, review documents, speak to the ward and seek other information and report their findings back to the court. A monitor may be appointed under normal procedures (with proper notice to the guardian and ward) or in an emergency situation. If, based upon the monitor’s findings, the court needs to enter any further orders to protect the ward’s interests, the court may do so.

Under Florida Statute 744.108, a guardian and their attorney are entitled to reasonable fees for the services provided. The fees will be calculated based upon the time required, difficulty of the services provided, the results of the services and the experience of the guardian and attorney. For more information on what all a court may take into account in determining the fee, please read the statute itself as there is a list of items to be taken into account. This has become a profitable area here in Florida so the legislature has rules regulating who may serve as a Professional guardian. To learn more about becoming a Professional guardian, please review statute 744.1083 and 744.1085.

Continue reading " General Guardianship Provisions under Florida Law " »

What is a Living Trust?

Think of a Living Trust as a bucket on paper. A trust is an agreement between the Trustee and the Trustmaker (also called a Settlor or Grantor) whereby the Trustee holds title to the assets for the benefit of the Trustmaker and other named beneficiaries. A Living Trust usually is an agreement with yourself that says while you are alive and well, you maintain total control of your property and you may do whatever you’d like with that property. Then upon your disability, it names a successor Trustee who will manage the assets for your benefit. Then upon your death, it names a successor and how the property is to pass to your beneficiaries.

To go back to the bucket theory, think of it as a bucket that you carry along while you are alive and if you need an asset, you take whatever you need out of the bucket and as you obtain or purchase an asset, you put it into the bucket. If you become ill, you just hand the bucket off to someone else to take care of he assets. It really is that simple.

Do you have to be wealthy to have a Living Trust?

No you don’t. However, a Living Trust is more expensive to set up than a typical will. The money you spend to set it up is minute compared to the money you will save in probate costs though upon your death. So do you want to pay more now to save more later or pay a little now to pay more later?

Why a Living Trust?

The primary purpose of a Florida Living Trust is to spare your beneficiaries the delay, publicity and expense of a public probate court proceeding. In Florida, a probate court proceeding can take anywhere from 8-15 months, depending on the size of the estate and whether or not a hearing is needed. However, with a Florida Living Trust, your assets can pass to your beneficiaries without delay, usually within a month or two.

A Living Trust also allows you to do disability planning in order to avoid having to set up a guardianship in the future. This alone is a big benefit to setting up a living trust and transferring all of your assets into the living trust.

Types of Living Trust?

There are two types of living trusts: revocable and irrevocable. A revocable living trust keeps you in control of your assets while you are still living, and allows you to change beneficiaries, modify the terms or even revoke the trust.

An irrevocable living trust is one you do not control, and it cannot be changed or revoked. However, there are tax benefits to an irrevocable trust that are not available with a revocable trust. Generally, an irrevocable trust is not subject to estate taxes. On the other hand, an irrevocable trust is only available in certain situations.

How to set up a Living Trust?

There are a lot of websites out there that say they will set up a Living Trust for you by just answering a few questions. However, I suggest you go see an attorney to have a Living Trust set up for you. I have seen some of the trusts that are created online and when I review what they say with the client, they do not pass the property according to the client’s wishes. Sometimes they actually pass property to people that the client wanted to actually disinherit!

Continue reading " Common Questions Regarding a Florida Living Trust " »

As I was watching the coverage of the Florida primary last night, I started to wonder what the tax plans were for Newt Gingrich and Mitt Romney, the two leading Republican candidates in this years presidential election. So I did a little research. I write this blog purely to inform and not insert any personal feelings or politics at all. All the information I share is readily available on both candidates’ websites and you can go there to further your knowledge. My goal is to try and consolidate their tax plans into this blog post.

Newt Gingrich’s tax plan, in a nut shell, would give all individual taxpayers the choice between paying their taxes under the current tax system or a flat tax system of 15%. Corporate taxpayers would pay an income tax of 12.5% and be allowed to fully expense capital expenditures (subject to some exceptions).

Gingrich’s choice for individual taxpayers would slightly modify the current tax system by 1) making capital gains, dividends, and interest income tax free, 2) apply a standard deduction of $12,000 for each individual and dependent, and 3) eliminate most of the deductions and credits currently available except the deductions for mortgage interest, charitable deductions, child credits and earned income tax credit. Newt’s plan also repeals the AMT tax and the federal estate tax. It is unknown if the gift tax would be repealed or not. Note the individual “flat tax” is different than previously announced and publicized flat taxes because Gingrich’s flat tax maintains deductions and credits for his flat tax.

Based upon early estimates from the Tax Policy Center, Gingrich’s plan would reduce the federal governments revenue by about 35%. Please note these estimates can change greatly once the full policies are announced and disclosed.

Mitt Romney’s tax plan seeks to permanently extend the 2001-2003 tax cuts, eliminate taxation of investment income for most taxpayers, reduce the corporate income tax rate, eliminate the estate tax, reduce the gift tax and repeal the taxes implemented in 2010 with the health reform bill.

Romney’s plan would permanently extend all the 2001 and 2003 tax cuts and continue a patch on the AMT tax. The plan would eliminate the tax on long-term capital gains, dividends and interest income for married couples filing jointly with income lower than $200,000 ($100,000 for individuals and $150,000 for heads of households). Romney’s plan is to permanently repeal the estate tax but keep the gift tax with a maximum rate of 35% and lifetime exemption of $1 million.

Romney’s corporate tax plan will seek to 1) reduce the corporate income tax rate to 25%, 2) make the research and experimentation credit permanent and 3) extend for one year the full expensing of capital expenditures. The plan would also allow a “tax holiday” for the repatriation of corporate profits held overseas. This would allow companies to bring their profits back into the US without the profits being taxed. Currently, a business pays the income tax based upon the countries tax policy where the business is located. They then keep the money within that country to prevent it being taxed again when brought into the US due to the US’s current high corporate tax rate.

Based upon early estimates from the Tax Policy Center, Romney’s plan would reduce the federal governments revenue by about 16%. Please note these estimates can change greatly once the full policies are announced and disclosed.

To learn more on each candidates tax plan, go to their respective websites to find out more detailed information than I have provided here. Like I said, my goal was to summarize their proposals but not persuade you one way or another. I hope I was able to give you something to think about when it comes time for your state’s primary to take place.

Continue reading " What are the Tax Policies of the Two Leading Republican Candidates? " »