Is it a Gift or a Loan? Your intention matters for your Estate Planning

Have you ever given your child money to help them with school or a car or rent? How about loaning money to a friend? Is the intention to give a gift or a loan? How these transactions affect your estate planning may not be your first thought, but a good estate planner will take these transactions into account.

A transaction is a gift under section 2512(b) of the Code whenever there is a transfer for less than adequate and full consideration. If you never expect the other person to pay you back, then the transfer was a gift. At this stage it is important to remember that a gift should be properly reported on a gift tax return. Now what if you have made a large gift to one of your children during your lifetime, but you would like to treat your children equally upon your death? You may wish to acknowledge in your will or trust the gift you made to your child during your lifetime as an advancement of that child’s share. This would reduce your child’s share by that amount and give that same amount to your other children.

Avoiding Undue Influence, as an Adult Child, Assisting Parent’s Estate Planning

Writing a will is a process most people view as a terrible chore, but it is one that is necessary. The process may get further complicated when one spouse has already passed away and the adult children of the surviving elderly parent assist in managing and dividing finances. This has become more of a reality as more and more middle-aged children are caring for elderly parents. Perhaps, not surprisingly, this phenomenon is more pronounced in Florida, which according to the U.S. Census Bureau, leads the nation in terms of greatest share of its population aged 65 and older in 2010.

This scenario can lead to issues in estate planning especially if the parent is experiencing diminished mental capacity where too much of an adult child’s influence over estate planning decisions of the parent may bring legal problems such as legal charges of “undue influence.” Every state has its own undue influence laws to address these types of issues not only in the context of children’s undue influence on parents but others outside the family, such as a girlfriend or caretaker. In Florida, in order to raise a presumption of undue influence, a petitioner must show “(1) the existence of a confidential or fiduciary relationship between the decedent and the procurer of a will; (2) the active participation of the procurer in the planning and drafting of the will; and (3) the realization by the procurer of a substantial benefit under the provisions of the will.” These elements in Florida are found in common law as opposed to codified statutes so the court’s decision will be based on how convincing the evidence is in a case.

Seeking Paternity in Probate: Are You Out of Time?

When an estate enters probate and is being distributed, the distribution is usually between family members. Family members can include spouse, children from the marriage, parent, adopted child, aunt, cousin, etc. If there are issues or questions about the status of these individuals, they are usually litigated after the estate holder passes. But what if you are a child born out-of-wedlock? What status do you have and what rights do you have to the estate?

Under Fla. Stat. § 732.103, any children from the marriage are automatically deemed heirs of the estate, and entitled to a share of the intestate estate. But out-of-wedlock children have to establish paternity if they want to share in the distribution of the estate. But do these individuals have the opportunity to litigate the paternity after the father has passed? The opportunity is there, but it is subject to a statute of limitations under Fla. Stat. § 95.11(3)(b). The statute imposes a four year limitation for paternity actions generally, starting from the date the individual turns eighteen.

Fiduciary Exception for Attorney-Client Privilege is Extinct in Florida

If you are an attorney hired by a fiduciary, whether it be a trustee, a guardian, or a personal representative, you not only are working for the fiduciary, but you are also working for the best interests of the third party ward or beneficiary. However, can the beneficiary come forward and demand access to privileged communications between the fiduciary and the fiduciary’s attorneys? The “fiduciary exception” to the attorney-client privilege would allow beneficiaries to demand access, as long as the information is related to the normal administration issues of the trust or estate. Because the beneficiary is the intended third party beneficiary of the trust or estate, they are entitled to the information related to the trust or estate.

The original rule created confusion and uncertainty for fiduciaries and their attorneys, so Florida legislatively abolished the “fiduciary-exception” rule by adopting Fla. Stat. § 90.5021. Specifically § 90.5021(2) states that any communication between a lawyer and client acting as a fiduciary is privileged and protected to the same extent as if the client was not a fiduciary. However, there was still much litigation over this issue, and the Supreme Court of Florida on more than one occasion expressed concerns over its constitutionality. However, the Supreme Court of Florida finality resolved the issue in In re Amends. to Fla. Evidence Code, No. SC17-1005 (Fla .Jan. 25, 2018), in which it upheld the constitutionality of the statute.

Foreign Property, Divorce, and Florida Probate Proceedings: Do not Assume Anything

          In Florida, if for some reason your marriage ends, there are some instances where your ex-spouse’s rights to inheritance under your estate plan are automatically severed. In Florida, the ex-spouse is automatically cut out of any estate planning documents, reducing the need to amend a will in the event of a divorce. Also, if a couple owns a house in Florida as tenants by the entireties, that joint interest is severed upon divorce and they become tenants in common. The divorce changes the property interest, and allows that each ex-spouse inherits their half, but the other half does not automatically transfer to the surviving ex-spouse. However, all of these automatic changes happen when the property is located in Florida. What changes if the property is located in a foreign country? A case out of the Second District Court of Appeals addressed the issue in Ebanks v. Ebanks.

Arthur and Diane Ebanks were divorced in Florida in 2008. Arthur executed his will on the day he filed for divorce in 2006. The Ebanks jointly owned three water front properties in the Cayman Islands. In his will, Arthur provided that upon his death, the property jointly held will pass to the survivor. The property in the Cayman Islands was owned under “joint proprietorship,” which is a form of holding title in the Cayman Islands which is similar to joint tenancy with right of survivor ship. Under “joint proprietorship” the interest of the deceased proprietor would transfer to the surviving proprietor. There is no law in the Cayman Islands dissolving a joint proprietorship in the event of divorce.

What happens to Your Pets When you Pass Away?

In addition to the human members of one’s families, many individuals also have animal members of their family. Because pets are so important to many families, it is often appropriate to make provision in one’s will or trust for one’s pets. While pets cannot take under a testamentary will, a pet owner may still be able to set money aside and account for her pet’s care. An owner may create a pet trust under state law or may grant a person with the authority to care for their pet as a guardian.

You may have heard of celebrities in the news giving large devises to their pets, which may have been upsetting to other beneficiaries (or people who thought they should have been beneficiaries). For example, Leona Helmsley left $12 million to her dog, opting to leave her grandchildren out of her will. When a devise to the pet is considerably large, however, a court may step in. Leona Helmsley’s dog wound up only inheriting $2 million after a court determined $12 million was too high.

Understanding Fiduciary Access to Digital Assets Under Florida Fiduciary Access to Digital Assets Act

Social networking, e-mail, and digital platforms are here to stay; unfortunately, we are not. Internet users must plan for the management and disposition of their assets in similar ways that they make plans for tangible property.

Florida statutes define a digital asset as “an electronic record in which an individual has a right or interest.” When a user with digital assets passes away or becomes incapacitated, a representative may want access to these digital assets to collect financial records of the decedent, to prevent identity theft, or even for sentimental reasons. There are various state and federal privacy laws, however, that may prevent one from acquiring this information. Amongst these laws is the Florida Fiduciary Access to Digital Assets Act. The Act applies to a fiduciary acting under a will, trust, or power of attorney executed before, on, or after July 1, 2016 Fla. Stat. § 740.08. Chapter 740 generally prevents access to electronic information and assets without specific authorization from a user, even if a general grant of authority has been given to a fiduciary. As such, if the user desires that the agent have access to electronically stored information digital information or digital assets, they must curate the operating document to include a special authorization to that effect.

Probating the Estate of a Missing Person

Even more excruciating than the death of a beloved person is arguably the uncertainty when the beloved person goes missing and his or her body is never recovered. Florida laws contain rules that allow the surviving family members to complete the mourning process, declare the missing person dead, and move on with their lives. One of the issues that the surviving members must deal with is the distribution of the estate of the deceased. Can you probate a missing person’s estate?

The answer is yes. However, as the first step, the missing person must be declared fictitiously dead. Under Florida Statute §731.103(3), a person who is absent from the place of his or her last-known domicile for a continuous period of five years and whose absence is not satisfactorily explained after diligent search and inquiry is presumed to be dead. The thoroughness of the search for the missing person is considered on a case by case basis; therefore, what may be enough in one case might be insufficient in another one. What is clear though is that at least some search must be done every time.

What is my Deadline to Contest a Will in Florida?

Surprisingly, as astounding 55% of adults in the United States do not have a Will or any other sort of estate plan in place. While planning one’s estate certainly makes matters easier for loved ones after death, problems can arise even when one does make a will. There are dozens of reasons one may want to contest a will. Some of these include including lack of testamentary capacity, undue influence, fraud, lack of the required number of witnesses or discovery of a later will. But when one realizes there is an issue with a will, what does one do and how much time does one have to challenge it? Legal actions typically have a statute of limitations. As defined by Black’s Law Dictionary, a statute of limitations is the “time frame set by legislation where affected parties need to take action to enforce rights or seeks redress after injury or damage.”

In Florida, the time limitation to challenge a will is statutory. While Florida allows years to pass on claims before barring actions with a statute of limitations, the Florida Legislature only gives three (3) months for someone to contest a will. Florida Statute §733.212 (the “Statute”) outlines the process and deadlines for the filing of objections. It states in relevant part:

Florida Anti-Lapse Statute

When preparing a Will, it is assumed that the beneficiaries that you name will outlive you. If you expect someone to die before you, it would not make sense to leave any of your wealth and assets behind for them. However, unexpected things happen. Unfortunately, testator’s live beyond the life of their beneficiaries all the time. Sometimes, people do not update or even think about their Will for decades and those named years ago as beneficiaries have passed away. What happens to the gift(s) left for someone who is now deceased?

This concept is known as “lapse.” The original, common law understanding of lapse, was that if a beneficiary predeceases the testator, the specific gift will fall back into the residuary estate of the testator, not the estate of the deceased beneficiaries. For example, if the will states “Car to X, everything else to Y,” and X dies before the testator, the car will fall back to the residuary estate and go to Y. If both X and Y die, the testator’s estate will pass through intestacy.

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