FLORIDA ESTATE PLANNING AND PROBATE LAW BLOG: 2014

PROTECTING INHERITED ASSETS IN CASE OF DIVORCE

♠ Posted by Marc J. Soss in estate plan,florida estate planning,florida probate attorney,florida probate lawyer,Last Will and Testament,post-marital agreement,pre-marital agreement,Revocable Trust

For those happily married, there are usually no objections to sharing gifts received from parents or grandparents. In contrast, when divorce is on the horizon the sharing of gifts is not an option. Unfortunately, past actions may subject those gifts or bequests to joint ownership and division upon divorce (separate versus marital property). To avoid this potential land mine it is important to consider the following options: Pre-Marital and Post-Marital Agreement: These agreements can protect inherited assets (business, property, art collection, etc.) should a divorce occur. Each spouse can agree to forgo his or her rights to any inheritance or major gift given to the other spouse before or during the marriage. Maintain Separate Accounts: Inherited or gifted funds should be maintained in a separate account so that it is not commingled with the other spouse’s assets or marital funds. Utilize a Trust: Utilization of...

SELECTION OF THE STATE OF YOUR DEATH AND ESTATE TAX BILL

♠ Posted by Marc J. Soss in estate plan,florida estate planning,florida probate attorney,florida probate lawyer,Last Will and Testament,Revocable Trust

While it is not unusual for states to claim that they are the best place to live or have the best beaches. However, states are now promoting themselves that they're also great places to die. In 2015, four states will increase the amount that's exempt from state estate taxes, reducing or eliminating the tax that heirs will owe. On January 1, Tennessee's estate tax exemption will jump to $5 million from $2 million, Maryland's exemption will increase to $1.5 million from $1 million, and Minnesota's exemption will rise to $1.4 million from $1.2 million. On April 1, 2015, New York's estate tax exemption will increase to $3.125 million from $2.062 million. All still well below the federal estate tax exemption amount. In 2016, Tennessee's estate tax will disappear, Maryland and New York will increase their exemption thresholds every year until 2019 (when they'll match the federal exemption amount) and Minnesota's exemption will rise in $200,000...

FLORIDA ESTATE PLANNING FOR SINGLE PARENTS

♠ Posted by Marc J. Soss in estate plan,florida estate planning,florida probate attorney,florida probate lawyer,Last Will and Testament,Revocable Trust

Single parents are a growing population in the State of Florida. While creation of an estate plan is important for everyone, it is even more important for single parents. As a single parent you need to plan for: (i) who will raise your children (make medical decisions for them) in the event of death or disability (grandparent, other parent, family member, etc.); (ii) who can be trusted to manage their children's assets; and (iii) at what ages will your children need financial support to maintain their lifestyle and pay for college. It is important to have answers to these questions spelled out in your Florida estate planning documents. The last thing you want is for family members to be fighting over these issues and a Florida Probate Judge making the ultimate decision for you....

2015 RETIREMENT ACCOUNT CONTRIBUTION LIMITS

♠ Posted by Marc J. Soss

Taxpayers can now put aside a little more toward their retirement in 2015, according to the Internal Revenue Service. The agency has adjusted the maximum contribution allowed for pension plans and other retirement funds for tax year 2015, it announced today, a change reflecting cost-of-living increases. Taxpayers 50 years old and over can contribute up to $24,000 in retirement funds for 2015, an increase of $1,000 from 2014. Though some limits remain unchanged from last year, several ceilings have increased. Some of the changes include: • The elective deferral (contribution) limit for employees who participate in 401(k)s, 403(b)s, most 457 plans and the federal government’s Thrift Savings Plan has been increased from $17,500 to $18,000. • The catch-up contribution limit for employees aged 50 and over who participate in those same plans has been increased from $5,500 to $6,000. • The limit on annual contributions to an IRA remains unchanged at $5,500. The additional...

INHERITED IRAS ARE NO LONGER PROTECTED FROM CREDITORS

♠ Posted by Marc J. Soss

In the case of Clark v. Rameker, the Supreme Court ruled that an inherited IRA was not considered a protected retirement funds and was subject to creditors’ claims if the beneficiary filed for bankruptcy. The case originated from a dispute in Bankruptcy Court over whether an inherited $300,000 IRA qualified as a protected retirement account. The Supreme Court, in reliance on the U.S. Tax Code, determined that since the beneficiary was required to withdraw a minimum amount of money from the account each year, even though they had not reached the age of retirement, the account was not a protected retirement fund. Why is this important? The ruling means that an inherited IRAs will now longer be considered a protected asset and will be available to satisfy a beneficiaries creditor claims. What can I do? Account owners should consider naming a standalone Trust as the beneficiary of the IRA. The Trust will restrict the beneficiary’s access to the funds and keep them...

CAN I AMEND MY REVOCABLE TRUST WITH A NON-TESTAMENTARY DIRECTIVE

♠ Posted by Marc J. Soss

The recent 3rd District Court of Appeals case of Kritchman v. Wolk, Nos. 3D12-2977, 3D12-2457, has reinforced, under Florida law, a cause of action against the trustee(s) of a Revocable Trust for breach of Trust and the potential for the settlor to amend their trust without compliance with Section 736.0405(2)(b) of the Florida Statutes. The case evolved from a correspondence (the “Note”) the Settlor of a Revocable Trust’s had written to the co-trustee during her lifetime. The Note did not comply with the requirements of Section 736.0405(2)(b) of the Florida Statutes (which requires that all testamentary directives in wills and trusts be in writing and witnessed) but advised the co-trustee that the Settlor had been paying for her first cousin’s grandson’s (the “grandson”) private school and college education expenses for seven years and that she wanted her Trust to continue to pay for his remaining college education expenses. Shortly thereafter, the Settlor passed...

WHEN A LIFE ESTATE INTEREST IN FLORIDA HOMESTEAD REAL PROPERTY IS NOT REALLY A LIFE ESTATE INTEREST

♠ Posted by Marc J. Soss

The recent 2nd District Court of Appeals ruling in the case of Friscia v. Friscia, No. 2D13–412 (August 27, 2014), provides a new twist on the value of a “life estate” interest in Florida Homestead real property. Friscia involved a surviving second spouse’s challenge to the determination that her deceased spouse’s interest in his former marital residence constituted “homestead” real property, protected from the possession and control of the Personal Representative of his estate, that the former spouses marital settlement agreement granted temporary exclusive use and possession of the residence to the former spouse and precluded the surviving spouse from utilizing the “life estate” interest in the residence that she had inherited. The 2nd DCA affirmed the Probate Court ruling that held the former marital home to be entitled to the homestead exemption and that the terms of the MSA did not waive the decedent's right to the constitutional protection from claims of his creditors....

“Roughly 70% of families lose a chunk of their inherited wealth, mostly due to estate battles.” How to manage estate litigation risk?

♠ Posted by Marc J. Soss

Accenture estimates that $30 trillion will pass from Boomers to Millennials over the next 30 years. Will this intergenerational wealth transfer actually happen? Who knows? At one time Boomers were expected to benefit from a similar windfall of equally gargantuan proportions — some $41 trillion at the time of this study (2003). Then reality stepped in, the “great recession” hit (likely the worst global recession since World War II), incomes stagnated, people lost their jobs. More recent estimates now put the expected Boomer inheritance at $8.4 trillion. While uncertainty is unavoidable, the best we can do is manage it. And good estate planning is all about managing uncertainty. The trick is knowing which uncertainties or “risks” to focus on. Traditionally, the risk factor most estate planners and their clients spent most of their time fretting about was taxes. In reality, estate litigation poses a much greater risk for most people. According to this study fewer than 2 out of...

CAN I AMEND MY REVOCABLE TRUST WITH A NON-TESTAMENTARY DIRECTIVE

♠ Posted by Marc J. Soss