Articles Posted in Young Professionals

FLORIDA CHARITABLE TRUSTS: ALTERNATIVE BENEFICIARIES AND CY PRES DOCTRINE

Due to applicable tax exemptions and tax deductions, charitable trusts are a great tool for preserving the value of your property intended for charitable purposes and for reducing taxes payable by your remaining estate (intended for purposes other than charitable ones). Naturally, the main goal when setting up a charitable trust will be the fulfillment of the philanthropic objective of your choice. While the law comes to aid with mechanisms to fill in the blank spaces in the will or trust agreement, well-meant but poorly executed provisions in the documents may defend these mechanisms and obstruct the desired purpose.

Charitable purposes may include relief of poverty; advancement of arts, sciences, education, or religion; promotion of health, governmental, or municipal purposes. Fla. Stat. 736.0405(1).  This list is, of course, non-exhaustive. A specific charitable purpose and beneficiary organization will usually be designated in the document. Even if it is not, the court will select one or more charitable purposes or beneficiaries that will be consistent with the settlor’s original intent, at least to the extent it can be ascertained. Fla. Stat. 736.0405(2). But what if the agreement names a purpose and a beneficiary, but the beneficiary does not exist? Or exists at the time the agreement is made, but ceases to exist before it is supposed to take the bequest? Or what if the stated purpose is impossible to fulfill? In those situations the cy pres doctrine applies to help execute the bequest in accordance with the general spirit of the will or trust agreement.

ESTATE PLANNING: CRYPTO CURRENCIES AND DIGITAL ASSETS

Although we all unquestionably live in a digital age at least for the past two decades and the legislatures are adopting new laws every day to reflect this reality, digital estate planning remains one of the areas where relying on state-made laws might not be enough. Laws in this area are scarce and only of a general nature. What happens with our digital assets after we die is usually controlled by private companies that store the data. For that reason, and because of the specific nature of digital assets, it is advisable to take these matters in your own hands.

What is a digital estate planning? It is a estate planning that covers any of your digital assets, including cryptocurrencies, websites, email accounts, social network accounts, cloud accounts, and all content stored or communicated trough these tools. What sets these assets apart from the more traditional ones is the fact that there might not be any person other than you who is aware of those assets or who could access them. In other words, no official register, no tax records, no bills, no paper contracts. Yet these assets may have a great value, both personal and monetary.

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.

Guardianship:  When No Less Restrictive Alternative is Available

What is guardianship?

The simple answer: court intervention to safeguard the property and care of an individual unable to make such decisions themselves.

Do you own a home health care agency or nurse registry? Safeguard your referral sources through a non-compete agreement and enforce it!

The home health care industry generally includes businesses that provide skilled nursing, physical therapy, and other health-related services to homebound patients.  If you run a home care company, you know that referrals are crucial.  This is because patients typically seek out home care services after a referral from a “middle man,” such as a physician, hospital, or skilled nursing facility. As a result, home care companies hire marketing representatives to promote the companies and cultivate relationships with the middle men in hope of securing future patient referrals for their business.

Imagine that you hire such a marketing representative, train her, and give her access to your company’s internal referral source database, preferences, and strategies.  Naturally, you want to protect your sources, so the representative signs a confidentiality and non-compete agreement as part of her employment contract.  After some time, the representative quits, and all of a sudden you start receiving significantly less referrals from the sources that the representative worked on while employed by you.  Coincidence?  It turns out that the representative started working for your direct competitor and used her relationship with your precious referral sources to your competitor’s benefit, in direct violation of the non-compete agreement.  Surely the law is on your side, right?

4th DCA Recognizes Homestead Exception for Alimony Creditors

The Florida Constitution provides powerful homestead protection against creditors.  Generally, only three types of super-creditors can breach this protection – (1) government entities with a tax lien or assessment on the property; (2) banks or other lenders with a mortgage originating from the purchase of the property; and (3) creditors with liens originating from work or repair performed on the property.

However, a recent decision by the District Court of Appeal for the 4th District confirmed a “long recognized” fourth category of super-creditors – alimony creditors.  The facts of this case are as follows:  Robert Spector (“Husband”) and Renee Spector (“Former Wife”) divorced in 1996, and agreed in a post-nuptial agreement that Husband would (1) pay Former Wife $5,000 per month in alimony until his or her death, or until she remarried; (2) transfer to Former Wife the title and interest in their marital home; and (3) maintain a $750,000.00 life insurance policy for Former Wife’s benefit.  Subsequently, Husband was held in civil contempt for “willful and deliberate failure to comply with the alimony provisions” of the post-nuptial agreement and was also denied a bankruptcy petition as alimony arrearages were not subject to bankruptcy discharge.

Legal Capacity and Estate Planning- How to Help Safeguard a Will from Future Litigation

When a loved one grows older, their caretakers’ ever growing to-do list can become overwhelming. After dealing with the basic, everyday needs of an aging family member, it may sometimes be easy to overlook the fact that your loved one does not have a valid will.  By not addressing this issue, the task of handling final affairs and estate distribution after their death becomes increasingly more difficult. If you are responsible for someone who is at risk for developing Alzheimer’s, dementia, or any other disease that can affect their mental capacity, it is important that you consult with an estate planning lawyer who can ensure that a proper will is drafted in accordance with the laws of the state of Florida.

Florida courts have held that a will can be properly admitted to probate if the testator was competent at the time the will was executed.  Jervis v. Tucker, 82 So.3d 126 (FL 4th DCA 2002).  A testator will be found to have been competent if they possessed the ability to “mentally understand in a general way the nature and extent of the property to be disposed of, and the testator’s relation to those who would naturally claim a substantial benefit from the will, as well as a general understanding of the practical effect of the will as executed.” American Red Cross v. Estate of Haynsworth, 708 So.2d 602, 605 (FL 3rd DCA 1998). Florida courts will apply these standards and also evaluate the facts specific to a particular case in order to determine if a testator was of “sound mind” when they created the will. Estate planning lawyers play an important role in this process and have the responsibility of ensuring that the testator is legally competent at the time the will is created.

The importance of a Semicolon – Does property partially used as primary residence and partially for business purposes qualify as Homestead?

Does property partially used as primary residence and partially for business purposes qualify as homestead under Article X, Section 4 of the Florida Constitution? Surprisingly, the answer apparently rests on a semicolon.

This question was addressed in 2003 by the Florida Court of Appeal for the First District in Davis v. Davis, 864 So. 2d 458 (Fla. 1st DCA 2003). The facts of this case are as follows: Mr. Horace Davis lived with his wife Carolyn on a contiguous piece of property measuring less than 160 acres outside of municipality in an unincorporated portion of Nassau County. The property included the couple’s residence and on a portion separate from the residence, Mr. Davis operated a mobile home park generating profit through rent. Mr. Davis died in 2000 having written a will.

Florida: A Safe Haven for Surviving Spouses in Probate

          Marriage is one of the most sacred and respected institutions in our society.  Both state and federal governments provide benefits to encourage marriage with beneficial incentives. Florida provides several benefits for surviving spouses as illustrated in Florida’s Constitution and Probate Code. This article reviews some of those benefits but is not an exhaustive list.

First, surviving spouses receive protection under Florida’s Homestead Exemption.  The Florida Constitution prohibits a decedent from freely devising his or her homestead, when the decedent is survived by a spouse or minor child. Art. X, § 4 (c), Fla. Const.  However, the decedent can devise a homestead to his surviving spouse if there is no minor child. § 732.4015 (1), Fla. Stat. (2010).  If a decedent tries to devise a homestead to someone other than a surviving spouse or minor child under a will, then the homestead property will be transferred to the decedent’s surviving spouse and the decedent’s descendants, with the surviving spouse receiving a life estate in the homestead and the descendants receiving a remainder, per stirpes at the decedent’s death.§ 732.401 (1), Fla. Stat. (2012).  Alternatively, “the surviving spouse may elect to take an undivided one-half interest in the homestead as a tenant in common, with the remaining undivided one-half interest vesting in the decedent’s descendants in being at the time of the decedent’s death, per stirpes.”  § 732.401 (2), Fla. Stat. (2012).  To receive the homestead exemption, “an individual must have an ownership interest in a residence that gives the individual the right to use and occupy it as his or her place of abode.”  In re Alexander, 346 B.R. 546, 551 (Bankr. M.D. Fla. 2006).

Effect of Marital Agreement on Entitlement to Probate Estate

When it comes to estate planning, multiple factors can influence the distribution of the estate, besides a trust document or a will. One such device is a martial agreement made between spouses prior to their marriage. The marital agreement can change the distribution of the estate if the agreement addresses the surviving spouse’s rights to the estate in the event of a death. The Second District recently decided a case involving a marital agreement and a subsequent claim against the estate for additional money allegedly pursuant to the agreement.

In Northern Trust v. Shaw, the surviving spouse, Natalia Shaw, sued the estate of her deceased husband for money allegedly due to her under their marital agreement (also known as a prenuptial agreement). Mrs. Shaw and her husband Andrew were married in February 2009. Before they were married, Mr. and Mrs. Shaw executed a marital agreement that provided for the disposition of their assets in the event of their deaths. Under the agreement, Mrs. Shaw waived her rights to Mr. Shaw’s estate except for a few items: (1) $500,000 from Mr. Shaw’s estate, (2) any testamentary gifts made by Mr. Shaw during the marriage, (3) any retirement and pension benefits in which Mrs. Shaw was named the beneficiary, and (4) a life estate interest in any principle residence owned by Mr. Shaw.