Creditors

Giving money to a child, a loved one, a relative or a friend – your intentions do matter

July 1, 2019 | by Chepenik Trushin LLP

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.

Help mom and dad with estate planning, but know your boundaries under the law

June 10, 2019 | by Chepenik Trushin LLP

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.

Paternity in Probate bench court – timing is everything, be aware

May 28, 2019 | by Chepenik Trushin LLP

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.

Missing person. Now, what’s next, probate court and the impact of intestacy.

February 12, 2019 | by Chepenik Trushin LLP

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.

Arbitration and Estate Planning – Decisions made final

June 15, 2018 | by Chepenik Trushin LLP

WILLS, TRUSTS, and ARBITRATION AGREEMENTS

In previous blog posts, we have shown how wills and trusts are favored vehicles when protecting someone’s assets. Perhaps one of the purposes of a well-drafted will or trust is to avoid hearing the judge’s gavel when knowing who gets what part of the inheritance. Unfortunately, contentions amongst the parties may well exist. The good news is that since 2007, parties have another alternative to resolve disputes that arise out of a will or a trust. Florida Law provides the option for parties to have a clause in their will or trust requiring arbitration. See Fla. Stat. § 731.401.

Arbitration, is a private (not state-sponsored) method of resolving disputes. Arbitration is not to be confused with mediation: While mediators help the parties in finding a solution, arbitrators decide a dispute.

As a business owner, react or act – probate court expenses

April 30, 2018 | by Chepenik Trushin LLP

What is Probate?

Probate is a process, which the court supervises, for settling a deceased person’s estate. The process involves identifying assets belonging to the estate, paying the decedent’s debt, and distributing the remainder of the assets to the decedent’s beneficiaries. Costs for the probate proceeding have first priority for payment from the estate’s assets.

If a decedent dies testate (with a valid will) and designates a personal representative, then the will’s provisions govern disposition of the decedent’s probate assets. If a decedent dies intestate (without a valid will), then Florida law will govern selection of a personal representative and will govern who will receive the decedent’s probate assets.

Family law implications under the 2018 Tax Bill

March 8, 2018 | by Chepenik Trushin LLP

HOW THE NEW TAX BILL MAY AFFECT DIVORCES

In one of our previous posts we informed about the new Tax Cuts and Jobs Act (“TCJA”) and the major changes it brings, including the various adjustments in tax deductions. This article focuses on deductions applicable to alimony, as the new system may significantly affect and expedite divorce settlements in the months to come.

Alimony is a form of spousal support awarded by agreement or by court decision to the lower-income spouse after divorce, typically referred to as the “dependent” spouse. The courts have wide discretion in establishing the amount of alimony and the time period during which the higher-income spouse is obligated to pay. The purpose of alimony is to help the dependent spouse overcome the divorce and to at least partially maintain the standard of living the spouses shared during their marriage. To ease the burden of splitting one household into two, the alimonies were tax deductible – at least until now.

Irrevocable Trusts, one tool in an estate planning tool box

January 24, 2018 | by Chepenik Trushin LLP

IRREVOCABLE SPENDTHRIFT TRUSTS

Trusts are popular estate planning instruments that may bring many benefits both during lifetime and in the case of death. Some common reasons for setting up a trust include the avoidance of costs and time consumption of probate proceedings, property management for those who cannot or do not wish to manage the property themselves, continuance of property management after death or during disability, and saving of taxes and protection of the assets against the claims of creditors. However, there are several types of trusts and not all of them provide these benefits to the same extent.

The revocable trust is the most flexible one as the creator (settlor) can at modify the terms of the trust or completely revoke it at any time. See Fla. Stat. § 736.0602. However, the assets transferred into such trust are still considered personal assets of the settlor and accordingly, can be reached by his or her creditors. See Fla. Stat. § 736.0505(1)(a). Therefore, the revocable trust is not an ideal solution for asset protection purposes. Upon death of the settlor, this trust becomes irrevocable, meaning that the rules for asset distribution can no longer be changed. It is also possible to make a trust irrevocable from the outset and to afford protection against creditors by adding a spendthrift provision. See Fla. Stat. § 736.0502.

A Will seems simple, but when executed, it can be a rocky road

January 10, 2018 | by Chepenik Trushin LLP

How to comply with formal requirements of Will execution

Florida law places great emphasis on compliance with its statutes regarding execution of wills. This is to assure the authenticity of such an important document profoundly affecting many lives, and prevent fraud and imposition in its execution. The statutory provisions, which appear in Florida Statute §735.502, set out four main requirements for executing a will. Failure to comply with the formal requirements can invalidate the will and force the estate to pass through intestate succession. It is therefore important to comply with and understand these formal requirements.

Firstly, the will must be in writing. This means that the document can be handwritten, typed, or printed. Florida does not recognize oral wills (nuncupative wills) or wills without witnesses (holographic wills). Nuncupative wills are allowed in only few jurisdictions and typically require witnesses and some exigent circumstances such as a car accident or a heart attack. Contrarily, many states recognize holographic wills and have different requirements as to their validity.

Probate litigation and Attorney-client privilege

November 28, 2017 | by Chepenik Trushin LLP

Where There’s a Will, There May Not Always Be a Way for Attorney-Client Privilege

Attorney-client privilege may not always apply in probate litigation. In fact, the Third District Court of Appeal has held that under the Florida Evidence Code, a lawyer may not invoke attorney-client privilege under certain circumstances.

Attorney-client privilege is a key hallmark of the attorney-client relationship. The privilege prevents disclosure of confidential communications pertaining to legal advice between a client and her attorney. Attorney-client privilege therefore promotes candor and better representation. Rule 4-1.6(a) of the Florida Rules of Professional Conduct states that “[a] lawyer must not reveal information relating to representation of a client . . . unless the client gives informed consent.” https://www.floridabar.org/rules/rrtfb/rule/?num=4-1.6. Further, under the official comments to Rule 4-1.6, a lawyer has an ethical obligation to assert attorney-client privilege on a client’s behalf, including during proceedings involving evidentiary matters.