Estate Planning:
There are a number of ways to save money for a family’s children that will release the money to them at an early age in their life.
The two most popular options are either through the Uniform Gift to Minors Act (UGMA) or through the Uniform Transfer to Minors Act (UTMA). Both of these were created with a similar goal, to save money for children to use when they become legal adults. While the acts are similar, both have specific nuances that must be taken into account.
Last week, The Supreme Court unanimously ruled that the funds contained in an IRA are not protected from creditors after bankruptcy.
You may need to reevaluate how your estate plan deals with your IRA. If your beneficiaries live in Florida, this may not be a concern because the Florida Legislature has an IRA exemption statute which includes inherited IRAs. As it is difficult to predict where your beneficiaries will live at the time of your death, you may not be able to count on the Florida statutes to protect your beneficiaries.
We have recommended to make an asset protection trust the beneficiary of your trust to protect from the retirement funds from the loss that could be associated with creditors of our client’s beneficiaries (typically their spouse or children). Many have not seen the need for this and as a result, there may be many families using traditional beneficiary designations which place their retirement funds at risk.
In today’s world, it is common to see blended families full of biological and stepchildren. It is crucial for parents, who wish to leave an inheritance to their stepchildren, make a will or trust because stepchildren do not have the same inheritance rights as biological children.
Florida’s probate laws do not treat stepchildren as a person’s legal heir, which means stepchildren do not have an automatic right to inherit from their stepparents. Remember that your children may be the stepchildren of your spouse, and depending on who lives longer may be unintentionally disinherited.
This does not mean that stepchildren cannot be included in the will. To ensure a step-child can inherit from the estate, he or she must be specifically named as a beneficiary.
Probate is the system the court uses to administer a person’s estate, either through a will or through intestate succession. Clients often ask for ways to avoid the probate process, such as adding a child to their bank account or adding the child’s name to the deed.
Adding a Child to a Bank Account
In most cases, adding a child to your bank account is not a good idea. A parent who adds a child to his or her bank account, may interfere with the will, and could put the account’s funds at risk.
There are many situations where a parent may wish to disinherit a child, such as when the parent has been estranged from the child for years. Clients often wonder if they are obligated to leave assets to their children or if they are allowed to disinherit them completely.
Florida’s constitution protects the rights of minor children through homestead laws, which prohibit the head of the household from leaving his or her residence to anyone other than a spouse or minor child. Under this law, a surviving spouse is given use of the property for the remainder of his or her life, this is known legally as a life estate, and then the home passes to the minor children. Recently a surviving spouse has been given the option of taking 50% of the interest in the home or the life estate. The homestead law only applies to children who were minors at the time of the death.
If a person dies without a will, any property that person owned during his or her life will pass under Florida’s intestate succession law. Intestate succession is a law that regulates the decedent’s estate for the remaining heirs. The part of the intestate estate that does not pass to the surviving spouse, or the entire estate if there is no surviving spouse, is given to the children of the decedent. This means that without a will, a person’s children will receive part of their estate without the decedent’s consent.
New Florida Statutes §732.806, which is effective October 1, 2013, makes an improper gift to a lawyer in a will or other estate instrument void.
The new statutory provision is here: http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0732/Sections/0732.806.html
The new Florida statute in effect tracks 4-1.8(c), Rules Regulating The Florida Bar and incorporates it into the probate code, and makes a violation of the statute a basis for voiding any part of a will, trust or other written instrument which makes an improper client gift to the drafting lawyer or a person related to the lawyer. The statute also provides exceptions to this prohibition, including gifts where the lawyer or other person is related to the person making the gift as well as title to property acquired for value from a person who receives the property which violated the statute.
Life is full of instances where taking a decision seems to be extremely challenging. The task is even more difficult if the decision concerns the medical treatment for a loved one that is incapable of deciding for him or her self. Deciding health care matters for patients that cannot do so is emotionally wrenching for families and represents an ethical dilemma for physicians. This difficult scenario is better illustrated with the Terri Schiavo case.
Terry Schiavo Sad Case.
Ms. Schiavo was sustained by artificial hydration and nutrition through a feeding tube for 15 years after suffering a cardiac arrest, triggered by extreme hypokalemia caused by an eating disorder. Ms. Schiavo’s husband, Michael Schiavo, faced a public legal struggle with his wife’s parents and siblings about whether Ms. Schiavo’s life-sustaining medical treatment should be continued or stopped. Mr. Schiavo and the two neurologists that he selected to testify in court stood for the position that Ms. Schiavo’s condition met the criteria for a persistent vegetative state and believed that her treatment should be stopped. Ms. Schiavo’s parents, siblings and the neurologists testifying in court for Ms. Schiavo’s estate stood for the position that Ms. Schiavo’s condition could improve in the future and believed that treatment should be continued.
In Florida, a Durable Power of Attorney (DPA) is a document that allows you to designate someone to act on your behalf if you ever become incapacitated. The person creating the DPA is known as the “principal” and the person receiving authority to act on your behalf is known as the “agent” or “attorney-in-fact.” Depending on the DPA, your agent will have authority to handle your financial transactions or to oversee your medical care.
Steps to Create a DPA
DPA for your finances: With this type of durable power of attorney, you can give a trusted person as much authority over your finances as you like. Your agent can handle simple tasks like sorting through your mail, or more complicated ones like watching over your investments. To create a Financial DPA follow the following steps:
Forbes has reported that nearly 2.5 million Americans die each year without a will. While many states have default rules that define who will receive your assets, sometimes they do not cover your specific circumstances. Richard Blum, a Holocaust survivor and New York real estate developer appears to be one such example.
If you die without a will or living trust (“intestate”), state law will determine how your assets which are subject to probate are distributed, and the result may not be what you would want.
In Florida this generally means your probate assets will go to your spouse, then your children, then to parents, then to siblings and so on. While this may be fine for the traditional family, we see more families with children from outside the current marriage or relationships where they may not be a relationship that is legally recognized by the state.
Probate can have the reputation of being a nightmare, and many hate the idea of going through this process. If the idea of transferring your assets through probate daunts you, then you will be happy to know that living trusts can avoid probate. The probate process is usually more expensive and time consuming than having a living trust set up to transfer assets. Moreover, a living trust has many more advantages than skipping probate. An estate-planning attorney can discuss with you the specific advantages that a living trust will bring to your estate plan and can assist you with setting up one to effectively address your needs and the needs of your beneficiaries. Meanwhile, here are 6 general benefits of using a living trust in your estate plan.
BENEFIT #1: A living trust can protect the assets in the trust for certain beneficiaries.
Sometimes, the intended beneficiaries are not capable to handle their full inheritance. For example, many states do not allow minors to own property. And even if a child was old enough to receive property legally, a full inheritance can detriment the child by tempting him to quit school or start an early retirement. Moreover, there are those beneficiaries who will spend all their inheritance at their first opportunity. A living trust can prevent any of these scenarios by allowing you to appoint a trustee to keep your assets for the benefit of your beneficiaries. The trustee would invest the assets in your trust for your beneficiaries’ benefit until they are capable of handling their inheritance.
Florida Estate Planning Lawyer Blog