Florida Probate Litigation Lawyer Blog

Strictly Adhering to the Terms of an Estate Planning Document

Mon, 07 May 2012 09:00:06 -0500

Once again a recent court case reminds us how important it is to have up-to-date and very clear estate planning documents. A case out of Broward County could have happened anywhere in Florida. The Broward County Court decided a case wherein a lady created a trust. Pursuant to the terms of the trust if the settlor wanted to change or revoke the trust after she had been adjudicated incapacitated she would either need to be restored by the court or provide letters from two “licensed physicians” indicating that she was competent. As chance would have it, the settlor was later adjudicated incompetent due to her deteriorating mental health state. However she then wanted to amend her trust to change the amount the beneficiaries would receive under the trust. She obtained a letter of capacity from a licensed physician who had met with her many times. She obtained a second letter from a nursing home administrator with expert experience and medical schooling-but without a physician’s license.

The court would not allow the amendment. The letter from the nursing home administrator was not good enough. The trust unambiguously stated what the requirements are for allowing her to amend after incapacity. It required two letters from “licensed physicians”. The court refused to change what was clearly required in the instrument. She did not meet her own requirements to restore capacity and therefore the court did not uphold the amendment. Her ability to amend her own trust would have been different if she had used different language. It is important when creating estate instruments to use language that will clearly express the goals you wish to achieve. If you need help creating or updating estate documents please feel free to contact the experienced attorneys at Chepenik Trushin to help. If you are living in the West Palm Beach, Broward, Miami-Dade area you can reach us at 305.981.8889 or 866.626.9898.

Resources:

Jervis v. Tucker, 4th DCA (2012)

Lottery Winners and the IRS

Mon, 30 Apr 2012 09:00:05 -0500

As Florida lottery ticket sales increase so do the dreams of winning. Scratch-off ticket sales for the week ending March 4, 2012 in Florida, exceeded $60 million, the highest level of sales achieved since the Florida Lottery launched its first ticket in 1988. Some winners plan ahead by attempting to minimize the taxes they will have to pay if they make gifts to family members from lottery proceeds.

Lottery winners may form an entity owned by multiple family members, allowing those family members to share directly in the lottery winnings. Lottery proceeds can be paid directly to the entity. This is all fine if there was in fact a real and binding arrangement to share the proceeds. However, if there was not, the IRS considers this a gift and will impose a tax in the value of the proceeds that the family member receives as a result of the winnings.

Family members are obligated to pay gift taxes depending if the family agreements were in fact pre-existing arrangements or are only a product of post-lottery planning. Some have criticized these arrangements saying there is a "lottery winnings" exception to federal gift taxes that gives a free pass to the sharing of the winnings among family members.
A recent Tax Court case warns that there is no such lottery exception and that the IRS will scrutinize such lottery sharing arrangements and asserts gift taxes when appropriate.

Retired? How you can use a LLC and FLP in your Estate Plan

Thu, 01 Mar 2012 14:32:04 -0500

Florida is famous for its unique attributes. The state is known for having plenty of sunshine, ocean breezes and its “snowbirds”, or its senior citizen residents who return to Florida every winter to take advantage of all the Sunshine State has to offer. Florida has retained the highest percentage of senior residents in the country, with 17.3 percent of citizens older than age 65 in 2010. From 1990 to 2000, Palm Beach County's 65-plus population grew 25 percent while Broward County saw a 1.4 percent increase in its senior population. Miami-Dade County saw a 17 percent increase in 65-and-older residents in the past 10 years. And while some Broward and Palm Beach cities now have fewer senior residents than before, many still retain vibrant retirement communities, which boost their 65-plus-population percentage high above the 13 percent national average. In Tamarac, where 38 percent of the population was 65 or older in 2000, seniors continued to make up 28 percent of the population in 2010. In Palm Beach County, seniors made up well over 50 percent of the population in the small communities of Briny Breezes, South Palm Beach and Highland Beach.

Senior citizens have their own unique needs when it comes to financial planning and protection of assets. Every senior should aim to utilize the variety of planning devices are available that will allow them to save taxes and protect assets. These devices include trusts, family limited partnerships (FLPs), and limited liability companies (LLCs).

Some concerns senior citizens have are the same concerns as the general population. For example, they, like others, want to save on taxes. They want to pay the IRS the least amount of federal income tax possible. If they decide to give gifts, they want to minimize the transfer taxes involved. The elderly, like others, want to protect their assets from creditors. If they are involved in a business, they may want to shield themselves from the effects of judgments against the business.

However, some concerns are unique to seniors. For example some elderly individuals may face nursing home care and may worry how their Medicaid eligibility will be affected. The elderly may also be concerned about the probate process and may want to control the process to reduce the cost and publicity involved.

Recently, family limited partnerships (FLPs) and limited liability corporations (LLCs) have emerged as financial planning techniques people can use to protect assets from creditors, save taxes, and maintain control over their affairs. Family Limited Partnerships (commonly called FLPs) can facilitate moving wealth from one generation to another. Partners of an FLP are either General Partners (GP) or Limited Partners (LP). General Partners have the responsibility for managing the FLP and its assets. Limited Partners generally have just an economic interest in the FLP. Limited Partners have no ability to control, direct, or otherwise influence the operations of the FLP. They can neither buy additional assets, nor sell existing assets, and they cannot act on the Partnership's behalf. So why would setting up an FLP ever benefit a senior citizen who wishes to transfer money to a family member? First, FLPs allow one family member, typically the GP, to move assets to other family members (often children who are LPs), while still retaining control over the assets. Because the LPs have no rights of control, they cannot liquidate their partnership interest. The General Partner decides the timing and amounts of distributions. That is, a distribution cannot be made to one partner (GP or LP) unless all partners receive their pro rata portion of any disbursements. Secondly, when calculating the fair market value of a transfer for tax purposes, the transferred money is typically valued less than if the money transfer had been in cash. The interest in a FLP is not liquid and therefore the interest holder may not receive a distribution until sometime in the near (or distant) future. Thus, the fair market value for transfer tax purposes is usually less than the interest transferred.

Estate Planning with Artwork

Thu, 16 Feb 2012 12:57:17 -0500

Miami-Dade, Broward and West Palm Beach counties are home to some of the finest art in the country. Alongside the many fine art galleries located in South Florida there are private art collectors and individuals who own valuable and sometimes extensive collections. These collections make up part of their estate and careful consideration should be given as to the distribution of these pieces. An experienced estate planner can help you decide when and to whom the art should be gifted.

Often art collectors wish to gift art to their children or members of their family. Art collectors should consider several factors when deciding to do this. The first consideration is that a 28% income tax rate is locked in for the children who receive the art and there are significant expenses for appraisals and the risk of a gift tax audit. Also the giver should consider if the art is something that the children are even interested in receiving. Children’s tastes may be different than the parents, and the children might not appreciate the gift as much as the parents hope. Also, if grandchildren live in the house, there may be a risk of damage to the art!

Sometimes the best and simplest plans when dealing with fine art in an estate is to consider giving the art to public charity. Generally speaking, the art owner gets an income tax deduction for the full value of the art, without ever having to recognize the gain. There are 4 major issues:

A Cruise Ship Accident and Death at Sea

Thu, 26 Jan 2012 17:39:39 -0500

Florida Statute 731.103(3) creates a presumption of death if a person is missing for five years. Once this happens, the person’s estate can be probated and their assets can be distributed. However one does not always have to wait for five years to pass. With enough circumstantial evidence, a person can be presumed dead before the five years is up. In an interesting Florida case involving a West Palm Beach family, the West Palm Beach Court of Appeals dealt directly with this issue.

In the mid 1990’s a wife attempted to have the court declare her husband deceased before he was missing for five years. The lower courts said that the courts could not do so until five years had passed. On appeal the court found that the wife had presented enough circumstantial evidence to allow the court to declare the husband deceased and allow for probate of his assets.

Her husband had been a crew-member of the cruise ship, Club Royale. As Hurricane Erin approached on August 2, 1995, the captain of the ship took it out of port and tried to ride the hurricane out in the open sea off the coast of Cape Canaveral. In the hurricane, the ship capsized and sank. The United States Coast Guard conducted an extensive search by aircraft and surface vessels to search for survivors for four days. It combed over 41,000 nautical miles of open-ocean and found eight crewmen alive on two separate life rafts. It recovered the body of a ninth crew-member on a third raft. Eventually the Coast Guard located 27 of the 30 life rafts from the ship. It found no trace of the husband or the Captain of the ship.

Estate Planning for Same Sex Couples

Mon, 09 Jan 2012 16:02:32 -0500

For same sex couples, having effective estate planning documents and correctly titled property is very important. Without documents expressing the wishes of the couple, there may be undesirable results in the event of a death or serious illness of a partner. If the couple’s wills are not executed properly, upon one partner’s death, property may pass intestate to a relative rather than to the surviving partner. Without a health care surrogate document, if one partner is sick in a hospital the other partner may not have rights to make important decisions for them. The current laws of Florida do not recognize same sex marriages so same sex couples living in South Florida have little protection outside of legal documents that their property and assets will pass to the surviving partner in the event of a death. There are many same sex couples living in Miami Beach, Ft. Lauderdale, Wilton Manors and other South Florida communities who can benefit from a comprehensive estate plan. It is important that same sex couples seek out the assistance of an experienced attorney to make sure their deeds, wills, trusts and powers of attorney are airtight and will carry out each person’s wishes in the event of death or serious illness. In this evolving area of law, same sex couples should have peace of mind that their post death wishes are secure.

An important step for same sex couples to take is to make sure their property is titled properly. Couples can hold property as joint tenants with rights of survivorship. This allows the property to pass to the surviving partner without the property having to go through the probate process. A same sex couple might believe their properties are titled correctly, but unfortunately sometimes deeds are titled incorrectly by mistake. If a deed is incorrect the property may be held only as tenants in common, meaning the property would not pass automatically upon death, but it would be subject to probate.

Happy Holidays from Chepenik Trushin

Fri, 23 Dec 2011 10:43:57 -0500

To all of our colleagues, business associates, and previous, current and perhaps future clients, we extend our warmest holidays wishes to you and your family and we hope that you will enjoy special time with family and friends this holiday season.

First are foremost, we would like to thank all of you a productive and prosperous year at Chepenik Trushin. As our first full year in existence came to a close, we could not be more pleased with the progress this firm has made. The year 2011 brought about great changes for Chepenik Trushin, including an expansion into a penthouse suite at the Wells Fargo Tower on 12550 Biscayne Boulevard, and the addition of two new attorneys to our team, Aaron D. Millman and Joshua Levine.

Be sure to explore our recently updated website. And again, we hope that you will enjoy this special time with family and friends, reflecting on the year gone and looking forward to what comes in 2012.

Happy Holidays from all of us at Chepenik Trushin.

Lost or Destroyed Wills

Fri, 23 Dec 2011 10:40:22 -0500

The situation may arise where a person who had a will prepared dies and then the will cannot be found. If a family member dies and you cannot find their will to admit to probate, the court will presume that your relative intend to destroy the will and that your family member wished for their estate to pass according to intestate laws. If you want to prove that there was indeed a will, you have to will have the burden to produce evidence that a will existed.

Anybody interested in the estate may establish the terms of a lost will and offer it to probate. An interested person generally means someone who may have been named in the decedent’s will or who would stand to inherit if no will is found or proved. This may include a brother of the decedent living in Miami-Dade County, a niece living in Broward County or even an old neighbor living in New York.

What Control Does a Personal Representative Have Over Assets Held in a Professional Association?

Mon, 19 Dec 2011 10:04:38 -0500

Many questions may arise when a person passes away and the person’s professional association holds some assets. The professional association may be a corporation, which is a separate legal entity from the person. In this case the personal representative will not have automatic entitlement to the business assets. This remains true even if the deceased person owns 100% of the corporation. For example if a person owns a successful corporation that operates throughout several South Florida counties and the owner passes away, his probate administration may be conducted in Broward County. The personal representative of the estate may wish to reach the corporation’s assets to satisfy the deceased person’s estate obligations. However, Florida courts have decided against letting a personal representative receive automatic control of the business or its assets.

Fees For Guardianship Services

Thu, 08 Dec 2011 14:05:06 -0500

Some residents of Miami-Dade or Broward County may currently serve as guardian for a ward or may become an appointed guardian in the future. A ward means a person for whom a guardian has been appointed. A person may need a guardian because they become incapacitated or because they are a minor. The responsibilities of a guardian will vary depending on the ward’s needs. A guardian is defined in the Florida Statutes Section 744.102 defines a guardian as a person who has been appointed by the court to act on behalf of a ward’s person or property, or both. A guardian for a ward can live close by or in a different location. For example, if a Miami-Dade County resident becomes incapacitated, their guardian may reside in the same county, in another county in Florida such as Palm Beach County, or even in another state.

Often after someone is appointed guardian they will have questions about their responsibilities and compensation. Florida Statute Section 744.108 specifically addresses the issue of fees for guardians. The statute allows for a reasonable fee for services rendered and reimbursement for costs incurred on behalf of the ward. The court will take into account different factors including the time and labor required, the difficulty of the questions involved, the fee customarily charged in the area for similar services, the amount of income earned by the estate, and the responsibilities and potential liabilities assumed by the guardian. The court will also consider the nature and length of the relationship with the incapacitated person, the experience, reputation, diligence, and the abilities of the person performing the service. Therefore it is highly important for a guardian to keep accurate records of costs associated with the guardianship responsibilities.

Trustee Duties

Tue, 15 Nov 2011 12:11:00 -0500

A trustee has many important duties. They have obligations to beneficiaries and to the trust. Their duties may be altered by the trust, by the creator of the trust or even by the beneficiaries. A trustee should be chosen carefully to ensure they can fulfill the purposes of the trust. According to the Florida Statutes section 736.0801, the trustee has the duty to administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the laws of Florida. A settlor (trust creator) may choose anyone they wish to serve as trustee. It could be a family member trustee located locally in Miami, Ft. Lauderdale, or West Palm Beach. A trustee could also be a corporate trustee located within Miami-Dade County, Broward County or somewhere else.

The trustee also has a duty of loyalty, required by the Florida Statutes section 736.0802. The trustee has to administer the trust solely in the interests of the beneficiaries. A conflict between the trustee’s fiduciary obligation to the beneficiary and the trustee’s own personal interests may make a transaction voidable by a beneficiary affected by a transaction. Some transactions which presume a conflict between a beneficiary and trustee involves situations when the transaction is entered into by the trustee with the trustee’s spouse, the trustee’s children, siblings, or parents.

For example, if a trustee sells $500,000 worth of trust assets to her husband at a lower price of $400,000 there is a potential for a conflict between the obligations the trustee owes to the beneficiary and the trustee’s own personal interests. The beneficiary has remedies available. However, if the transaction may have been authorized by the terms of the trust; approved by the court; or if the beneficiary does not commence a judicial proceeding in time, the beneficiary may loose the relief available to her. It is important that a beneficiary of a trust contact an attorney in this situation to see what relief is available to them. Even a transaction not concerning trust property may involve a conflict between personal and fiduciary interests if the transaction concerns an opportunity that properly belonging to the trust.

Who Needs a Durable Power of Attorney?

Thu, 10 Nov 2011 11:14:01 -0500

What if an accident or illness made it impossible to manage your financial affairs? Would your loved ones have to go to the Dade County or Broward County courthouse to get the authority to handle your affairs? No one likes to consider such grim possibilities, but the truth is that almost every family will eventually face this kind of difficulty. Durable powers of attorney can certainly make life easier for you and your family if times get tough.

Florida Statute Section 709 provides that a durable power of attorney is a written document that remains valid even if you should later become unable to make your own decisions. It is often chosen as a way to plan for those times when you are incapacitated. With a durable power of attorney, you are able to appoint a person or an agent to manage your financial affairs, make health care decisions, or conduct other business for you during your incapacitation. You can give your agent the power to do every act which may legally be done by you, or you can give them limited power, for example, to only sell property, pay bills or make investments.

Living Wills in Florida

Mon, 24 Oct 2011 13:05:42 -0500

The living will is an important estate planning tool. Because this form of “will” is used while an individual is still alive (but no longer able to make decisions) it is dubbed the “living will.” The purpose of a living will is to allow you to make decisions about life support and directs others to implement your desires in that regard. Doctors in all parts of Florida, including Miami-Dade County and Broward County are familiar with these documents. In some cases a living will may forbid the use of various kinds of burdensome medical treatment. A living will can be very specific or very general. More specific living wills may include information regarding an individual's desire for such services such as pain relief, antibiotics, hydration, feeding, and the use of ventilators or cardiopulmonary resuscitation. Living wills may need regular updating to ensure that the correct course of action can be chosen.

Living wills are needed because advances in medicine allow doctors to prolong and sustain life although the person will not recover from a persistent vegetative state. Some people would not desire to remain in that state while others would. The living will allows you to make the decision of whether life-prolonging medical or surgical procedures are to be continued, or withheld or withdrawn, as well as when artificial feeding and fluids are to be used or withheld. It allows you to express your wishes prior to being incapacitated. Your physicians or health care providers are directed by the living will to follow your instructions. You may change the living will prior to becoming incapacitated.

What is the proper venue for probate proceedings?

Wed, 24 Aug 2011 13:52:35 -0500

Various types of lawsuits have different requirements for venues. A venue deals with the locality of the lawsuit or where the lawsuit will be filed or commenced. Typically, the venue is a county or district and is chosen based on the subject matter of the case or the where the defendant resides. For instance, if there is a cause of action for a slip and fall occurring in Fort Lauderdale, Broward County, Florida will be the venue of the lawsuit.

In matters of probate administration, Florida Statute 733.101 lays out the possibilities for venues. It states that the venue shall be (a) in the county in this state where the decedent was domiciled. “Domicile” is defined in Florida Statute 731.201(13) as “a person’s usual place of dwelling and [domicile] shall be synonymous with residence.” Florida Statute 733.101 also gives two options if the decedent was not domiciled in Florida: a probate administration may commence in any county where the decedent’s property is located or if they have no property in Florida then in the county where any debtor of the decedent resides.

A short example can help explain these three paragraphs. James, John, and Chris were driving in a car on I-95 and get in a wreck. All three of them unfortunately pass away. James was a resident of Miami-Dade County and his domicile was there. John permanently lived in Georgia but had an apartment he rented out in Broward County as an investment. Chris lived in Michigan but bought and financed his Porsche through a dealership whose business operates through headquarters in Palm Beach County. James’ last will and testament will be admitted in Miami-Dade County since his domicile was in that county. John’s last will and testament will be admitted in Broward County if need be. Chris’ last will and testament will be admitted in Palm Beach County if need be.

Venue is important to understand because, according to Florida Statute 733.103(1), a will shall be ineffective until the will is admitted to probate in this state or in the state where the decedent was domiciled. The best way to ensure that the probate administration process is handled correctly is to consult an experienced probate attorney.

If you or someone you know lives in the West Palm, Fort Lauderdale, or Miami-Dade area and need help opening an estate or creating or amending an estate plan, the experienced attorneys at Chepenik & Trushin will help with these estate planning needs. Please feel free to contact us for an initial consultation.

Non-judicial Settlement Agreements for Trust Disputes in Florida

Wed, 13 Jul 2011 11:25:03 -0500

No matter how good a person’s intention may have been in creating a trust, as with any matter involving money and property, disputes often occur. Beneficiaries in Fort Lauderdale may contest the actions of the Trustee located in Miami. As with other legal disputes, it is often desirable to resolve a dispute over a trust without dealing with the time, expense, and burdens of the court system. This is why Florida Statute section 736.0111 permits people to enter into non-judicial settlement agreements. A non-judicial settlement agreement allows people to resolve a dispute themselves, without the court, and then enter into a contract that lays out whatever agreement was reached. Then, if a future dispute arises about the trust, a court can step in and enforce the terms of the non-judicial settlement agreement.

Non-judicial settlement agreements can be used to resolve a wide variety of issues that often cause problems when dealing with a trust. For example, non-judicial settlement agreements can be used to resolve disputes over (1) how the wording of a trust should be interpreted, (2) a trustee’s report or accounting of the money or property in the trust, (3) whether to direct a trustee to take or not to take a certain action, (4) granting power to a trustee to take certain actions, (5) appointing or removing a trustee, and (6) determining a trustee’s compensation.

There are some things people should be aware of before entering into a non-judicial settlement agreement. Settlement agreements can only be valid if the terms of the agreement could have been approved by a court if the dispute had actually been filed in court. Also, a non-judicial settlement agreement will not be valid if it causes a result that is prohibited by the Florida Trust Code. For example, an agreement cannot modify or terminate a trust in a way or manner prohibited by the Trust Code. Because the Florida Trust Code is complex and because there is often a lot of money and/or valuable property at stake in a dispute over a trust, it is important that someone with experience helps negotiate and write a non-judicial settlement agreement or there is a risk that a settlement agreement will not be valid. If a settlement agreement is not valid, it will have absolutely no effect on a trust and the individuals affected by the trust. In other words, an invalid non-judicial settlement agreement is not worth the paper it is printed on.

If you or someone you know is involved in a dispute over a trust and lives in the West Palm, Fort Lauderdale, or Miami-Dade area, the experienced legal team at Chepenik Trushin is ready, willing, and able to assist in all aspects of the dispute, including non-judicial settlement agreements. Please do not hesitate to contact us for an initial first consultation.