Estate Planning and Tax Lawyer Blog

So Bob, a resident of Jacksonville, just passed away. He has a sizable estate but also some outstanding debts he owed upon his death. He had two credit cards with a balance of $10,000 each, a home mortgage, an outstanding hospital bill and his brother paid the funeral bill. Bob named Sally the Personal Representative in his Will, how should she take care of the bills?

First off, Sally, as the Personal Representative, must obtain the names and amounts of any creditors Bob’s estate may have. One way to do that is by obtaining all of Bob’s mail to see what bills come in through the mail. As bills come in, Sally should give them a copy of the Notice to Creditors so they may file their claim. If they fail to file their claim within 30 days, the claim is barred unless they can show a reason as to why they are late.

The other thing Sally must do is notify any other creditors Bob may have by publishing a Notice to Creditors in a local newspaper for 2 consecutive weeks according to Florida Statute 733.701. This gives the public at large notification that if Bob owed them any money, that they have 3 months to make a claim against his estate. Again, if no claims are made within 3 months, then any claims that come in afterwards, without a good reason why, are barred.

After all the claims are filed, Sally will then file a written statement of all claims she has or intends to pay and object to any claims that are not valid. Any claims that Sally intends to pay shall be paid within one year. The probate court may extend the time for Sally to pay though if Sally shows good cause as to why she cannot pay. If Sally wants to object to a claim, she must object within 4 months from the first publication of the Notice to Creditors or 30 days from the filing of the claim, whichever is greater.

Once it is settled which claims are valid and must be paid, they must be paid in a certain order according to Florida Statute 733.707. The order of payment is as follows:

1. Class 1: Costs, expenses of administration and compensation of the personal representatives and their attorneys fees.
2. Class 2: Reasonable funeral costs, grave expenses, not to exceed $6,000.
3. Class 3: Debts and taxes with preference under federal law as well as all Medicaid and other public assistance received during the decedent’s lifetime.
4. Class 4: Reasonable and necessary medical and hospital expenses of the last 60 days of the decedent’s life.
5. Class 5: Family Allowance.
6. Class 6: Arrearage from child support.
7. Class 7: Debts acquired after death by the continuation of the decedent’s business but only to the extent of the assets of that business.
8. Class 8: All other claims, including those founded on judgments or decrees rendered against the decedent during the decedent’s lifetime, and any excess over the sums allowed in Class 2 and Class 4.

Sally will have to start with Class 1 creditors and pay them off and then move down the list. Once she gets to a Class that she cannot fully satisfy, then she will pay all creditors within that class proportionally.

So going back to the facts above, Bob had a sizable estate, so Sally won’t have to proportionally pay any of the creditors. The first creditors she will pay is herself, her attorneys fees and any prepaid costs she may have paid for as they are Class 1 creditors. Sally will then pay Bob’s brother who paid for the funeral bill since he is a Class 2 creditor. The hospital bills will be paid next as class 4 creditors. The remaining creditors, credit cards and mortgage, are Class 8 creditors and will be paid last.

Continue reading "What if the Estate Owes Money?" »

So your father who lived in St. Augustine Florida just passed away and you find out that you were named the Personal Representative of his Will. What exactly do you need to do? What are your duties and what powers do you have to carry those duties out?

The first thing you should do is contact an attorney to review the estate. The attorney will go over all the rules and types of probate with you so that you know exactly what you are getting into.

Once you are named the Personal Representative by the probate court and you have your letters of administration, then what? The powers and duties of a Personal Representative can be found in Florida Statutes 733.601 – 733.620. Generally, the Personal Representative is deemed to be a fiduciary of the estate and must act in the best interests of the estate and beneficiaries. The job of the Personal Representative is to settle and distribute the estate of the decedent according to the decedent’s Will in an expeditious and efficient manner. As long as the Personal Representative acts in the best interest of the estate and beneficiaries, the Personal Representative will not be subject to any personal claims or lawsuits.

One of the first duties of the Personal Representative is to open the probate proceeding in the proper court. Once the proceeding is opened, then the Personal Representative must notify all the beneficiaries of the estate that the probate has been opened and also notify all potential creditors that an estate proceeding has been opened. Once any interested parties have been notified, then the Personal Representative needs to go gather the assets of the estate and inventory them so that a proper inventory is filed with the court. The court’s job in the probate proceeding is to make sure that all debts are paid and all assets are distributed properly under the Will.

In gathering the assets, the Personal Representative may change the locks on any real estate to protect the asset from being depleted by beneficiaries or anyone else. In gathering financial assets, the Personal Representative shall change the name and address on all accounts so that any future statements come to the Personal Representative.

Florida Statute 733.612 describes some specific activities that the Personal Representative may engage in such as selling real estate, investing financial assets, voting on business decisions. Remember, all of this must be done in the best interests of the estate and its beneficiaries.

If you are deemed to be acting in your own best interest, a beneficiary may file a lawsuit against you personally for your bad acts and breaching your fiduciary duty. Florida Statute 733.609 allows the court to have you pay all the beneficiaries attorney’s fees and court costs, so it could get expensive.

Having stated all the above, the most important part is to make sure you consult and retain an attorney. In Florida, you must retain an attorney for a probate proceeding unless the only assets within the estate are tangible personal property. A qualified attorney will ensure that you do not run afoul of your duties under the Florida Probate Code and ensure that everything is taken care of in an efficient and proper manner.

Continue reading "What are some of the duties and powers of the Personal Representative?" »

When drafting your Will, one of the big decisions is who do you want to name as the Personal Representative of your estate. The job of a Personal Representative is a very important job as they are in charge with making sure the estate passes according to your wishes. However, in order to serve, the Personal Representative must fall within those allowed to serve under the Florida Statutes.

For this discussion, lets assume Bob made a Will back in 1960 and named his wife, Sally, and Acme Bank as the Co-Personal Representatives. Bob also has a brother that live in St. Augustine. In 1991, Acme Bank was acquired by XYZ Bank. Unfortunately, Sally, Bob’s surviving spouse, has recently been diagnosed with dementia. Now that we have the facts, lets review the rules that we will apply the facts to.

Florida Statute 733.301 lays out the preferences in naming a Personal Representative of an estate. If the estate is a testate estate (one with a Will), then the preferences are as follows:
1. The Personal Representative named in the Will.
2. Person selected by a majority in interest of the persons entitled to the estate.
3. A beneficiary of the Will.

If the estate is an intestate estate (one without a Will), then the preferences are as follows:
1. The surviving spouse.
2. A person selected by a majority of the heirs.
3. The heir nearest in degree (your closest relative).

In either situation, the court will appoint a capable person if no qualified Personal Representative exists.

To be able to be appointed as the Personal Representative based upon the above preferences, you must be competent at the time of the death of the decedent. However, under Florida Statute 733.303, you may not be appointed as the Personal Representative, even if you are one of the preferred appointees from above, if you (i) have been convicted of a felony; (ii) are mentally or physically unable to perform the duties or (iii) under the age of 18 years old.

Under Florida Statute 733.304, a nonresident of Florida will not qualify as a Personal Representative unless they are related to the decedent or the spouse of a relative of the decedent.

If you name a bank or trust company to serve as the Personal Representative of the estate, they must be either incorporated under the law of Florida or licensed to transact business in the State of Florida pursuant to the rules in Florida Statute 733.305. This includes any banks who may have purchased the entity you have named in your Will.

Finally, if you are named as the Personal Representative but after being named, you know or should have known that you are not qualified to serve or no longer qualified to serve, then you must promptly file and serve a notice setting forth the reasons why you cannot serve. Failure to file the notice makes you personally liable for all costs and attorney’s fees incurred in any removal proceeding.

So in Bob’s situation above, he named Sally and Acme Bank to serve as the Personal Representatives of his Will. Under Florida law, Sally, having been recently diagnosed with dementia, is not able to serve under Florida law due to her incompetency. Acme Bank no longer exists because it was bought by XYZ Bank in 1991. However, XYZ Bank is no longer doing business in Florida as of 2002 and, therefore, cannot serve as the Personal Representative of Bob’s estate. So all the persons/entities named in Bob’s Will are no longer available. However, Bob’s brother, who lives in St. Augustine, also happens to be the beneficiary of Bob’s estate. Under Florida Statute 733.301, Bob may petition the court to serve as the Personal Representative and the court will most likely appoint him since he qualifies as a Personal Representative.

If you think this scenario is far fetched, it is not. I am currently probating an estate with the exact same set of circumstances!

Continue reading "Who may serve as the Personal Representative of an Estate" »

For residents of Jacksonville and Duval County Florida who pass away, a probate proceeding would take place in Duval County. The place where the probate is to take place is called the venue.

So for our story, lets assume Bob, who lives in Jacksonville, Florida, passed away in his home. Bob’s assets are a bank account at Jacksonville Bank, a brokerage account at Merrill Lynch, a bank account at New York Bank and a second home in New York City. So where should the probate or probates take place?

Section 733.101 states the rules for the venue of a probate proceeding in Florida. It states that the venue for probate shall be “(a) in the county in this state where the decedent was domiciled; (b) if the decedent had no domicile in this state, then in any county where the decedent’s property is located; and (c) if the decedent had no domicile in this state and possessed no property in this state, then in the county where the debtor of the decedent resides.” So what does this mean?

Well if the decedent was domiciled in Florida, the probate will take place in the county where the decedent lived. Pretty straight forward. So in Bob’s situation, since he lived in Jacksonville, Florida, the proper venue for his primary probate will be in Duval County, Florida. I will explain why I say primary here in a bit.

If the decedent had no domicile in this state, aka no primary residence, then the proper venue for the probate will be where the decedent owned real estate (his second home). So if Bob’s primary home was up in New York City but he had a second home in Jacksonville, then Bob’s primary probate would be up in New York and the personal representative would have to open what is called an ancillary probate here in Duval County (now you see why I said primary probate above). An ancillary probate is a probate opened to deal with assets owned outside of the state where the decedent’s primary residence was located. So if you own real estate in several states, be weary of having to open several probates in several states…it can get expensive.

Finally, if the decedent had no domicile and possessed no property in the state of Florida, then the venue is proper where a debtor of the decedent resides. A debtor is someone who owes you money. This situation is rare since usually the decedent will have some sort of property if they also have a debtor.

So lets go back to Bob from above. Remember that Bob, who lives in Jacksonville, Florida, passed away in his home. Bob’s assets are a bank account at Jacksonville Bank, a brokerage account at Merrill Lynch, a bank account at New York Bank and a second home in New York City. Where would Bob’s estate be probated based upon Section 733.101?

The primary probate will take place in Jacksonville since Bob’s primary residence was located in Jacksonville. Within the primary probate, we would include Bob’s Jacksonville Bank account, his Merrill Lynch account and even his New York Bank account. Why the New York account? A bank account is money that can technically be accessed anywhere in the world and not just in New York. Due to that fact, bank accounts, stock accounts, etc. may be probated in the location of the decedent’s primary residence and do not have to be probated where the financial advisor or banker is located. However, there will still have to be an ancillary probate opened in New York due to the second home in New York City. Want to know how to avoid all of this?

Continue reading "Where should a probate take place?" »

Probate in Florida can be a long and drawn out process. Some of the drawbacks are the fact that it can take years to settle an estate and it is all public record. However, the biggest drawback can be the costs and fees associated with probate. Some of the costs come from the filing fees, the publication fees, attorney’s fees and personal representative fees.

Florida Statute 733.6171 sets out the provisions for how much an attorney may be compensated in a probate proceeding. Probate work is a big money maker for attorneys. The statute sets out a table of what a presumed reasonable fee is. For instance, if the value of the estate is $1M, then the attorney’s fee is presumed reasonable at 3% or $30,000. However, the statute allows the attorney to receive more compensation. The first way is the if the attorney has to provide any “extraordinary” services, the attorney may be compensated more. Some examples of extraordinary services are if the attorney has to help sell any real estate, if there is a will contest or if the decedent had a business that is continued. The other way an attorney may receive additional compensation is through an agreement between the personal representative and the attorney. An agreement supersedes all the reasonable fees discussed above.

Florida Statute 733.617 sets out the provisions for how much a personal representative may be compensated. The presumed reasonable fees for a personal representative are the same as they are for attorneys. The personal representative may also receive additional compensation for extraordinary services. Further, if you have named more than one personal representative, each named representative gets a full share as if they were the only named personal representative.

It may seem like these are a lot in fees. However, we have not even discussed the costs associated with probate. The filing fees for opening a probate range from $150 to $500, depending on how much the estate is worth. These costs are continuing to increase due to cuts in court funding. The cost to publish the notice to creditors (the notice which gives creditors notice of the estate being open) can be several hundred dollars. You also have realtor fees, CPA fees, and many other fees that can quickly add up. Finally, if you have a taxable estate, your biggest fee will go to the IRS in the form of a tax check.

To illustrate the fees and costs of a probate, lets assume that Bob has a $9 million estate and he only left a Will where he named Sally and Kim as the personal representatives. Bob’s estate was large because he had a successful internet business. The presumed reasonable attorney’s fees, based upon the statute, are $180,000. However, since Bob has a business, the attorney may petition the court for additional fees. The resumed reasonable fees for Sally and Kim each is $210,000 each for a total of $420,000. By the time you add all the other costs, the probate of Bob’s estate could cost Bob’s estate (and his beneficiaries) a total of $700,000 or about 8% of the estate. Oh, did I forget to mention the check to the IRS for approximately $1.4 million. The costs can add up quickly.

Most of the above costs are easily avoidable with a proper estate plan in place to avoid the costs and taxes.

Continue reading "What are the costs of probate?" »

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" »

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!" »

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?" »

Fortunately, there is some relief for the heirs (surviving spouse and children) of a decedent who passed away with few assets but a lot of debt. Section 732.402 of the Florida statutes lays out what type of property is exempt from creditor's claims.

Types of property that is exempt from creditor's claims are as follows:

1) The homestead of the decedent.
2) Household furniture, furnishings and appliances in the decedent's usual place of abode up to a net value of $20,000 as of the date of death.
3) Two motor vehicles (subject to some weight and use restrictions).
4) 529 and prepaid tuition plans.

The property listed above is exempt from all claims against the estate except perfected security interests thereon. There are other allowances as well that a family can have access to in a time where cash is short.

Continue reading "What type of property is exempt from creditor's claims in a probate?" »

Upon your death, what happens to your Florida homestead? The answer depends on whether you have a revocable living trust or a simple last will and testament.

If you have a revocable living trust that is fully funded where you have properly put your homestead into your trust, then the homestead will pass according to the provisions of your trust. The key here is properly put in your trust. Florida homestead law generally states that the surviving spouse must obtain some sort of ownership interest in the homestead unless a martial agreement is in place - prenuptial or postnuptial. If you have put your homestead into your trust without a separate agreement in place there could be some real estate title issues which is a topic for another day.

If you have a last will and testament, then your last will and testament will need to be probated. In the probate process the homestead will be dealt with through what is called a "Petition to Determine Homestead Status." This petition is important because the homestead passes free of any estate creditors to the surviving spouse or heirs and so this ensures that a creditor cannot force the sale of the homestead upon your death.

Continue reading "What Happens To Your Homestead Upon Your Death?" »

A child born after the death of the decedent but conceived prior to the decedent’s death are treated as if the child was born during the life of the decedent and shall received a full share of the estate that they are entitled to under Florida’s intestate laws. This is shown in Florida statute 732.106.

Continue reading "What Are the Inheritance Rights of a Child Conceived Before a Decedent's Death but Born After the Decedent's Death in the State of Florida?" »

I am asked a lot by potential clients "what types of assets need to be probated?" To answer that question, I will first discuss the three different ways you can own an asset.

First, you may own an asset in your individual name. However, upon your death, the asset will have to go through probate unless it has a beneficiary designation, transfer on death designation or payable on death designation attached to it. Example of these types of assets are checking accounts, savings accounts and brokerage accounts.

Secondly, you may own an asset jointly with rights of survivorship. This means upon the death of one owner, the asset passes to the survivor - "the survivor wins". However, the survivor then will have to have the asset probated upon their death to pass it onto their heirs.

Lastly, you may own the asset as title by contract. Examples of this are life insurance policies and retirement plans. These assets pass according to the contract you have with the company you bought the asset from. WARNING: the asset may still go through probate if you list your estate as the beneficiary or have no beneficiary listed at all. Make sure to periodically review the beneficiary designation as it may be the wrong one listed.

Continue reading "What types of assets have to be probated in Florida?" »

The state of Florida offers a probate shortcut for small estates that makes it easier for heirs to transfer assets or property left to them by someone who has died.

To use Florida’s simplified probate process for small estates, an executor – the person designated in a will to handle a decedent’s property -- must file a written request with the local probate court requesting to use the simplified system. If granted, the executor will then be able to distribute the assets without having to go through the regular probate process.

There are two ways a Florida resident can use the simplified probate process:

1. If there is no real estate, and no creditor claim on any assets except any amount due to satisfy funeral or medical expenses (limited to the last two months).

2. If the value of the entire estate, after satisfying any creditor claims, is equal to or less than $75,000, OR if the decedent has been dead for more than two years.

Continue reading "Florida Summary Probate System" »

Of all the things you wish to leave your heirs, the expense and hassle of going through probate in Florida is probably not on that list. Nor should it be. There are ways you can ensure your estate passes directly to whomever you wish without having to go to Florida probate court.

Living Trusts. You can create a living trust to give away virtually anything you own – real estate, cars, boats, artwork, jewelry, even bank accounts. But this is not a do-it-yourself project. Meet with a Florida estate planning attorney, who can explain the steps to setting up a living trust, choosing a successor trustee and titling your assets over to that trust. You’re still in control, but your heirs avoid probate.

Joint Ownership. Any property you own with someone else that provides for right of survivorship automatically passes that property on to the other person once you die with no need for probate. If you own property with someone through joint tenancy, you must be sure each of you owns an equal share for it to pass on without probate.

Transfers-on-Death. Any securities you own – stocks, bonds, brokerage accounts – may pass to a beneficiary if you register those securities as transfer-on-death. You must fill out a beneficiary form, then the person you name as beneficiary can claim the accounts upon your death without probate.

Payable-on-Death. You can add a payable-in-death designation to bank accounts and CDs and your beneficiary will be able to claim the money from the bank upon your death without going through the probate process.

Continue reading "How to Avoid Probate in Florida" »

A resident alien or non-resident alien has the same rights as a U.S. citizen when it comes to their inheritance rights under the Florida Probate Code. Section 732.1101 states “Aliens shall have the same rights of inheritance as citizens.”

Continue reading "How Are the Estates of Aliens (Non-Citizens) Handled Under Florida Law in an Intestate Estate?" »

Escheat literally means to return to the lord. In the probate context, it happens when property and/or an estate is transferred to the government because a person has died without a will and/or without an heir to his or her estate. When this happens, the property is turned over to the State of Florida to be deposited in the State School Fund. Make sure you plan correctly to ensure that your property will not be taken by the state.

Continue reading "What Does the Term "Escheat" Mean Under Florida's Probate Laws?" »

Dower and curtesy have both been abolished in Florida under Statute 732.111.

Dower is a common law that entitles a widow to a portion of her husband's estate in absence of a last will and testament. The provision of dower allows the wife to provide for herself and any children born during the marriage. In most circumstances, the widow is granted up to one-third interest in her husband's assets. Curtesy is the husband's right in his wife's estate.

However, Florida still provides for the surviving spouse and family in several ways. One way is that the surviving spouse has an "elective share". It is not automatic though, the surviving spouse must elect to take their share. Florida also provides for the family allowance. Both of these concepts will be explained further later.

Continue reading "How Does Florida Law Address the Concepts of Dower and Curtesy in an Intestate Estate?" »

Someone who is of “half blood” shall inherit only half as much as a “whole blood” heir. If by chance all the heirs are of “half blood”, then all “half blood” heirs shall inherit as if they were a “whole blood” heir.
An adopted child is treated as a “whole blood” of the decedent as if the adopted child was a natural born child of the decedent.

Continue reading "How Does Florida Law Deal with Children Who are "Half Blood" versus "Whole Blood" to the Decedent or an Adopted Child of the Decedent in an Intestate Estate in the State of Florida?" »

The rights vary from the mother and father. A child born out of wedlock is treated as the child of the mother for all intestacy distributions. However, the child born out of wedlock is treated as the child of the father only if:
1. The natural parents participated in a marriage ceremony before or after the birth of the child, even though the marriage was void;
2. The paternity of the father is established by an adjudication before or after his death; or
3. The paternity of the father is acknowledged in writing by the father.

Continue reading "What Are the Rights of Persons (Children) Born Out of Wedlock in an Intestate Estate in the State of Florida?" »

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?" »

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" »

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" »

As I blogged about earlier, Florida has a new Durable Power of Attorney law that goes into action on October 1, 2011. Florida also has a new intestacy statute that becomes effective October 1, 2011 as well.

As a reminder, intestacy means you have passed away without a last will and testament and the state in which you live in, for me Florida, has therefore, written one for you. Most of the time this is not what you want-so please set up a last will and testament.

However, for those of you who do not, your family composition (spouse only, children only or blended family of some kind) will determine how your assets are passed. A fellow Florida attorney, David Shulman, published a flow chart that you may use to determine how your assets would pass in Florida if you do not leave a last will and testament.

Continue reading "REMINDER: Florida's New Intestacy Law Effective October 1, 2011" »

One of the biggest worries that some clients have is how to give their tangible personal property (jewelry and collectibles) to their children upon their death. Sometimes it is the personal property which causes family conflict upon death as those items have sentimental value to the family. Here are several solutions:

a) In Florida, you may leave a letter that states that certain personal property is to pass to a certain person upon your death. As long as the letter has 1) what the item is; 2) who it goes to; 3) dated at the bottom and 4) signed by the owner of the property. This letter may be changed at any time and does not have to be notarized or witnessed. However, your estate planning document must allow the letter to pass the property.

b) If you feel that your beneficiaries may fight over your property, give them each different colored sticky notes the next time they come over. Items that have several different colors on them, you know that could be an item that is fought over and deal with it now so that everyone understands who is to receive the property upon your death.

c) Do nothing and hope all goes well. (This option is chosen often unfortunately because "I'll be dead anyway")

Continue reading "How To Give Away Your Personal Property Upon Your Death?" »

When I sit down with a client to discuss and design their estate plan, one of the questions I ask is "Who would you like to be the personal representative for your Will?" Most of the time, the answer comes quickly. They usually name a spouse, child, parent or sibling.

However, that is not always the case in a small family. In that case, who can they turn to? The answer must fall within one of these two parameters: 1) The person named must be a family member or 2) Must live or do business in the State of Florida.

So can you name your mom who lives in California - Yes. Can you name you next door neighbor - Yes. Can you name your bank - Yes. Can you name your best friend who lives in Georgia - No.

Continue reading "Who May Serve As A Personal Representative In Florida For A Probate?" »

Probate is a word that gets thrown around a lot by estate planning attorneys but do you really know what probate is?

Probate is the process by which your assets pass to your heirs with the court's oversight. To start a probate, you file a petition, a death certificate and the will with your local court. If you do not have a will then the state in which you live will provide one for you. HINT: set up a will, the state's will probably doesn't pass your assets the way you want them to pass.

Once the probate is opened, then the court oversees the payment of all debts and expenses relating to the estate and then the final distribution of assets. Depending on state law and complexity of the estate, this process can take anywhere from one month to several years. Probate, however, is expensive and public record.

Continue reading "What is Probate?" »

Often times when co-owners of property are in dispute, the most equitable remedy is partitioning that property. But at what value should the property be appraised? Present value? Fair Market Value? How should closing and marketing costs be divided, if at all, among the parties? Should these costs be deducted from the value of the property? These are just a few issues pertaining to proper valuation models.

Proper due diligence and market anticipation are just a few key concepts lawyers should take from the Ludwick opinion. Partition can take many years to resolve and numerous costs are involved. Different market assumptions are a primary cause in valuation disputes. Each valuation expert should agree to the same assumptions and risks beforehand, then calculate the value of the property based on those assumptions. If they are true experts in valuation models, then both estimates of the property should be similar. If you have a property or valuation issue, reach us at estate planning

The United States Supreme Court has agreed to hear the appeal from the estate of Anna Nicole Smith in the latest dispute over the late celebrity’s inheritance from Texas billionaire Howard Marshall, who died in 1994 at the age of 89. Smith was then 26, and they had been married for 14 months.

Smith and Marshall’s adult son, Pierce Marshall, were in litigation over the inheritance for over a decade. Pierce Marshall died in 2006 and Smith died in 2007. Heirs of both estates continue to wrangle over Howard Marshall’s estate, which is worth over $1.6 billion. Smith has one legal heir, a three-year-old daughter.

Howard Marshall did not leave anything to Smith in his will or a trust. She claimed it was because of undue influence from his son, Pierce, and testified that Howard had promised her a share of his assets earned during their marriage. Results from ensuing court battles include:

• A Texas probate court denied Smith any money from the estate;
• A U.S. bankruptcy court awarded Smith $474 million;
• A federal appeals court in California dismissed the $474 million award;
• The U.S. Supreme Court ordered the Federal Appeals Panel in California to reconsider its ruling in 2006;
• The California federal appeals court ruled in March this year that Smith’s estate was not entitled to the $300 million it claimed was intended as a gift from Marshall.

In Manhattan, the United States Court of Appeals for the Second Circuit will hear oral arguments in early October in a suit brought by famous American novelist John Steinbeck’s son Thom and granddaughter against the estate of his late wife Elaine Steinbeck claiming that she engaged in a 30-year conspiracy to cheat Steinbeck’s blood heirs of royalties and copyright control of his famous works.

John Steinbeck died in 1968, leaving the bulk of his then-estimated $1 million estate to his third wife, Elaine. He left $50,000 to each of his two sons. His will directed that the future profits from his works go to his wife and an attorney. The will did not mention copyrights.

Under 1968 copyright law, a writer’s children and spouses had interests in the renewal of copyrights. Steinbeck’s sons sued Elaine in 1981, claiming she had renewed the copyrights in their name but kept the royalties. The suit was later settled.

When Elaine Steinbeck died in 2003, she left her estate – which included her copyrights for her late husband’s novels and screenplays – to her two sisters, her daughter from a previous marriage, and several grandchildren.

In 2004, Thom Steinbeck and his niece, Blake Smyle, sued the estate of Elaine Steinbeck, questioning whether she had exercised renewal rights for her late husband’s work properly and whether or not the heirs had been properly informed of their interests.

The suit alleged that Steinbeck “was an author who cared little for business matters, including his intellectual property,” which is why he did not make provisions for how it should pass. That suit was dismissed in 2009, and is currently the subject of the Manhattan appeal.

The primary purpose of a Florida living trust is to spare your beneficiaries the delay, publicity and expense of a 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.

Florida also has a simplified probate process for smaller estates – those less than $75,000 – so if your estate falls into this category, a living trust may be an unnecessary expense.

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.

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.

If you are interested in learning about all the advantages of a living trust, consult a Florida estate and tax planning attorney.

A very popular estate planning technique is to transfer assets into a Family Limited Partnership (FLP) and then claim a valuation discount on the interests that the estate still owns upon a person’s death.  The IRS has questioned this technique and is starting to litigate cases that fall within certain parameters.  In fact last year, the IRS hired 14 new estate tax attorneys and plans on hiring 10 more this month.  In doing so, the IRS is looking at estate tax returns that claim reduced values of the estate based upon FLP interests.  The IRS has hinted as to what “red flags” they look at when determining whether or not to litigate a case where an estate valuation discount is taken.  The following is a list of some, but not all, of those “red flags”:

• Near death creation of the FLP
• Decedent retained no assets for living expenses
• No contributions by other partners
• Nature of assets (person use assets)
• Failure to observe partnership formalities
• Commingling of personal and partnership  assets
• Post-death distributions or borrowing from the FLP (ex. Loan taken out by estate to pay taxes)
• Non pro rata distributions if the decedent is the only person receiving distributions
• No real business or investment purpose or creditor protection purpose
• Achieving discounts seems to be the real reason for creating the FLP

If you have created a FLP or are thinking about creating a FLP, please consult with an estate planning or tax attorney for advice or to review how you have been conducting business through the FLP.