News and Important information for Seniors and their Families.
In this issue, we discuss the following topics.
- How to Bulletproof your estate plan
Elder Law Update 4th Quarter 2015
The Doctrine of Dependent Relative Revocation May Just Save your Inheritance
The Florida District Court of Appeals recently applied a little known doctrine called the Doctrine of Dependent Relative Revocation in the case of In Re Estate of Murphy to save an estate from passing through intestacy.
The owner of the estate was Virginia Murphy. Mrs. Murphy died in 2006 and was predeceased by her parents and husband. She also died without any siblings or children. In the years before she passed, Mrs. Murphy executed a number of wills that were prepared by her longtime attorney Jack S. Carney, including the last will she executed in 1994. The 1994 will named Mr. Carey as personal representative of Mrs. Murphy’s estate; and it purported to leave the bulk of that estate to Mr. Carey, Gloria DuBois (Mr. Carey’s legal assistant), and George Tornwall (Mrs. Murphy’s accountant, who died the year before Mrs. Murphy passed away).
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What your Financial Planner needs to know about an IPUG™ Trust
Most financial planners are unfamiliar with some of the modern twists available with irrevocable trusts. They tend to be familiar with the older style of irrevocable trust that can pose several problems for those who use them. These problems include:
- Loss of control over the management of the assets;
- A separate EIN number for tax reporting purposes;
- A larger tax bills because of the way traditional irrevocable trusts are taxed;
- A loss of the step up in basis available to assets owned by an individual upon the death of the settlor; and
- The inability to change provisions or beneficiaries in the future.
The irrevocable trust, you have chosen does not suffer from any of the traditional problems discussed above. It is an Irrevocable Pure Grantor trust (IPUG™). With the iPug™ many of the advantages that are traditionally only found with a revocable trust can be provided in an irrevocable trust. Some may ask, why should we use an irrevocable trust instead of a revocable trust. Here is a summary of the reasons that the iPug™ trust is superior to the revocable trust and does not pose the problems that a traditional irrevocable trust presents:
Does Florida law protect IRAs and SEP-IRAs from Creditors?
NOTE: The US Supreme Court ruled that inherited IRAs are not protected from creditors. Florida has statutes that appear to offer protections for residents of Florida. It is best to plan for no creditor protection for inherited IRAs at this time.
At the Law Office of David M. Goldman, one of our biggest goals is to protect our client’s assets from creditors. One of the most important assets a person can have is a retirement account. These accounts are often targeted by creditors, but the good news is many retirement accounts are protected from creditors through federal and state laws.
So what type of retirement accounts are protected from creditors? The most common form of protected retirement accounts are known as “qualified retirement plans,” and are protected under Federal ERISA law. ERISA protected accounts include traditional pension plans such as 401(k) and 403(b) plans, and these plans are usually exempt from civil court judgments and from bankruptcy. Other protected accounts include Rollover IRA accounts, which are assets, formerly in a 401(k) account, from a previous employer that are “rolled over” into an IRA. This means that these retirement accounts are usually protected no matter what state they were established in.
Who Bears the Cost of Guardianship in Florida?
Petitioning a Court to become the guardian of an adult is, unfortunately, not a cheap process. Many clients are very shocked to find out just how expensive becoming the guardian of a loved one can be. Not only are their court costs that have to be paid, but there are attorney and doctor fees as well.
First of all, you must file two separate petitions with the court. Each of these petitions has its own filing fee, which is not small. For example, in Duval County, Florida, each filing fee can be $400.00. And the fees do not stop there. A 3 person examining committee is appointed by the court as well as an attorney to present the potential ward. Each examining committee member has their own individual fee, which can range anywhere from $175.00 to $250.00 each. The court appointed attorney must also get paid for their time.
The law of charitable pledges
One issue that occurs in estate planning is whether or not a charitable pledge can be enforced on a person’s estate after death. Wealthy individuals often make pledges to their favorite charitable organizations during their lifetime, only to die before fulfilling the pledge. Executors are then placed in the difficult situation of balancing its duty to ensure the estates assets for the decedents heirs and to pay the money owed by the estate to the charitable organization. If a court rules the pledge is enforceable, the pledge must be paid out of the estate before the rest of the estate’s assets are distributed to the beneficiaries.
Courts will often find a charitable pledge enforceable when these situations occur:
The pledge is an offer to contract that becomes binding when work obligated by the pledge has begun, or the charity relying on the pledge has otherwise incurred liability.
Donor’s pledge has induced other pledges
The charity’s acceptance of the pledge imparts a promise to apply the funds according to the donor’s wishes, and his pledge is supported by that promise.
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How to add a second member to a LLC in Florida
Limiting the ability for creditors to charging lien to the owner of a Florida LLC is a big concern for many residents. At least two members are required to limit a creditor’s ability to a lien, and adding another member to an LLC can be a tricky process.
In Olmstead vs. Federal Trade Commission, the Supreme Court decided the issue of whether a court could order a judgment-debtor to surrender all “right, title, and interest in the debtor’s single-member limited liability company to satisfy a judgment. The Court ruled courts were allowed to do this and reasoned, “that there is no reasonable basis for inferring that the provision authorizing the use of charging orders under section 608.433(4) establishes the sole remedy for a judgment creditor against a judgment debtor’s interest in single member LLC. This case, and other recent bankruptcy cases, have made it clear that a single member LLC is not as safe from creditors as once believed. The best solution to this issue of potential liability is to form a multiple member LLC.
Generally, there are two ways to add another member to an LLC. The LLC owner can allow a third party to invest money in the LLC in exchange for a minority interest. There is no limitation regarding who can serve as the third party, which means a family member or even a spouse can be a third party. What is important is that the share of the LLC given in consideration for the investment reflects a fair value for what is given. The purchase price must be at or above fair market value.
THE INALIENABLE RIGHT TO STAND YOUR GROUND
Joshua Prince and Allen Thompson have written a law review article which was just published on The Inalienable Right to Stand Your Ground that was published in the St Thomas Law Review journal.
Many of our clients seek to protect their firearms by suing Gun Trusts or NFA Trusts, This article seeks to explore what rights we have to firearms and when our rights to use them should be protected.
How is Someone Deemed Incapacitated in Florida?
Florida Statute 744.331 outlines the legal process that must be followed in order to have an adult deemed incapacitated in Florida. Per the Florida Statute, the process begins when a concerned family member, friend, or other interested party files two separate petitions with a Florida Court. One petition is the Petition to Determine Incapacity and the second is the Petition for Appointment of Guardianship. Both of these petitions are then served upon the alleged incapacitated person as well as read to the alleged incapacitated person by a court appointed attorney appointed to look after the best interests of the alleged incapacitated person. The court appointed attorney must be part of the court’s attorney registry or belong to the office of criminal conflict and civil regional counsel. However, the alleged incapacitated person can always substitute their own personal attorney if they choose. The alleged incapacity person’s next of kin must also be notified of the Petition to Determine Incapacity and the Petition for Appointment of a Guardian.
After an attorney has been appointed to represent the alleged incapacitated person, a three (3) person examining committee is also appointed. The examining committee is comprised of 3 persons from multiple different backgrounds including but not limited to psychologists, physicians, nurse practitioners and social workers. Their role is to examine the alleged incapacitated person and prepare and file a report with the court that complies with Florida Statute 744.331(f). Per this statute, the report must include a mental health and physical examination as well as a functional assessment. More specifically, Florida Statute 744.331(f) requires each report to contain the following:
When is a Guardianship needed even with a Power of Attorney in Place?
It is a very common practice as people age for them to visit an attorney for estate planning and execution of a Power of Attorney in order for safeguards to be put in place and to select a trusted family member to manage their assets, should they ever become unable to do so themselves. Having a Power of Attorney in place should prevent the necessity of a guardianship from being needed, but unfortunately a Power of Attorney does not always prevent the need for a guardianship and this is why:
When a Power of Attorney is in place and the incapacitated person is being cooperative with the assistance he or she is receiving from their designated Power of Attorney and other family members, and as long as the designated Power of Attorney is only acting in the best interest of the incapacitated person, a guardianship should not be needed. However, if the incapacitated person is not being cooperative and is wasting his or her property by either giving it away, making bad purchase decisions or what have you, then the Power of Attorney does not give the authority necessary to limit the incapacitated person’s access to their property. Therefore, a guardianship would be needed in order to remove the incapacitated person’s right to manage their property.