Death and Taxes: Common Taxes in Estate Planning and Florida Probate

Posted By on April 14, 2015

Before tomorrow’s April 15th deadline, people will be making financial decisions, like depositing funds in an IRA (individual retirement account), in an effort to pay less federal income tax.  Some of these tax decisions can also be used as part of an estate planning tax strategy (other tax strategies that can have duel usage, include investing in a life insurance policy or investing in an annuity). (Also see “2014 Year End Estate Planning.”)

 

Taxes Payable At Death

Taxes are a part of life, and the after life (since they are paid by your estate). Common taxes that must be paid and that are related to someone dying, include:

  1. Federal income taxes on income earned in the year of the death;
  2. Federal income taxes on income earned by the estate during the estate administration;
  3. Gift taxes;
  4. Capital gains tax on assets sold in the year of the death;
  5. Federal estate tax.

Proper planning with an estate planning lawyer can limit the amount of taxes that must be paid from your estate.  The benefit to this planning, of course, is to increase the amount that your beneficiaries will inherit from your estate.

What’s Happening With The Death Tax?

The federal estate tax is also known as the federal “death tax” and it’s always been controversial. It is a tax calculated on the estate’s net taxable assets, which is tallied by deducting allowable deductions from the total estate value, aka the gross estate (the definition of “gross estate” is not a simple calculation and it should be explained and calculated by a lawyer or accountant since certain assets owned at the time of death, and some transferred prior to death, for example, are included in calculating this figure).

If a federal estate tax is due, then the personal representative of the estate (aka executor) must file the federal estate tax return (Form 706) and determine what assets will be used to pay the tax.

This estate tax is different from an income tax that may be due by the estate.

Right now, there is a great deal of news coverage over a joint Senate and House effort to repeal the federal estate tax. The Death Tax Repeal Act Of 2015 would end the current tax levied on an estate.

Whether or not it will become law is debatable: Congress may pass the Death Tax Repeal Act but President Obama has already announced that if the bill reaches his desk, he will veto it. The President’s position is not to repeal estate taxes

Estate Planning Is For Everybody — It’s Not Just for the Rich

Given the changes that happen in tax laws each year on both the federal and state level, as well as the changes that happen regarding the federal estate tax, it is important to have estate plans in place and reviewed annually.  This is especially true if you have any concerns about maximizing how much inheritance you pass to your loved ones or your favored charities.

A Florida lawyer who handles estate planning and/or probate matters can help you determine the best route for you to take in estate planning – from drafting and finalizing a Last Will and Testament, to choosing between other asset transfer vehicles, like IRAs, Trusts (revocable, irrevocable, life insurance), etc.

It it surprising to learn how many people think they don’t need to have an estate plan in place — it’s not just something for the rich and the wealthy to consider – estate planning also includes planning for health issues – like who has the authority to make medical decisions for you or do you want certain measures taken to keep you alive, etc.

Also, life insurance policies, including burial insurance, can be purchased on many kinds of budgets that can provide for surviving families; and establishing trusts for minor children so they can go to college is always a good thing to consider – no matter how small your estate may be.

Finally, setting up an estate plan does not have to be expensive or complicated. It may not take that much time, either. And while most people do procrastinate about their estate plans, most people don’t want to pay, or don’t want their family to pay, any more in taxes than they have to — so maybe tomorrow’s Tax Deadline is a good incentive to get your estate plan in place!

Florida Probate Lawyer Costs and the Attorneys’ Fees Statute in Florida

Posted By on March 10, 2015

One of the biggest questions involved in probating someone’s estate after their passing is how much will the probate process before a Florida Probate Court itself cost? There are variables here depending upon each case, of course.

Different kinds of property may involve unique expenses. Having investments in other states or foreign countries can warrant specific expenses in the transfer of ownership and clearing of creditors, payment of taxes.

Larger estates will bring more probate costs than smaller estates, especially for those who have not done advance estate planning (where many assets can be removed from the probate process).

However, one cost that may be concretely identified and known — even in advance of any probate needs — is the cost that the Florida probate lawyer will bring to the table. This is because the Florida Legislature has passed specific Florida laws that establish and set attorneys’ fees for Florida estates moving through the Florida Probate Court judicial process.

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Florida Probate Lawyer Fee Schedule Per Florida Statute

According to Florida Statute 733. 6171, the following Florida Probate Lawyer Fee Schedule applies in Florida Probate matters. Homestead properties are not included here, and the lawyer’s fee is based upon not only the assets included in the probate estate at the time of filing, but any income that is generated by these assets during the probate case.

From Florida Statute 733.6171(3) the lawyer’s fee schedule is as follows:

(a) One thousand five hundred dollars for estates having a value of $40,000 or less.
(b) An additional $750 for estates having a value of more than $40,000 and not exceeding $70,000.
(c) An additional $750 for estates having a value of more than $70,000 and not exceeding $100,000.
(d) For estates having a value in excess of $100,000, at the rate of 3 percent on the next $900,000.
(e) At the rate of 2.5 percent for all above $1 million and not exceeding $3 million.
(f) At the rate of 2 percent for all above $3 million and not exceeding $5 million.
(g) At the rate of 1.5 percent for all above $5 million and not exceeding $10 million.
(h) At the rate of 1 percent for all above $10 million.

Does This Always Apply? No.

This schedule is set up for efficiency in probating general probate matters where there isn’t any big surprise, allowing for payment of the probate lawyer without the need for a judge to review the legal fees and judge them to be reasonable.

If the Florida probate attorney’s bill comes within these amounts in the schedule, it is deemed to be “reasonable” and ready for payment by the estate. As the Florida Statute explains, “Attorneys for personal representatives shall be entitled to reasonable compensation payable from the estate assets without court order.”

However, the Florida probate lawyer and the estate’s personal representative (along with those “….bearing the impact of the compensation”) may contract around this schedule. For many reasons, there may be a need for legal compensation to be paid differently than what is set out in this general fee schedule. A written agreement can be made that is different than this Legal Fee Schedule and that is fine under Florida law and is usually done when everyone agrees that specific legal work is needed in the case.

What might that be? Florida probate lawyers may need to take steps to insure that there is no unwarranted will contest in the case, as well as defending against a challenge to the probated will should one be filed. That’s one example.

Other “extraordinary services” defined by Florida law here include:

  • will construction.
  • proceeding for determination of beneficiaries.
  • contested claim.
  • elective share proceeding.
  • apportionment of estate taxes.
  • any adversarial proceeding or litigation by or against the estate.
  • representation of the personal representative in audit or any proceeding for adjustment, determination, or collection of any taxes.
  • tax advice on postmortem tax planning.
  • review of estate tax return and preparation or review of other tax returns required to be filed by the personal representative.
  • preparation of the estate’s federal estate tax return.
  • purchase, sale, lease, or encumbrance of real property by the personal representative or involvement in zoning, land use, environmental, or other similar matters.
  • legal advice regarding carrying on of the decedent’s business or conducting other commercial activity by the personal representative.
  • legal advice regarding claims for damage to the environment or related procedures.
  • legal advice regarding homestead status of real property or proceedings involving that status and services related to protected homestead.
  • involvement in fiduciary, employee, or attorney compensation disputes.
  • proceedings involving ancillary administration of assets not subject to administration in this state.

Ordinary vs Extraordinary Legal Services

Bottom line, the Florida Legislature has set up a schedule for everyone to follow regarding standard, ordinary, and expected work that a Florida probate lawyer will have to undertake in any probate matter in order to complete the probate process. If the estate goes outside that standard, general route with any number of unique (or extra-ordinary) situations, like a will contest or confusion over language of a will provision that needs judicial construction, or complications due to ongoing business activities, zoning issues, taxing matters, and the like, then the schedule does not apply.

In these extraordinary circumstances, the Florida probate lawyer will undertake specific legal work to meet those unique issues and challenges to the estate and the legal fees and expenses will be unique to that situation, controversy, or court fight.

If a Florida estate is valued in excess of $100,000, then there may well be extraordinary issues involved in probating that estate. It is wise to work with a Florida probate lawyer who will discuss fees and rates with the estate’s representative and who is amenable to fee arrangements that include flat fees, specific hourly rates, etc.

How to Avoid Florida Probate: 5 Ways to Transfer Your Property Other than a Will

Posted By on February 10, 2015

Ask most people here in Florida about how they will pass along their property to their kids or spouse or favorite charity, and odds are high that they’ll say they are doing this with their Last Will and Testament. After all, writing your will is a traditional and historic way of leaving your valuables — your land, your home, your jewelry and artwork — to your loved ones.

Broward County Courthouse in Fort Lauderdale, FL; Photo by Georgia Guercio; 2010-11-21

 

Anyone who uses a Will to leave property to their heirs and beneficiaries also leaves them with having their estate administrated in accordance with the Florida probate statutes and probate rules. Under Florida probate law, the probate court oversees the process of how that will’s instructions are followed.

Everything from confirming who the beneficiaries are under the will, to who acts as the personal representative of the estate, to paying off creditors, paying taxes, transferring title to real estate, and more, must be routed according to the probate laws.

Due to the time it takes to administrate an estate, as well as other misconceptions about the probate process, Florida probate lawyers are often asked by their clients for ways to avoid the Florida probate process, if possible.

5 Examples of How to Avoid Florida Probate

 

1. Don’t own any property.

If you don’t have any property to transfer, then there is no need for a Florida Probate Court to be involved, as a general rule.  This is where gifting comes into play as well as jointly owned property with rights of survivorship.

2. Have a Trust.

If you create a trust (e.g., a revocable living trust) your trustee has the job of following the trust’s instructions on the property you’ve transferred to the trust.  When transfer all of your assets to your trust, then you may not need a probate administration after your passing. However, your trustee may need to file a Notice of Trust with the Probate Court.

3. Checking Accounts with Others

If you keep your money in a checking account with a child or spouse that is “joint tenancy with right of survivorship” (JTWROS), then the person named on the account with you becomes sole owner of that account when you pass, there’s no need for this to go through probate. (there are risks in setting up your accounts this way, including tax issues, creditor issues and possible divorce issues related to the co-owner, among other issues.)

4. Own Your Home as a Life Estate

If you transfer your home or other real estate to a beneficiary, but keep a “life estate” for yourself, then the land automatically transfers in full upon your death because the “life estate” ends by its own terms. No need for a probate court to be involved here. (Again, there are risks in using this strategy, including possible restrictions on lifetime transfers and possible divorce issues related to the co-owner, among other issues.)

5. Contracts that Pay Upon Your Death

Life insurance policies, IRAs, annuities, and other contracts name beneficiaries that will receive ownership of these assets upon your passing. It is controlled by contract law, and the Florida Probate Code isn’t applicable to these agreements.

Warning Before Using These Probate Alternatives

As always, there are things to consider when Florida law comes into play. The above non-probate avenues are tools to be used to avoid the cost in time and money to your beneficiaries of a Florida probate administration. However, if you are not careful, then you may end up creating a legal mess that gives them a bigger headache than just writing out a simple Last Will and Testament would have caused.

Before deciding to do things like add your child to your checking account or transfer your home to your spouse, it’s important to get the guidance of a Florida probate lawyer. Each person is an individual and each situation is unique. A meeting with an attorney to confirm that your plans are sound and without any legal surprises isn’t that expensive and getting legal advice here is not only a relief to you but a comfort to your loved ones in the future.

What Are The Two Main Types of Notices Given To Parties in a Florida Probate Administration?

Posted By on January 13, 2015

Florida law defines the types of notices that are to be given in the administration of a Last Will and Testament in a Florida probate court proceeding. What notice a party receives, and what notices must be sent, are governed by Florida probate statutes, procedures and probate rules.

What Information is Provided in Florida Probate Notices?

In any Florida probate matter, there are two major areas of information that need to be shared with anyone interested in the property that makes up the decedent’s estate: first, there is general information about the estate itself; and second, there is specific information about the probate court proceedings and the issues that are being determined as part of the probate process.

Florida probate administrations are court cases where someone’s Last Will and Testament,  as well as other end of life estate planning issues, are administrated in a judicial process with the purpose of transferring the decedent’s property according to his or her wishes.  General information about a probate matter includes things like the date the probate matter was filed; the name of the personal representative representing the decedent’s estate (with contact information); and other overall basics. Specific information about a probate case focuses upon targets like a particular piece of property or the rights of a particular creditor or a particular claim.

Some of this information is shared under the Florida Probate Code through one of two types of notice documents: the Notice of Administration or the Notice to Creditors. In accordance with Florida Statute 733.2123, and the probate rules, each of these notices must be sent to a party in a specific way (in writing, within a set time frame, by regular mail, by certified mail, etc.).

1. What is a Notice of Administration?

Pursuant to Florida Statute 733.212, the personal representative must promptly serve a copy of the notice of administration on:

(a) The decedent’s surviving spouse;

(b) stated beneficiaries;

(c) The trustee of any trust described in Florida Statute 733.707(3) and each qualified beneficiary of the trust as defined in Florida Statute 736.0103, if each trustee is also a personal representative of the estate; and

(d) Persons who may be entitled to exempt property.

The Florida Notice of Administration must provide details on specific information as specified by law. The Notice of Administration must give notice of the following:

  • the name of the decedent (the person who has passed away),
  • the file number of the estate,
  • the designation and address of the court in which the proceedings are pending,
  • whether the estate is governed by a Last Will and Testament (i.e., testate or intestate),
  • the date of the will and any codicils,
  • the name and address of the personal representative,
  • the name and address of the personal representative’s attorney, and
  • an explanation that the fiduciary lawyer-client privilege applies with respect to the personal representative and any attorney employed by the personal representative.

Key in the Notice of Administration is information given to those who may challenge the probate in some way. The Notice of Administration must also provide noticed that any interested person has 3 months from service of the notice to assert their objection that challenges the validity of the will, the qualifications of the personal representative, the venue, or the jurisdiction of the court.

For other components to a Florida Notice of Administration, see Florida Statute 733.212(2).

2. What is a Notice to Creditors?

Florida Statute 733.2121 in Chapter 733 of the Florida Probate Code controls Notices to Creditors. The Notice to Creditor must be published once a week for two weeks in a row “…in a newspaper published in the county where the estate is administered or, if there is no newspaper published in the county, in a newspaper of general circulation in that county.”

Under Florida law, the personal representative of the estate must provide a specific, detailed notice to creditors — but not all creditors have valid claims against the estate. Some creditors’ claims will be barred under Florida Statute 722.702 and 733.710. For those creditors who have valid claims for payment against the estate in probate, the Notice to Creditors must be sent that includes:

  • the name of the decedent,
  • the file number of the estate,
  • the designation and address of the court in which the proceedings are pending,
  • the name and address of the personal representative,
  • the name and address of the personal representative’s attorney, and
  • the date of first publication of the Notice to Creditors.

Each notice must explain to the creditors that they have a statutory deadline to meet in filing their claims against the estate. These deadlines are set forth in Florida Statute 733.702. If the creditor misses the deadline, then that creditor’s claim is barred and uncollectable.

The personal representative has to search for creditors as a part of the representative’s duties to the estate. How extensive that search must be, and the consequences of a personal representative failing to discover a creditor, is explained in Florida 733. 2121(2).


If you believe that you may be entitled to, but did not receive, notice of a probate administration or a probate proceeding, or if you have issues concerning a probate notice from a Florida personal representative, then it may be in your best interest to contact a Florida probate lawyer to learn your legal rights and remedies under Florida’s probate law.

2014 Year End Estate Planning

Posted By on December 9, 2014

In a matter of days, we’ll be entering a new year and 2014 will be a part of history. However, it’s still early enough in December for you to consider or update your Florida estate planning before the new year.

There are reasons why you should, legally. For instance, some laws change on January 1, 2015, that may impact your estate plan.

One example that may not impact lots of Floridians, but is a big deal to those with a significant estate, is the change to the Federal Unified Estate And Gift Tax Exemption. The Federal Unified Estate and Gift Tax exemption jumps to $5.43M/person on January 1, 2015.

Granted, most Floridians do not have taxable estates and don’t need to worry about federal estate taxation — but if you do, then this change is something to consider in your estate plan before New Year’s Eve.

2014 End of Life Estate Plan Considerations

Aside from federal gift tax implications, other things to consider for year-end estate planning are things like:

1. The Beneficiaries Named in Your Retirement Accounts

Is everyone listed as a beneficiary that you want to be there? Do you want to add a new child or grandchild?

2. The Beneficiaries Named in Your Insurance Policies

Who is the primary beneficiary on your life insurance policy (or policies)? Is this still best scheme for you? Do you have your estate listed as a beneficiary — and is this wise?

3. Charity Donations

For income tax deductions, you need to make your charitable contributions before year-end.

4. Gifts To Avoid Federal Gift Tax

In 2014, you can gift up to $14,000 per person to as many folk as you deem fit and there will be no federal gift tax. It goes up to $28,000 if you’re not married.

5. Think About a 529 Education Plan

With this plan, you can make 5 years of gifts in one year’s time for future expenses related to education.

Estate Planning Is For Everyone

Remember, estate planning is for everyone — and young people (including new or expectant parents) as well as established couples and independent seniors are well served by having an end of life legal plan established in the event of their passing. It’s not as complicated as it seems, and many already have begun an end of life estate plan without realizing it.

Do you have life insurance? Then you’ve already begun an end of life estate plan!

It’s important to have a plan for what happens to your property when you die. If you die without the basics of an estate plan in place, then your loved ones and survivors can be harmed.

For one thing, the State of Florida’s intestacy statutes will decide who gets what — and that may go against your wishes and what is fair in your family situation. If you have minor children or beloved pets, then who will take care of them when you die? It’s important for their protection to have that decision and end of life plan in place.

Other Things That Might Be Part of Your Estate Plan

Most people will have wills and life insurance policies as part of their estate plan; however, Florida law provides for many other protections for people and their estates, such as:

  • Power of Attorney
  • HIPAA Medical Waiver
  • Health Care Surrogate
  • Living Will
  • Trusts

Having a basic plan in place gives you peace of mind and provides not only for a smooth transition for your property, but also provides protections for your children, your pets, and your spouse. Taxes that would otherwise be due and payable to the federal government can be legally avoided with an estate plan.  Estate planning is for every adult, not just for older Americans.

10 Reasons Why Your Parents Need a Health Care Surrogate

Posted By on November 11, 2014

What is a Florida Health Care Surrogate?

In Florida, a Health Care Surrogate is a person who makes your health care decisions for you when you are not able to make these decisions for yourself. This is someone who will have legal authority to pass on your wishes to your health provider (doctor, hospital, etc.) when you cannot. Often, people like spouses, adult children, parents, brothers or sisters, or sometimes close friends are named as Health Care Surrogates. This is done by executing a legal document, like this online example provided by the Florida Bar.

 

10 Reasons Why Your Parents Need Health Care Surrogates

Children may want to discuss the need for a Health Care Surrogate (”HCS”) with their parents in advance of the need for having one, as part of their parents’ estate planning needs. Why do this? Here are ten reasons from a Florida probate lawyer’s perspective on why your parents need health care surrogates:

1. Parents Can Make Sure That Siblings Aren’t Overwhelmed by Tough Decisions to be Made

In the future, adult children may not be able to figure out what the best interests of their parent may be. These decisions can involve lots of complicated decisions, including if certain types of medication should be used or if surgery should take place. With a Health Care Surrogate in place, the burden of these decisions can be avoided. The HCS may be required to investigate all available options and makes the decision on when it’s best to do things like moving a parent to a care facility.

2. Parents Can Decide Now, Before Disability Choices Must Be Made

There are times when it is obvious to everyone except the parent(s) that changes need to be made for the best interests of Mom or Dad. Particularly for independent parents, it can be hard to face the reality that physical limitations (or mental challenges) warrant the need for care. Having a Health Care Surrogate helps children with a parent who is resisting recognizing new realities.

3. Parents Can Protect Against Emotional Fights Between Children Over Care Issues

Sometimes, children cannot agree on what is best for their parent. Emotions can run high, and there can be fierce fighting among siblings about what is best for Mom or Dad. Having a designated Health Care Surrogate established by the parent beforehand helps the family avoid all this strife.

4. Parents Can Protect Against One Child Controlling the Situation

In some situations, one child may attempt to control the entire situation of how to care for an aging parent, to the exclusion of their brothers and sisters, as well as other family members. This often happens when this child is in the position of caregiver for an elderly parent. Having an advance planning Health Care Surrogate naming more than one child as a HCS could keep the caregiving child from distancing other children from the parent and excluding them from important decisions about health care that may have to be made.

5. Financial Needs of Children for Contributing to Care Can Be Evaluated

Health Care Surrogates can also help in decision making that involves financial considerations. Parents can instruct the HCS in advance how they wish to have finances impact future health care decisions as well as applying for public assistance benefits (i.e. VA benefits or Medicaid).

6. Parents Can Decide How Best to Share Caregiving Among Loved Ones

Health Care Surrogates will be able to help ease the burden on children and family members who are trying to deal emotionally with the decline of their parent by freeing the children to love and comfort and enjoy their remaining time with their parent without the details and stresses of determining their shared health care responsibilities. HCS decisions can be made with the parent’s preferences for how children are to participate in care-taking of the parent, such as whether or not the parent will live in any particular child’s home or if they will stay in their own home with outside home health care support.

7. Surrogate Will Know How to Deal with Potential Situation of One or More Parents All Needing Care from Kids

Children may be facing the decline of more than one parent at the same time. Children may have parents that are both facing serious health issues. Children can face both Mom and Dad having health care needs simultaneously. Having a HCS in place in advance helps ease the burden here on everyone involved.

8. Treatment Choices Can Be Communicated by the Parent In Case They Can’t Do It in the Future

Health Care Surrogates will be able to act with an understanding of what the patient wants to have for medical treatment because they will have instructions in advance from a parent long before the need to address decisions on medical care for a parent incapacitated in some way, e.g. in a coma or with advanced dementia.

9. End of Life Decisions Can Be Clarified By the Parent Now

Health Care Surrogates will be able to act in accordance with the parent’s wishes when the time comes for end of life decisions, such as experimental procedures or removal of a feeding tube for someone deemed to be brain dead by their physicians.

10. If Your Parents Don’t Decide on Surrogate Now, the Court May Decide for Them

Parents who have the foresight to appoint a Health Care Surrogate not only protect their family in the future, they also protect their own desires and preferences for what their future decisions should be. Absent making this appointment, parents may face a Florida probate judge making this appointment for them. This person may be trusted by the judge, but this court-appointed HCS will never have the in-depth understanding of the parent’s wants as someone who was personally appointed first-hand by that parent.

10 Reasons Why New or Expectant Parents Should Have a Will

Posted By on October 14, 2014

Congratulations if you are reading this post because you are expecting a child or if you are a new parent. There are few joys in life as great as raising a child! Congratulations, too, on investigating how to protect your family in the event of an untimely passing on the part of you or your spouse.

Here are 10 reasons why a Last Will and Testament is especially important for new and expectant parents:

1. Guardians.

By doing some estate planning now, you can establish pre-need guardians for your child and family. These are people you trust to be either their financial guardian and/or their guardian of the person. One person can undertake both roles (like a parent does) or different people can act here, splitting up the money decisions from the day to day responsibilities.

2. Unmarried Parents.

Not every child is born to parents with a marriage license. If mom and dad are not married, then having a will set up will protect the baby in the event one of those parents passes away. When parents are not married, without a Florida will, the family home as well as savings, etc., may not pass under Florida law to a live-in partner to care for the child(ren). Florida “intestacy” laws will apply.

3. Step-Children.

In today’s modern families, often there are blending situations where step-parents are doing their estate planning. In a Florida will, these parents can look after the interests of step-children, including appointing guardians for them (see above).

4. Transfer of Property Between the Couple.

Under Florida intestacy laws, if one parents dies, some of their property might not go to their surviving spouse, but directly to their children. This might not be best for the family and preparing a will protects everyone here.

5. Heirlooms and Treasures.

Often, there are specific pieces of property that parents wish a particular child to have. The grandmother’s engagement ring to their daughter, the father’s pocket watch to the son. With a will, specific assets such as jewelry, collectibles, letters or vacation properties that you want to leave to a specific child can be accomplished through specific bequests.

6. Education Decisions.

If you should die before your child reaches adulthood, how do you want my children to be educated? Planning for your child’s schooling can be done through your Last Will and Testament: your estate can pay for a tutor to continue their homeschooling, for instance. If your kids are in private school, a portion of your estate can cover their tuition.

7. Paying for College.

You can plan within your will for part of your estate to be held in trust for college tuition or other post secondary education.

8. Special Needs Child.

Special needs children face unique challenges and you can protect them with a Special Needs Trust, which can protect future government benefits for which they may be eligible as well as insuring they will have the ability to pay for medical care.

9. Timing.

Children have the right to a childhood, and your estate planning can protect that time of innocence. If they are to inherit a substantial amount of property or cash, for instance, you can decide in your will both how and when your children receive their inheritance.

10. Protecting Them From Themselves.

If your family has a history of addiction issues, you can try to keep your children free from drugs, gambling, etc. by adding a provision to your Last Will and Testament that prevents them from inheriting or delays inheritance if they are exhibiting addictive behavior, such as using drugs or gambling.

What is a “No Contest Clause” in a Florida Will?

Posted By on September 9, 2014

In Florida, can you block someone from challenging your will with a No Contest clause?

 

Last Will and Testament of Tennessee Williams

In Florida, as in all other states, there are laws on the books that establish how your property will be distributed should you die without a will, or if you die without a valid one. So, the smart thing to do in order to make sure that your real estate and personal belongings are inherited by the people you wish, and not the ones that the state legislature has assigned as heirs, is to make a valid Last Will and Testament.

This isn’t that hard to do. A simple Last Will and Testament can be drafted quickly and inexpensively by a Florida estate planning lawyer. If you don’t have a complicated web of assets (like holdings in different states or countries; antiques or collectibles with changing market values; etc.) then finalizing a will to protect your desires and intentions is easy enough.

When you write your will, then you get to decide who gets what. You can be as detailed as you want. If you want you Aunt Midge to get your antique wall clock, then you can specific this bequest. If you want to make sure that your son and daughter have sufficient funds for their college education, then you can explain in your Will how this will be funded.

However, not all family dynamics are peaceful and united. You may have a valid concern that your desires and decisions on who gets what of your property may be challenged after your passing. Maybe you worry that your children from your first marriage will be unhappy with your decisions on leaving the family home to your second wife. Maybe your new spouse will be concerned that your caretaker should not receive such a large bequest, despite your intent to reward them for their compassion in your final illness.

Many people assume they can control any challenges to their will easily enough by including something called a “no contest clause.” It’s a will provision that has been used in every state and it’s been around for many years.

What is a No Contest Clause?

A “no contest” clause is language in a will that states that a person who tries to contest the will – or to challenge the validity of that will on its face – will be rewarded with being totally disinherited or blocked from receiving anything from the decedent. In other words, anyone who fights the will loses any inheritance at all according to the terms of the will.

Some states may find no contest clauses to be acceptable. Florida does not. Florida Statute 732.517 provides:

A provision in a will purporting to penalize any interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable.

Why Can’t You Use a No Contest Clause in Florida?

Florida law has found that no contest clauses in wills are all too often a bar to justice, keeping courts from hearing valid arguments against wills. As one Florida court has explained:

Under a no contest clause, in order to receive the devise, the beneficiary must forfeit the right to contest the instrument. But that right is essential to the integrity of the estate disposition process, because beneficiaries must be able to obtain, and courts must be able to provide, a determination of the instrument’s validity. …. Thus, a beneficiary cannot be forced to choose between the right to contest an instrument and the right to take under it, and this public policy is codified in section 736.1108(1) and its probate analogue, section 732.517.

What Can You Do Instead of a Non Contest Clause?

If you wish to insure that your desires are respected after your passing, then there are legal ways to do this as part of your overall estate planning. A Florida estate planning attorney can help you memorize your wishes and plan for your property so that everything you own transfers smoothly and efficiently to those to whom you want it to go — and this can be done at a reasonable cost.

Diminished Capacity To Write A Florida Will – How Do Lawyers Help Protect Your Wishes?

Posted By on August 12, 2014

Florida is a wonderful place to spend your retirement. It’s no surprise that so many people come here to spend their golden years, and here in the Miami and Broward County areas we see lots of seniors who are enjoying an active and full life here in the Sunshine State.

Florida probate lawyers help seniors and elders with their estate planning questions. Some of these queries are quick questions about how Florida law impacts existing estate plans that have been prepared in other states. Some of the questions relate to estate plan basics, like a Power of Attorney, Health Care Surrogate or a Last Will and Testament.

These are savvy and wise people who are seeking to control how their property is going to be distributed after their passing. It’s smart to plan ahead, and Florida probate lawyers are happy to help.

However, there are times when things aren’t so simple and smooth.

What is Diminished Capacity?

Under Florida law (Florida Statute 732.501), you must have a “sound mind” when you make a will or other estate plan document (i.e Trust or Power of Attorney). This is called “testamentary capacity,” and it means that you have the mental ability to understand what property you own or control as well as who are the people to inherit your stuff (”the natural objects of your bounty”). You have to be able to understand what the Will will do, from a practical standpoint, at the time that you sign (”execute”) the will documents. See, In re Wilmott’s Estate, 66 So. 2d 465 (Fla. 1953).

In Florida, it’s assumed that a person has testamentary capacity when they sign their Will. That capacity can be fleeting; even someone with established mental illness can have capacity to sign a will if they understood what they were doing at the time they made and signed it.

Diminished capacity is something to be shown by someone challenging the Will. If it is shown, then the will isn’t recognized as being legally valid.

Diminished Capacity in the Probate Lawyer’s Office

Since the capacity of the person is critical at the time that their Last Will and Testament is signed, then it’s important that their estate plan and probate lawyer confirm that they have testamentary capacity when their Will is executed.

How can a probate lawyer do that — we’re not doctors or psychologists, right?  Right. However, probate lawyers do have established legal standards they use in situations where diminished capacity may be a concern.

As a Florida probate lawyer, anytime someone wants to have a Last Will and Testament, Durable Power of Attorney, or other critical estate planning documents created or amended (changed), then we must confirm that this client has capacity to take this step. This is true for new clients as well as people we’ve known for years.

Why? It is the right thing to do. It’s not meant to be insulting or presumptuous; it’s for the protection of the client now and for the protection that their wishes are carrying out later, as well.

Florida Probate Attorney and Diminished Capacity

First, probate lawyers take the common sense steps. We observe the client for signs of diminished capacity, protecting them now from capacity challenges to their Will in the future.

Does the client act reasonably: do they know what they own, for example? Are there reasons why they may need special communications but they do understand, given special help? Older clients may have hearing loss, for instance. Their infirmities may mean they are more alert in the mornings than the evenings. Certain pain medications may be impacting their level of alertness and a conference with their physician can be vital.

If the lawyer is confident of capacity, then the finalization of documents proceeds at this point.

If the lawyer is still concerned about protecting his client and their wishes, he can undertake further steps including:

1. Lawyers can look to things like the Handbook published jointly by the American Bar Association and the American Psychological Association, entitled “Assessment of Older Adults With Diminished Capacity.” (Read it online here.)

2. We can also use the ABA Model Rule 1.14 as guidance here. It states:

(a) When a client’s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client’s own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.

(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.

3. There are times when a doctor’s opinion may be helpful. Here, the doctor’s written evaluation at the time that the Last Will and Testament is signed can be powerful evidence of capacity in a will contest down the road.

For Seniors, Protecting Against a Diminished Capacity Challenge Is Important

It is important for the Florida Probate Lawyer to establish capacity at the time that a Will is signed. However, being elderly or having some memory loss doesn’t make a senior citizen legally incapable of executing a valid will (or changing one).

If you are wanting to draft or amend your Last Will and Testament in Florida, and you have concerns that your decisions not be challenged later, then having a Florida probate attorney to help you with your estate planning can be critical to having your wishes honored.

Florida Personal Representatives Acting Badly; Suing the Past P.R. (and Her Lawyer) for Malpractice

Posted By on July 8, 2014

When a loved one dies in Florida, the law immediately creates an “estate” to hold that person’s real estate and personal property until the assets can be legally determined, which are then transferred to the person who inherits it. An executor (in Florida, the person appointed by the Probate Court is known as personal representative or “P.R.”) is appointed to oversee this process – the man or woman who acts as personal representative of the estate is held to the highest standards as a fiduciary and this person is responsible to to the estate’s heirs, creditors and beneficiaries.

 

 

Normally, the personal representative is named in the decedent’s Last Will and Testament.  Often times, the person named as the personal representative isn’t accustomed to dealing with legal matters.  For that reason, Florida law requires a personal representative to be represented by an attorney to assist them in their duties. Which is a good thing. (The Florida Probate Code allows the lawyer to be paid from estate funds for advice given to the estate’s personal representative.)

However, despite having legal counsel, there are times when things go wrong and where a personal representative doesn’t stay the course. Sometimes the beneficiaries seek to have the estate’s representative ousted through court proceedings; other times, the P.R. quits and another personal representative takes over.

There can be all sorts of reasons for a change of personal representatives of an estate. It is not necessarily a red flag of wrongdoing.

However, there are times when a new, or successor, personal representative does discover that bad things have happened during the course of the prior administration of the estate and when this happens, that replacement representative has a fiduciary duty to pursue claims and seek redress on behalf of the estate and its heirs.

Which brings us to the new case of Bookman v. Davidson, where the First District Court of Appeals has held that a successor personal representative who is filing suit for alleged impropriety in the administration of an estate can sue not only the prior estate representative but the attorney or law firm that represented him or her.

Bookman v. Davidson: Case of First Impression

Deborah Irby died and Dana Ford was named as her estate’s personal representative. Dana Ford hired a lawyer to help her with the job. Time passed and Ford quit. A man named Alan Bookman took over as the representative of the estate and began work on the task of settling the estate and getting all the property held by Irby to the rightful owner (and getting her debts paid, her taxes filed, etc.).

Alan Bookman discovered what he believed to be improprieties in the handling of the Deborah Irby Estate. He filed a formal lawsuit against both Dana Ford and her lawyer.  Specifically, Bookman found that before he took the reins, assets of the estate had been transferred or disclaimed that could have been used to pay Irby’s debts.

He sued Ford for the return to the estate of the fees she had been paid to act as its personal representative and he sued the lawyer for a return of the $195,000 that had been paid in legal fees.

Bookman had no choice here. Under Florida law, an estate’s personal representative has the legal duty to act not only within “the best interests of the estate” but also in “the best interests of all interested parties, including creditors.” When Bookman found the assets had been transferred that could have been used to pay the estate’s creditors, he had no choice but to sue in order to return to the estate those assets held by the predecessor representative or her agents.

The lawyer objected to being sued for professional negligence, arguing that Florida law did not allow Bookman to sue him for malpractice regarding his work regarding the estate administration, only Ford could do so since it was Ford that hired him.

The Florida First District Court of Appeals ruled otherwise. Pursuant to Florida Probate Code, sections 733.601-733.620, as the successor personal representative, Mr. Bookman did have “standing” to sue the lawyer who had provided advice and counsel regarding administration of the Deborah Irby Estate even though a different person, Dana Ford, was the estate’s representative at the time.

[Read the full opinion:  Bookman v. Davidson, — So.3d —- ,(Fla. 1st DCA May 05, 2014)]

The Point Here: Personal Representatives Answer to Beneficiaries and Creditors

The point to remember here: the fiduciary duty of a personal representative of an estate in Florida is important and it comes with potential personal liability. The powers, duties, and obligations of that personal representative are many, and they extend to the representative himself (or herself) as well as to beneficiaries, creditors, contractors, accountants, and attorneys. When one person replaces another in the role of personal representative of a Florida Estate, all the powers as well as the duties and obligations are passed like a baton to the successor.

It’s a position of the highest responsibility and its demands are many.

If you have a reason to doubt that an estate’s personal representative, past or present, is acting fairly or accurately in the administration of a Florida estate, then you need to consider your legal rights as a beneficiary or creditor to that estate.

Discuss your situation with a Florida probate lawyer if you have concerns, knowing that the personal representative not only has great power, but great legal responsibilities.

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