Estate Planning and Tax Lawyer Blog

it is really just 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 trust is a very flexible document whereby you can control your assets while alive but also control how they are spent after your death. It really is just a bucket though 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.

Continue reading "What a living trust really is..." »

This is the last of a series of blog posts that are relating to Gun Trusts and all the issues that surround them. My goal is to answer many common questions regarding Gun Trusts. Here are the last few questions:

9) Why use a Gun Trust to purchase the firearm instead of a Corporation of LLC?
A Gun Trust does not require an annual filing fee to your Secretary of State, a corporation or LLC does, thereby saving you money annually.

10) What happens if you violate the NFA?
You can be sentenced up to 10 years in federal prison, forfeit all of your firearms, forfeit your right to own or possess firearms in the future and be subject to fines up to $250,000.

11) Who may use the firearm if it is owned by the Gun Trust?
NFA items owned by trusts are legal possessions of the Trustee (or Trustees if more than one Trustee is serving). Each Trustee may use the firearm as well as any beneficiary in the presence or under the authority of the Trustee.

12)Does a Gun Trust allow criminals to obtain firearms?
No. You cannot buy a short barreled shotgun, machine gun or any other firearm without a background check by using the Gun Trust. The benefit is that you do not have to have the local authorities sign off on the purchase. A criminal will use other means to get the firearms as the purchase can easily be traced back to the buyer with a Gun Trust.

13)Where can I find information on Florida’s gun laws?
Florida’s gun laws are codified in Chapter 790 of the Florida statutes titled “Weapons and Firearms”.

Continue reading "Do you have questions regarding Gun Trusts? (continued)" »

This is a continuation of a series of blog posts that are relating to Gun Trusts and all the issues that surround them. My goal is to answer many common questions regarding Gun Trusts. Here are a few additional questions:

6) Can any Revocable Living Trust hold firearms?
The answer is no. The Trustee of a Gun Trust must be given special powers and instructions on how to deal with beneficiaries, what happens when the Grantor becomes mentally disabled or passes away. The Trustee must examine each beneficiary under federal, state and local laws to determine whether or not they, individually, may own and possess a firearm. The flexibility needed to allow the Trustee to property oversee the trust can conflict with the normal language within a Revocable Living Trust and can cause an “accidental felony”.

7) What are the benefits of a Gun Trust?
A Gun Trust allows someone to own the guns in a private manner while not having to get the written approval of the Chief Law Enforcement Offer where you live. The Gun Trust takes local politics out of the purchase and leaves it in the hands of the federal government.
A Gun Trust can also be amended to include additional beneficiary or take out beneficiaries. This is important as it allows you to have full control over who can and cannot use your firearms.

8) What won’t a Gun Trust do?
A Gun Trust will not allow you to bypass the required background check when purchasing a firearm.

Continue reading "Do you have questions regarding Gun Trusts? (continued)" »

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

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

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

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

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

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

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

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

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

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

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

To qualify for a marital deduction trust:

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


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


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


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

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

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

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

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

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

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

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

The headlines are full of troubled people who received too much money at too young an age and are spending it in foolish or even self-destructive ways. So how do parents or grandparents ensure that the assets they pass on will be used wisely by young heirs?

One of the most helpful estate planning tools is an incentive trust, which allows benefactors to pass on wealth with some strings attached. For example, if you are a grandparent who wants to pass on wealth to grandchildren but want to be sure they have the benefit of a good education so they know how to invest and grow it wisely, you can set up an incentive trust that defines the circumstances under which your gifts will be distributed.

Perhaps you wish to encourage an entrepreneurial spirit in your children – setting up an incentive trust that distributes assets for starting a new business will help you foster that spirit and pass along your lessons of the benefits of hard work.

An incentive trust can also be used to distribute gifts tied to charitable works if those are values you wish to continue to instill in your heirs. It can be contingent upon anything – even marriage or having children.

Most parents have a desire to not only provide financially for their children, but to also see them enjoy satisfying lives as contributing members of society. An incentive trust can be exactly what a parent or grandparent needs to pass on both an inheritance and a solid set of values.

When it comes to estate planning, people often wonder what the benefits are to creating a trust. Here are the five main reasons for creating a trust:

Control assets. A Trust can be used to retain control over the assets within the trust for a elected period of time, and may survive death if so designated.

Protect assets. A Trust allows you to put assets in the hands of a trusted advisor or administrator (the trustee) for proper management. In addition, putting assets into a knowledgeable trustee’s hands can also relieve your beneficiaries of what they may consider to be a burden for which they are unqualified.

Save on taxes. For married couples, all estate taxes can be avoided upon the death of the first spouse. A Trust can also ensure your own children benefit from your estate by establishing a tax by-pass Trust to hold property for children, while still allowing the trust funds to provide for the surviving spouse. The Trust assets will not be subject to estate tax upon the death of the surviving spouse.

Avoid probate. A Trust is a separate entity that continues after the death of the creator. The trustee can assume management of the estate and distribute the assets of the trust to beneficiaries without having to go to court.

Avoid a conservatorship. If the Trust creator becomes disabled or incapacitated, the successor trustee can take over management of the Trust without going to court to appoint a conservator.

If you have been named as a trustee for someone’s living trust, you may be wondering exactly what your duties will entail. If you are just distributing trust assets to the beneficiaries, your job will be different than if you are administering an ongoing trust, where you will be making investment decisions, filing tax returns, transferring assets and other duties that will probably require you to seek the counsel of an estate and tax attorney.

As a trustee, you will need to stay in touch with the executor of the estate (unless, of course, that is you). Following the trust owner’s death, you will need to:

• Obtain certified copies of the death certificate
• File the will with the probate court
• Make death notifications to the state Department of Health and Social Security Administration
• Identify and notify the beneficiaries
• Take an inventory of the trust assets
• Obtain a Taxpayer Identification Number
• Have the property transferred into your name as trustee
• Establish a system for keeping the trust records
• Obtain an appraisal for the assets of the trust
• Pay any outstanding debts

If the trust does not identify beneficiaries by name, but instead refers to them as “issue” or “children”, you should consult with a Florida estate planning attorney to find out exactly how Florida defines those terms.

If your phone contact list includes both a pediatrician and a gerontologist, welcome to the sandwich generation, that growing demographic segment of the population who are taking care of their parents and their kids at the same time.

Besides healthcare, many of us are also taking on more responsibility for helping older parents manage their finances.  If you are currently tasked with that responsibility – or will be at some point – here are some things to put on your checklist:

Prescription drug coverage. Is the Medicare drug program your parents chose a year or two ago still the right one for them?  Most seniors find the plethora of choices confusing, so defer making any changes they might need.  Mark Nov. 15 on your calendar, which is the start date for Medicare’s open enrollment program (it ends on Dec. 31).  Visit www.medicare.gov and use the online prescription drug plan finder to find the best plan for them.

Retirement account distributions. If you have parents over the age of 70 ½, they must take the required minimum distributions from their qualified retirement accounts by the end of each year.  If they don’t, whatever is left over on Dec. 31 is subject to a 50 percent penalty.  You can set up automatic deductions to solve this problem as well.

Estate planning.  If they have not done so already, your parents need to visit with an estate planning attorney.  Estate planning laws change constantly, so even if they do have an estate plan in place but haven’t updated it in awhile, they need to do so.

For more information on retirement and estate planning, contact our Jacksonville Florida estate planning law firm.

If you are the parents of a special needs child – and with autism spectrum disorder (ASD) now affecting 1 in 91 American children, that number is growing – then the need to plan for how your child’s needs will be met after you are no longer available to care for them is critical.

A special needs trust – also known as a supplemental needs trust – can be set up to allow a disabled beneficiary to receive assets without losing their eligibility for government programs or benefits.

Currently, federal law prohibits disabled individuals from receiving needs-based assistance if they receive an inheritance of more than $2,000. However, by establishing a special needs trust, assets can be passed on to care for a disabled individual without that person being considered an “owner” of the assets, which would disqualify them for important programs like Medicaid.

In fact, special needs trusts are not for the basic support of the disabled individual, but are for important supplemental support like education, counseling, extra medical care beyond the basics and even recreation. These trusts supplement the basic necessities, much as you do as a parent, to improve the quality of life and ensure the continued comfort of a loved one with special needs.

If you are the parent or guardian of someone with special needs and want to know more about special needs trusts, contact our Jacksonville Florida estate planning law firm.

If there were ever a more compelling reason to see your estate planning attorney to update your estate plan, it would be hard to find, according to a recent column at Forbes.com that says couples who use A-B Trusts could be leaving a surviving spouse with no assets if one of them dies in 2010, the year (thus far) of no estate taxes.

The A-B trust is a common estate planning tool for married couples that splits a trust into two components – the “A” trust is assigned to the first spouse to die, and is funded with the greatest value of assets, which will suffer no federal estate tax on the first to die. The “B” trust is for the surviving spouse, and is funded with the remainder of the couple’s assets.
Upon the death of the surviving spouse, the assets in the “A” Trust go to the heirs with no estate taxes due.

However, according to the Forbes.com column, if one spouse dies in 2010 and the A-B Trust has been created using the traditional language -- "the largest taxable estate on which no federal estate tax is payable"—the “A” trust will contain all of the couple's assets and the survivor's trust will have no assets.

If you are concerned about how the evolving estate tax law could affect your estate this year or in the future, you should consult with an estate planning attorney.

If your phone contact list includes both a pediatrician and a gerontologist, welcome to the sandwich generation, that growing demographic segment of the population who are taking care of their parents and their kids at the same time.

Besides healthcare, many of us are also taking on more responsibility for helping older parents manage their finances. If you are currently tasked with that responsibility – or will be at some point – here are some things to put on your checklist:

Prescription drug coverage. Is the Medicare drug program your parents chose a year or two ago still the right one for them? Most seniors find the plethora of choices confusing, so defer making any changes they might need. Mark Nov. 15 on your calendar, which is the start date for Medicare’s open enrollment program (it ends on Dec. 31). Visit www.medicare.gov and use the online prescription drug plan finder to find the best plan for them.

Retirement account distributions. If you have parents over the age of 70 ½, they must take the required minimum distributions from their qualified retirement accounts by the end of each year. If they don’t, whatever is left over on Dec. 31 is subject to a 50 percent penalty. You can set up automatic deductions to solve this problem as well.

Estate planning. If they have not done so already, your parents need to visit with an estate planning attorney. Estate planning laws change constantly, so even if they do have an estate plan in place but haven’t updated it in awhile, they need to do so.

For more information on retirement and estate planning, contact our Jacksonville Florida estate planning law firm.

As stated in my last few blogs, there are certain things you should think about when designing a trust for a beneficiary. Also remember, this list takes a very conservative approach and can be modified according to specific state law. The list continues as follows:

7) Consider selecting a state to settle the trust or move the location of the trust to a jurisdiction with more debtor friendly laws to maximize the protection of the corpus from the claims of potential creditors of a beneficiary. Some states are much friendlier than others.

8) Avoid giving a beneficiary the authority to remove and replace any trustee because a court may view it as placing with the beneficiary ultimate control over the trust.

9) Give the trustee the authority to distribute income or principal to multiple current beneficiaries rather than a single current beneficiary. This can easily be done by including the children of the beneficiary you intend to be the main beneficiary.

10) Consider including provisions that might automatically eliminate or suspend a beneficiary’s interest in the trust or give an independent trustee the authority to eliminate or suspend a beneficiary’s interest in the trust. This is commonly done with divorce provisions to cut-off an in-law upon divorce.

11) Consider limiting the beneficiary’s access to all or a portion of the trust for the term of the trust or a lesser period. You may want to limit distributions to income until age 65 to allow the principal to be there for your beneficiary’s retirement.

12) Consider giving an independent trustee the power to distribute the assets of the trust to the trustee of another trust.

And a bonus consideration: Do not permit a beneficiary to assign any part of all of his or her beneficial interest in a trust to anyone, not even a limited class of individuals such as a beneficiary’s descendants.

To discuss your current estate plan, please consult with an estate planning attorney.

As I stated in my last blog, the ways you pass the assets on to your beneficiaries determines whether or not there is any asset protection for thos assets.  In the end, most clients want to make sure it is their family who enjoys the assets and no one else.  Below is the first 6 in a list of 12 things you should think about when designing your estate plan.  Remember, this is a very conservative list and dependent on various state laws.

1)  Do not appoint the beneficiary as a Trustee, or if the beneficiary serves as their own Trustee, vest the distribution authority solely in an independent Trustee.

2)  Make all interest in income and principal discretionary unless a mandatory income interest is required to qualify for a tax benefit.  The assets left to a surviving spouse, to qualify for estate tax deferral, must pay all the income to the surviving spouse.

3)  Provide that distributions of income and principal may only be made in an independent trustee's sole, absolute, uncontrolled, unfettered, unlimited and full discretion.

4) Do not give a beneficiary with a withdrawal right over trust assets.

5)  Draft the trust to continue for a beneficiary's life rather than providing for outright distributions or unfettered withdrawal rights.

6)  Do not give a beneficiary a testamentary general power of appointment unless it is required to qualify the trust for a tax benefit.

My next blog post will finish the list of things to think about when designing your estate plan.  To have your estate plan reviewed to ensure it is designed to meet your needs, please consult an estate planning attorney.

There many things to think about when designing your estate plan.  One very important thing to think about is how to leave assets to your beneficiaries after your death (and your spouse’s death if applicable).

Most older estate plans just pass the assets outright to the beneficiary.  The downside of that is that if the beneficiary is ever sued, divorced or has to go on government benefits, the assets are completely subject to be taken.  There is NO ASSET PROTECTION when you leave assets outright to a beneficiary.

The best way to leave assets to a beneficiary is through a trust.  By leaving assets in trust for the beneficiary, as long as the language is correct, the assets will only be available for the beneficiary’s benefit, not for the benefit of any creditor.

Over the next few blogs, I will lay out 12 steps to take in designing a trust share for a beneficiary.  These 12 steps will help better protect your beneficiary from any potential creditor attack in the future.  These 12 steps are very conservative in nature and there may be case law that is more favorable and lenient towards creditor protection.  However, for purposes of my blog, I want to take the most conservative approach to education.  Stay tuned for the rest of the week to see how to properly design your estate plan.

To learn more about designing your estate plan to best protect your beneficiaries, please consult an estate planning attorney.

What are the basic estate planning tools that you can use to protect your family – and your assets – no matter what age you are right now?

Will – if you die without a will or a living trust in place, your assets will be divided up according to state law.  And you might not like it.  Are you on a second marriage?  Just been through a divorce?  Without a will designating how your assets will be distributed, you will be leaving a mess for your heirs to clean up.

Financial Power of Attorney – this allows you to designate a responsible party to handle your financial affairs in case you become incapacitated.

Living Will – a living will or a healthcare power of attorney designates someone to make major healthcare and/or end-of-life decisions for you when you cannot, according to your wishes.

Beneficiary Forms – even if you name the beneficiaries of retirement accounts or life insurance policies in your will, if those names are not on the account or policy’s beneficiary form, they will not receive them.

Title Your Assets – if you have set up living trusts for your spouse or children, you must be sure to retitle the assets in the name of the trust or the living trusts are invalid.

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

A charitable trust is truly the gift that keeps giving since it allows you to generously donate assets to charity and provides you and your heirs with tax breaks.

Establishing a charitable trust is fairly easy.  First, the charity you choose must have tax-exempt status from the IRS.  With the help of an estate planning attorney, you can then set up the trust and transfer the assets you wish to donate to that trust.  The charity serves as the trustee, and manages or invests the property to provide income for you or your beneficiaries.  Then, upon your death, the property reverts to the charity.

Usually, the income you receive from a charitable trust is through a fixed annuity or a percentage of the trust assets (at least 5% of the value of the trust per IRS rules).

By setting up a charitable trust, you receive significant tax advantages.  You can take an income tax deduction over five years for the entire value of your gift, minus the income you are likely to receive from it.

If you donate property, stocks or bonds, the charity will sell these to acquire property that will produce income for you – and since charities are not subject to pay capital gains tax, all the proceeds remain in the trust.

When you die and the trust property reverts to the charity, it is no longer a part of your estate, so it is exempt from any federal estate tax.

For more information on establishing a charitable trust, consult a Florida estate and tax planning attorney.

If you’re like most people, you may believe that your estate planning duties are done once you make a will.  Wrong.  There are several important things a will can do for you, like distribute family heirlooms, but there are just as many – if not more – important things it cannot do:

Avoid probate – if you leave property to someone through your will, it will not be passed on to them except through probate court proceedings, which can take a year or more.

Reduce estate taxes – a will won’t help you reduce estate taxes; you will need to set up some kind of a trust to do that.

Provide care – if you wish to provide for someone with long-term care needs, a will cannot do this for you.

Distribute some types of property – a will cannot allow you to distribute property that you co-own with someone else or have transferred to a living trust, the proceeds of a life insurance policy, stocks or bonds held in transfer-on-death form, money in a payable-on-death account, or money in a pension plan, IRA, 401(k) or other investment account.

Provide for pets – pets cannot own property, so to provide for them properly after your death, you will need to designate a caretaker for your pet and leave appropriate pet care funds for them.

To learn more about the proper uses of wills and trusts, consult a Florida estate and tax planning attorney.

Most people think that to receive tax benefits from a charitable trust, they have to have large sums of money to donate and an army of tax lawyers to set up and administer the trust.  But with a pooled charitable trust, you can donate as little as $5,000 and receive tax benefits.

A pooled charitable trust is just what it sounds like – a trust set up by a charity or investment company that accepts donations from anyone, then pools the donations into one investment fund.  Dividends are paid to donors according to the fund’s earnings and the donor’s contribution.

Most pooled charitable trusts have minimum initial donation levels, but then allow donors to contribute subsequent amounts in as little as $1,000 increments.  You can make contributions via cash, stocks or bonds.

Each time you make a donation to the pooled charitable trust, you can take an income tax deduction.  If you donate stocks or bonds, you can convert those assets into income-generating vehicles without paying capital gains taxes.  If you owned the stocks or bonds for over a year, the charity doesn’t have to pay capital gains either.

Any payments you receive from the trust are considered regular income, but you can request that your earnings be retained until you reach a certain age.  Upon your death, the charity receives your donations outright, without probate.

If you’d like more information on pooled charitable trusts, consult a Florida estate and tax planning attorney.

My last blog began a series of questions you should ask yourself to see if your estate plan needs to be updated.  Again, if you answer “No” or “I don’t know” to any of the questions, please set up a consultation with us so that we may review your estate plan 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 families needs:

1. I am satisfied with the persons I named as guardians of my minor children in my current plan.
2. I am satisfied with the persons I named as executor or trustee in my current plan.
3. The persons I named as executor are either a Florida resident or a family member.
4. I am satisfied that my current plan sets up a contingent trust for my minor children.
5. I am aware of all future estate planning fees and expenses; including an understanding of those involved at the time of my death.
6. My children have met with my attorney and fully understand their roles and responsibilities upon my incapacity or death.
7. My Revocable Trust, if any, and Power of Attorneys specify an understandable test to determine my disability.
8. My Revocable Trust, if any, gives instructions for my care and the care of my loved ones if I become mentally disabled.
9. My Revocable Trust, if any, is fully funded so that my family can avoid the delays, publicity  and expenses of probate.
10. I and my spouse, if applicable, own everything jointly.
11. I have put my personal property into my Revocable Trust, if applicable.
12. I own property in another state which has already been dealt with in my estate plan.

If your estate plan needs updated, please conult with an estate planning attorney to set up a review of your current estate plan.

Does your estate plan need a tune up?  Although most Americans do not have an estate plan, those who do have an estate plan set up their estate plan, shove it in a file drawer in their homes and completely forget about it afterwards.  Below are a series of questions to quickly ask yourself to make sure that your estate plan still does what you originally wanted it to do.  If you answer “No” or “I don’t know” to any of the questions, please set up a consultation with us so that we may review your estate plan 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 families needs.

1. I have a current Health Care Power of Attorney that has the required HIPAA authorizations to permit my spouse, children and/or family to make emergency health care decisions for me in the event I am unable to do so.
2. I have a current Durable Power of Attorney that is less than four years old to permit my spouse or children to handle my financial affairs in the event I become disabled.
3. I am certain that my current estate plan will minimize possible federal estate taxes at my death, including taxes on my house, life insurance and IRAs.
4. I have taken steps to avoid possible will contests and disputes at my death.
5. I have taken steps to protect my children’s inheritance in the event my surviving spouse chooses to remarry.
6. I have recently checked the beneficiary designations of my retirement plans and life insurance policies, and I am confident that I have not listed my estate or any minor children as either primary or secondary beneficiaries.
7. I have a plan to provide creditor and lawsuit protection for assets passed to my surviving spouse.
8. My current plan provides creditor and lawsuit protection for my children’s’ inheritance.
9. My current plan addresses income tax planning.
10. I have a plant to protect my children’s inheritance from a divorcing spouse.

Again, if you answered "No" or "I don't know", please consult with an estate planning attorney to review your estate plan and ensure it still works for you and your family.

The federal estate tax has gained lots of attention in 2010 because it ceased to exist...at least until Congress reinstates it, which many believe will be the case.

For Florida residents with sizeable estates – in 2009, the estate tax threshold was $3.5 million – adding an AB provision to a living trust can provide substantial tax savings.  An AB trust ensures that both spouses can take advantage of the government’s “unified credit” – a credit that allows you to exempt $1 million during your lifetime to reduce or eliminate gift taxes or reduce estate taxes.

By establishing an AB trust, each spouse can take advantage of the unified credit – once when the first spouse dies, and again at the death of the second spouse.

When the first spouse dies, an AB trust creates two separate trusts.  The assets of the survivor are transferred to the A trust, and an amount up to the exemption limit of the deceased spouse’s assets goes to the B trust.  Each trust is taxable, and each can use the exemption.

The B trust is subject to estate taxes, but because of the unified credit, no taxes are owed.  The surviving spouse receives income from the B trust while maintaining control over the A trust.  Upon the death of the second spouse, the benefits from the B trust go to the spouses’ beneficiaries, usually the children.  Only the A trust is subject to estate taxes, since the B trust was taxed at the death of the first spouse.

Sound complicated?  It can be, which is why you should consult a Florida estate and tax planning attorney if you have a large estate and want to learn more about the benefits of establishing an AB trust.

Probate is a lot like trying to get to a destination going through a long construction zone, very frustrating.  An important goal in Florida estate planning is to spare your family the expense and hassle of a probate court proceeding.  Here are some options to avoid Florida probate:

Living trust – setting up a Florida living trust can ensure that all your assets will be passed on to whomever you designate without probate court proceedings.  This entails creating living trust documentation and assigning a successor trustee to transfer the assets to your beneficiaries after your death.  However, you must transfer property ownership to yourself first as the trustee of your trust to ensure the property will be controlled by the terms of the living trust.  An estate planning attorney can help you with this.

Joint tenancy – if you own property with a spouse or someone else, a “right of survivorship” provision will ensure that the property transfers to the surviving owner.  In Florida, each owner must own an equal share of the property.  For married couples, this is known as “tenancy by the entirety.”  The downside to joint tenancy is that it can really mess up estate tax planning (remember, the estate tax returns on January 1, 2011, if not before).

Transfer-on-death designations – in Florida, you can register brokerage accounts in “transfer-on-death” (TOD) form.  Bank accounts and CDs can be designated “payable-in-death” (POD).  For both, the beneficiary inherits immediately upon your death, but you control the funds until that time.  Florida does not have such provisions for real property, like homes or vehicles.  There is also a possibility that TOD and POD designations will not avoid probate in the future.  There is talk that the Florida lawmakers are contemplating making accounts with TOD and POD designations an asset subject to probate.

If you need information on how to avoid Florida probate, consult a Florida estate and tax planning attorney.

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.

Estate planning is such a broad term.   Estate planning includes wills, trusts, taxes, business succession, asset protection and many other documents and practice areas.  Estate planning also includes long-term care insurance and elder care.   It is all about planning for the future.   The time to plan for a nursing home placement or admission is not the first day of the admission.  Ideally, the best time to plan is when there is no pressure to find a facility, when the person is healthy and able to make an informed decision about long-term care, and when there are funds and insurance plans available to purchase to complete or put in place the planning process.   Douglas K. Gitter, J.D. of Northwestern Mutual will be making a presentation this Sunday, March 14, 2010 on the importance of Long Term Care insurance in estate and succession planning.  According to Gitter, in discussions with clients many of them were unfamiliar with the overall effect long term care can have on their assets.  Take Charge of Your Future is a detailed educational seminar, which illustrates the importance of long term care planning to ensure financial security.   Martin Goetz, CEO of River Garden will also be speaking about his top-rated, five star, long term care facility.

Please join us to learn more at the Brotherhood Sponsored Community Breakfast this Sunday from 10:00 am to noon.  There is a $5.00 per person charge with RSVP to TempleBrothersJax@yahoo.com or $6.00 at the door.    

This is a community event open to all interested in attending.  While Wood, Atter & Wolf are not sponsors or speakers at this event, Wood, Atter & Wolf supports and commends people and organizations promoting good estate planning as well as the proper and dedicated care of the elderly and those in need of long-term nursing home care.

To learn more about Doug and his practice, please visit his website at http://douggitter.nmfn.com/.

Many people prefer a relative to be a trustee of their trusts.  However, in some situations, hiring an independent corporate trustee may be the smarter decision.

A corporate trustee brings impartiality, experience and expertise at a time that is often filled with emotion.  A corporate trustee will remain neutral in the face of family disagreements.  A lot of attorneys frequently recommend hiring corporate trustees, rather than naming family members for the following reasons:

• Corporate trustees have record keeping systems in place to guarantee timely, accurate accounting of principal and income as well as production of regular statements.
• Past history with family members can impair decision making.  A corporate trustee can ensure decisions are made on facts and not feelings.
• Privacy is a fiduciary duty of the corporate trustee.
• In matters pertaining to your legacy and your beneficiary’s inheritance, it is important to have someone with experience at the helm.
• Corporate trustees are consistently available, devoting full attention and resources to achieving the results required of a trustee.
• Substantial capital surplus and insurance coverage are carried by reputable corporate trustees for liability purposes.
• Perpetual existence assures a capable, professional organization is ready to complete the trust tasks required for decades going forward.
• There are strict compliance standards set by State and/or Federal regulatory agencies, as well as audits conducted by an independent auditor at least annually.
• Corporate trustees are required by law to faithfully perform all its duties and follow the trust document terms to the letter.
• Specialization in trust administration provides services in an efficient, cost-effective manner for reasonable fees.

If you’d like to discuss the value of a corporate trustee further, please contact an estate planning attorney for further information.

Ever wonder what happens to your pets after you pass away?  Most pet owners consider their pets as a member of their family.  It, however, is not uncommon for pets to be left behind as their owners pass away.  What can you do to ensure that your pet is taken care of upon your passing?  Estate planning for pets became more popular in the 90s and pet trusts are now legal in most states.

Legally, your pet is deemed to be tangible personal property that would pass to your heirs or beneficiaries by law.  With a will or a trust, you can control who will get your pets and how they should be taken care of.

Typically a pet trust sets aside a certain amount of money that is dedicated to caring for the pets you owned upon your death.  Once the last of the pets pass, any remaining funds pass to your beneficiaries.  There are decisions to be made though in setting up the pet trust.

The most important decision is who will serve as the trustee of the trust and caretaker of the pets.  Friends and family are usually thought of first.  Although they may enjoy playing with your pets, the enjoyment may diminish quickly.  A good way to test whether or not they will be a good caretaker is to have them pet-sit for several days. 

Another decision to be made is how much, if any, to compensate the caretaker for their services.  If you compensate them too little, they may not adequately care for your pets.  If you compensate them too much, they may keep a suffering pet alive too long.  There is a story about a caretaker who found a new black dog whenever the old black dog passed away to ensure they continued to receive compensation.  You want to avoid this situation.  There are always non-profit organizations who will gladly care for your pet under a pet trust.

If you would like to discuss the possibilities of a pet trust further, please contact an estate planning attorney to draft the legal documents necessary to ensure your pets are taken care of upon your passing.