Estate Planning and Documents

Supplemental Needs Trusts: Providing for Your Special Needs Beneficiary While Preserving His or Her Public Benefits

May 5, 2016 | by Chepenik Trushin LLP

Planning for the future care of a special needs beneficiary, especially if that beneficiary is your child, can be difficult and overwhelming. There are many facets to consider, chief among them: upon what assets will the special needs individual rely after you have passed if you have been his or her main source of support (and especially if the special needs individual suffers from a disability that prevents him or her from working)?

Consider this: leaving your assets to a special needs beneficiary outright can cause his or her means-tested government benefits to be terminated or decreased. For instance, in Florida, disabled individuals receiving Supplemental Security Income cannot have more than $2,000.00 in assets. Thus, although you intend to provide for your special needs beneficiary, you may cause unintentional harm by devising your assets to him or her outright, thereby severing means-tested benefits, such as Medicaid and Supplemental Security Income. Continue Reading

Unintended Consequences: How Not Having an Estate Plan Will Affect Prince’s Legacy

April 27, 2016 | by Chepenik Trushin LLP

Music legend Prince’s mysterious death continues to cause speculation as all of the details regarding his estate plan, or lack thereof, have yet to emerge. Prince reportedly amassed a fortune worth at least $300 million and his estate is expected to have an equally impressive future income stream. The estate stands to profit from the posthumous records sales that have soared since the star’s death, as well as “a trove of unreleased recordings” rumored to be in what Prince called, “the vault.” However, the future of Prince’s estate and legacy will depend on whether he created an estate plan.

Proper estate planning guarantees that your wishes are honored after death and the failure to do so may lead to unintended consequences. In Prince’s case it means that his sister, Tyka Nelson, is likely to inherit a large portion of his estate. Reportedly, Prince had a strained relationship with his sister, who at one point was allegedly addicted to crack cocaine and resorted to prostitution to support her children. It is unlikely that Prince intended for a substantial portion of his estate to pass on to her without a mechanism to distribute assets over time. Nevertheless, without the proper estate planning documents in place, this is the likely outcome as Tyka has indicated that the rock star died without a will. Continue Reading

Challenging Estate Plans: Modification of Sumner Redstone’s Estate Plan Prompts Allegation of Mental Incapacity

March 7, 2016 | by Chepenik Trushin LLP

Sumner Redstone, the controlling shareholder of Viacom Inc. and CBS Corp., is going to trial over claims that he is mentally incompetent. Redstone stepped down as executive chairman of both companies in early February.

The claims of incompetency come from Manuela Herzer, Redstone’s alleged ex-girlfriend, who was recently removed as Redstone’s health-care representative. In her suit, Herzer argues that Redstone lacked the mental capacity to remove her as his health-care representative and evict her from his mansion last October. Additionally, Herzer claims that Redstone has been “the victim of undue influence, fraud, manipulation, and chicanery” by those around him.

A Life Estate Explained

February 22, 2016 | by Chepenik Trushin LLP

Most people are familiar with the term life estate, but may not understand the exact details of how a life estate operates. First, “life estate” refers to a real property arrangement. A life estate is essentially just a method of splitting ownership of real property between two classes of people. In every valid life estate, there is at least one “life tenant” and at least one “remainderman.”

The life tenants and the remaindermen hold different property interests. The life tenants are the owners of the property during life. Each life tenant has the right to live in the property (rent-free) until his or her death. Following the death of the last life tenant, the property automatically transfers to the remaindermen. Following the transfer, the remaindermen become the full owners of the property, not subject to any life estate. One of the fundamental benefits of using a life estate to transfer property is that the transfer happens outside the probate process. A non-probate transfer allows the remaindermen to become full owners of the property without the cost, delay, and inconvenience associated with the probate process. Continue Reading

Are You Widowed? You Need To Plan Your Estate Too!

February 15, 2016 | by Chepenik Trushin LLP

Losing a spouse can involve some of the most painful experiences, difficult hardships, and distressing emotions. Often times, the remaining spouse feels bombarded with overwhelming and newfound decisions, ranging from heartfelt personal dilemmas all the way to crucial financial planning matters. Despite the emotional difficulty in handling personal finances after the passing of a loved one, engaging in estate planning is not only important, but rather a necessity.

Preferably, before death, spouses should seek professional assistance from an attorney to help draft wills that clearly express how the estate would be expected to pass. In order to protect the survivor, spouses must be extremely clear with their wishes long before illness or death. For example, spouses should ensure that all wills and life insurance policies are up-to-date with the names of the proper beneficiaries. This will prevent unnecessary, yet costly court costs or perhaps even money passing to an individual that was never intended. Continue Reading

What All Realtors Should Know When Representing a Foreign Buyer

February 8, 2016 | by Chepenik Trushin LLP

Recently, the Financial Crimes Enforcement Network (“FinCEN”) promulgated new rules which require certain U.S. title insurance companies to identify the natural persons behind companies used to pay “all cash” for high-end residential real estate in Miami-Dade County, Florida.

According to the 2015 Profile of International Home Buyers in the Miami Association of Realtor Business Areas, foreign real estate buyers account for 36% or $6.1 billion of total sales volume in the South Florida real estate market. Florida remains the top state for international buyers accounting for 21% of all foreign purchases in the United States. Miami in particular continues to have the most foreign buyers accounting for 74%, which is more than double than the national figure of 35%.

As a result, it is more important than ever for realtors with foreign buyer clients to have their clients engage an international tax attorney to ensure that the ownership of the property is structured with tax efficiency. Foreign persons purchasing U.S. real estate without consulting an international tax attorney may be putting themselves in precarious tax positions if the tax implications are not considered. Below is a high level discussion of some of the key issues.

David Bowie’s Estate Planning Guarantees Empire is Left to His Family

January 21, 2016 | by Chepenik Trushin LLP

Legendary rocker David Bowie was as brilliant in his estate planning as he was talented in his artistic ventures. Bowie’s colorful 50-year career encompassed both, a successful musical career and an acting career, which ultimately ended when Bowie succumbed to cancer in early January. Bowie’s empire, valued at an estimated net worth of $230 million, is primarily the result of several successful world tours and the sale of an estimated 140 million records. However, despite living a lavish lifestyle, with real estate in New York City, Switzerland, Los Angeles, London, and the Caribbean island Mustique, Bowie was said to have been “very much into estate planning issues at a relatively young age.”

Bowie’s financial astuteness was further evidenced by his creative invention of “Bowie Bonds”, created by Bowie and financial adviser, David Pullman. Bowie Bonds were asset-backed securities which awarded investors a share in Bowie’s future royalties for ten years. Bowie was able to retain ownership of his work rather than selling the copyright, and he was then granted complete ownership of the rights after the ten-year period. The scheme was created in the mid-1990’s and was bought by American insurance company Prudential Financial for $55 million. Pullman noted that even then, Bowie’s intent was always that “at the time of his death his assets would all transfer to his family and beneficiaries.” Bowie’s beneficiaries, model-wife, Iman, and his two children, can now financially benefit from Bowie’s strategic and forward planning.

New Year, New Estate Planning Tips

January 4, 2016 | by Chepenik Trushin LLP

The New Year is here, but some things may never change. The gym membership is already beginning to look old and your other resolutions have fallen by the wayside. However, one resolution that should be kept is the resolution to keep your estate plan up to date. Don’t have an estate plan? Then it is time to create one.

Updating Your Estate Plan

You may already have an estate plan that has been in place for years now. That’s great news! But there are a few important considerations to take into account. Have you acquired any new assets, such as a new property or a new life insurance plan? Then your estate plan warrants an update. Or you may have already disposed of assets, and the inclusion of those assets in your estate plan is no longer relevant. Including the change in assets will help keep your intentions protected.

Have there been any changes in your personal life that would entail a need for an update? Have you recently been divorced? You may want to remove your former spouse as a beneficiary of your estate. Or maybe you have recently wed. Including your spouse in your estate plan will help avoid some headache (and heartache) in the future. Continue Reading

Planning for Incapacity: Planning for When You Can No Longer Plan

December 9, 2015 | by Chepenik Trushin LLP

Let’s face it—no one wants to contemplate the possibility of a time when she or he is unable to take care of herself or himself. However, the truth of the matter is that it could happen to anyone at any time. In general, a person becomes incapacitated when that person no longer has the ability to make or enter into certain types of medical or legal decisions and agreements. Florida law specifically defines incapacity as “the inability of an individual to take those actions necessary to obtain, administer, and dispose of real and personal property, intangible property, business property, benefits, and income.” Wouldn’t you rather plan ahead for this “inability” so that you still have significant input into what will happen if or when you are unable to manage your own financial and medical affairs?

Various documents exist for a person to plan for incapacity. The type of document to execute depends on the type of care being considered. If dealing with property, a person might elect to execute a Power of Attorney. If dealing with the care of a person, various options include a Durable Power of Attorney, a Living Will, and a Health Care Surrogate.

Ensuring the Validity of Your Last Will and Testament

October 22, 2015 | by Chepenik Trushin LLP

There are a number of reasons why people choose to execute a Last Will and Testament. Some individuals create a will to ensure that their loved ones are provided for upon their passing. On the other hand, other people create a will to ensure that certain family members are specifically excluded from the distribution of their estate. Often times, however, life circumstances and/or the desires of the testator change between the execution of a will and the testator’s passing. In such instances, a modification or revocation of the previously executed will is necessary to reflect the changed testamentary intent.

Many people assume that they can modify or revoke their will simply by drawing a line through existing provisions, handwriting in new provisions, and initialing next to the changes. While this may be considered a valid modification in other states, this type of alteration is not valid under Florida law. Florida law requires strict adherence to what are known as “will formalities” in both the execution and the modification of a will. Any deviation from these strict formalities may result in a will being deemed invalid by a court, further resulting in the will not being admitted to probate and thereby frustrating the testamentary intent of the testator.