Florida Probate Litigation Lawyer Blog

Some individuals have a will and also have a revocable living trust to distribute assets. Often they are the trustee of the revocable living trust and their children or family members may be the beneficiaries. Why would somebody do this? Won’t their assets pass under the will when they die? The answer is yes, but it may take a while. Using a revocable living trust alongside a will can avoid delay before administration of the estate can proceed as a result of probate proceedings. If assets pass under a will a personal representative has to gain access to the decedent’s assets. They do this by getting letter of administration from the court. This should happen quickly but sometimes the process can take longer. For example, in some counties, such as Palm Beach County, it can take less than a week to have a personal representative appointed and armed with letters of administration. Other counties, such as Miami-Dade, frequently take longer. Sometimes, however, regardless of the county, the delay can be lengthy and estate assets can become at risk.

The revocable living trust allows the successor trustee to take over immediately upon the death of the original trustee. Even if a beneficiary desires to contest the appointment of a successor trustee, more likely than not, the trustee can continue to administer the trust during the litigation process. The successor trustee, without court approval or court appointment, can make distribution of assets, pay claims of creditors, and otherwise proceed to administer the trust.

If you are creating a revocable living trust it is important to remember the assets in the trust are not out of your reach. Generally, the trust creator may withdraw any part or all of the trust assets by written direction to the trustee. Further, the trust permits the creator to revoke or amend the trust at any time. However the trust does not protect the assets from creditors of the trust creator. The beneficiaries of the settlor’s trust also do not have any protection against the creditors of the settlor. If creditors need to be paid after the death of the trustee, the assets in the trust may be used to satisfy the creditor’s claim. The attorneys at Chepenik Trushin can help with creating trusts, funding those trusts and any other estate planning needs. Please feel free to call (305) 981-8889 for an initial consultation.

As Florida lottery ticket sales increase so do the dreams of winning. Scratch-off ticket sales for the week ending March 4, 2012 in Florida, exceeded $60 million, the highest level of sales achieved since the Florida Lottery launched its first ticket in 1988. Some winners plan ahead by attempting to minimize the taxes they will have to pay if they make gifts to family members from lottery proceeds.

Lottery winners may form an entity owned by multiple family members, allowing those family members to share directly in the lottery winnings. Lottery proceeds can be paid directly to the entity. This is all fine if there was in fact a real and binding arrangement to share the proceeds. However, if there was not, the IRS considers this a gift and will impose a tax in the value of the proceeds that the family member receives as a result of the winnings.

Family members are obligated to pay gift taxes depending if the family agreements were in fact pre-existing arrangements or are only a product of post-lottery planning. Some have criticized these arrangements saying there is a “lottery winnings” exception to federal gift taxes that gives a free pass to the sharing of the winnings among family members.
A recent Tax Court case warns that there is no such lottery exception and that the IRS will scrutinize such lottery sharing arrangements and asserts gift taxes when appropriate.
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Florida is famous for its unique attributes. The state is known for having plenty of sunshine, ocean breezes and its “snowbirds”, or its senior citizen residents who return to Florida every winter to take advantage of all the Sunshine State has to offer. Florida has retained the highest percentage of senior residents in the country, with 17.3 percent of citizens older than age 65 in 2010. From 1990 to 2000, Palm Beach County’s 65-plus population grew 25 percent while Broward County saw a 1.4 percent increase in its senior population. Miami-Dade County saw a 17 percent increase in 65-and-older residents in the past 10 years. And while some Broward and Palm Beach cities now have fewer senior residents than before, many still retain vibrant retirement communities, which boost their 65-plus-population percentage high above the 13 percent national average. In Tamarac, where 38 percent of the population was 65 or older in 2000, seniors continued to make up 28 percent of the population in 2010. In Palm Beach County, seniors made up well over 50 percent of the population in the small communities of Briny Breezes, South Palm Beach and Highland Beach.

Senior citizens have their own unique needs when it comes to financial planning and protection of assets. Every senior should aim to utilize the variety of planning devices are available that will allow them to save taxes and protect assets. These devices include trusts, family limited partnerships (FLPs), and limited liability companies (LLCs).

Some concerns senior citizens have are the same concerns as the general population. For example, they, like others, want to save on taxes. They want to pay the IRS the least amount of federal income tax possible. If they decide to give gifts, they want to minimize the transfer taxes involved. The elderly, like others, want to protect their assets from creditors. If they are involved in a business, they may want to shield themselves from the effects of judgments against the business.

However, some concerns are unique to seniors. For example some elderly individuals may face nursing home care and may worry how their Medicaid eligibility will be affected. The elderly may also be concerned about the probate process and may want to control the process to reduce the cost and publicity involved.

Recently, family limited partnerships (FLPs) and limited liability corporations (LLCs) have emerged as financial planning techniques people can use to protect assets from creditors, save taxes, and maintain control over their affairs. Family Limited Partnerships (commonly called FLPs) can facilitate moving wealth from one generation to another. Partners of an FLP are either General Partners (GP) or Limited Partners (LP). General Partners have the responsibility for managing the FLP and its assets. Limited Partners generally have just an economic interest in the FLP. Limited Partners have no ability to control, direct, or otherwise influence the operations of the FLP. They can neither buy additional assets, nor sell existing assets, and they cannot act on the Partnership’s behalf. So why would setting up an FLP ever benefit a senior citizen who wishes to transfer money to a family member? First, FLPs allow one family member, typically the GP, to move assets to other family members (often children who are LPs), while still retaining control over the assets. Because the LPs have no rights of control, they cannot liquidate their partnership interest. The General Partner decides the timing and amounts of distributions. That is, a distribution cannot be made to one partner (GP or LP) unless all partners receive their pro rata portion of any disbursements. Secondly, when calculating the fair market value of a transfer for tax purposes, the transferred money is typically valued less than if the money transfer had been in cash. The interest in a FLP is not liquid and therefore the interest holder may not receive a distribution until sometime in the near (or distant) future. Thus, the fair market value for transfer tax purposes is usually less than the interest transferred.
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Miami-Dade, Broward and West Palm Beach counties are home to some of the finest art in the country. Alongside the many fine art galleries located in South Florida there are private art collectors and individuals who own valuable and sometimes extensive collections. These collections make up part of their estate and careful consideration should be given as to the distribution of these pieces. An experienced estate planner can help you decide when and to whom the art should be gifted.

Often art collectors wish to gift art to their children or members of their family. Art collectors should consider several factors when deciding to do this. The first consideration is that a 28% income tax rate is locked in for the children who receive the art and there are significant expenses for appraisals and the risk of a gift tax audit. Also the giver should consider if the art is something that the children are even interested in receiving. Children’s tastes may be different than the parents, and the children might not appreciate the gift as much as the parents hope. Also, if grandchildren live in the house, there may be a risk of damage to the art!

Sometimes the best and simplest plans when dealing with fine art in an estate is to consider giving the art to public charity. Generally speaking, the art owner gets an income tax deduction for the full value of the art, without ever having to recognize the gain. There are 4 major issues:
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For same sex couples, having effective estate planning documents and correctly titled property is very important. Without documents expressing the wishes of the couple, there may be undesirable results in the event of a death or serious illness of a partner. If the couple’s wills are not executed properly, upon one partner’s death, property may pass intestate to a relative rather than to the surviving partner. Without a health care surrogate document, if one partner is sick in a hospital the other partner may not have rights to make important decisions for them. The current laws of Florida do not recognize same sex marriages so same sex couples living in South Florida have little protection outside of legal documents that their property and assets will pass to the surviving partner in the event of a death. There are many same sex couples living in Miami Beach, Ft. Lauderdale, Wilton Manors and other South Florida communities who can benefit from a comprehensive estate plan. It is important that same sex couples seek out the assistance of an experienced attorney to make sure their deeds, wills, trusts and powers of attorney are airtight and will carry out each person’s wishes in the event of death or serious illness. In this evolving area of law, same sex couples should have peace of mind that their post death wishes are secure.

An important step for same sex couples to take is to make sure their property is titled properly. Couples can hold property as joint tenants with rights of survivorship. This allows the property to pass to the surviving partner without the property having to go through the probate process. A same sex couple might believe their properties are titled correctly, but unfortunately sometimes deeds are titled incorrectly by mistake. If a deed is incorrect the property may be held only as tenants in common, meaning the property would not pass automatically upon death, but it would be subject to probate.
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