Archive for 2010
WHY LIFE INSURANCE IS AN IMPORTANT ESTATE PLANNING TOOL
As a Jacksonville, Florida Estate Planning Attorney, I work regularly with life insurance agents as part of the estate planning team. Life insurance is helpful in many estate planning situations. Some examples are:
1. A family with young children. Life insurance can replace the income if a parent dies prematurely in order to help raise the children and put them through college.
2. Blended families. What if a husband is in a second marriage with a new child, and also has grown children from a prior marriage? Life insurance provides a means for him to leave funds to his older children at death while still providing for his new wife and child.
3. Business owners. Most business owners know that a buy-sell agreement is an important planning tool to make sure that there is a smooth transition if one of the owners retires or dies. However, this buy-sell agreement may not work if there is not sufficient cash available to pay off the owner’s family. Life insurance helps provide the cash that makes a buy-sell agreement work.
4. Payment of estate taxes. Many times, estates are not liquid or there is property that everyone wishes to keep in the family. Life insurance provides a means to pay estate taxes without having to sell family property. When combined with gift giving strategies, such as creating an irrevocable life insurance trust, life insurance can provide leverage so that you may use pennies on the dollar to transfer assets to your family without estate taxes.
You may have heard that life insurance is tax-free. Life insurance benefits only are free from income tax. However, they will be subject to estate taxes at your death. We are available to discuss specific estate tax planning strategies that can keep life insurance out of your estate.
If you are considering your estate planning, you may wish to also have an older life insurance policy reviewed. Your insurance agent or financial advisor may be able to help you obtain a better policy now. People are living longer than they were 20 or 30 years ago, so you may be able to obtain a greater death benefit at a lower premium because life insurance generally is less expensive than it was many years ago. These are just some examples of how we utilize life insurance as Jacksonville, Florida Estate Planning Attorneys.
WHY DO ESTATE PLANNING IN ORDER TO AVOID PROBATE?
As a Jacksonville, Florida Probate Attorney, I understand the probate process and why many people seek to avoid it. Probate is the legal process used when the court has to get involved to help transfer assets after someone has died. There are several legal rules and procedures set up to make sure that the transfers are done properly and that the family is aware of what is being done.
There are three major reasons why people wish to avoid probate: First, probate is a relatively slow process. Because of the need to involve the court clerks and judicial officers, finalizing an estate naturally would be more time consuming than if it were done privately. Petitions must be filed with the court, notice given to creditors and family members, inventory lists developed and an accounting of income and expenses given. So, between the more cumbersome court procedures and the necessity of dealing with the court’s calendar, it typically takes many months to finalize an estate.
Second, probate is more expensive than if assets are transferred privately. There are several court fees involved in the probate process, including paying an attorney to assist the personal representative in completing all of the additional tasks required by the court process. Filing fees, fees for publishing notices to creditors and fees for providing accountings to the court and the rest of the family all combine to make transferring assets through the probate process relatively expensive.
Third, probate is a public process. If there is a will, it is required to be filed with the court. The will and all of the probate court documents are public records. Anyone could go to the courthouse or maybe just look online to learn about your assets and who would be receiving them. A nosy neighbor just might want to know how much you were worth at death and to whom you owned debts. People who prey on the vulnerable frequently review probate documents in order to try to obtain assets at a bargain basement price. In contrast, trust administration can be completely private.
My conclusion, as a Jacksonville, Florida Probate Attorney, is that compared with trust administration, the Florida probate process is slower, more expensive, and public. There are several estate planning methods to avoid probate. Attending our “Truth About Estate Planning Workshop” will provide you with information on how you can plan to avoid probate.
JACKSONVILLE, FLORIDA PROBATE ATTORNEY’S HORROR STORIES FROM THE REAL WORLD Story #3
As a Jacksonville, Florida Probate Lawyer, I have been involved in a probate dispute among six siblings. This probate litigation is located in Duval County, Florida. A mother died and left her estate to be divided among her six children. The tangible personal property was to be divided equally among the six children. However, the mother specifically stated that one of the children could continue to live in her home, but that the living arrangements would be subject to an agreement among all of her children. This has made for quite a probate dispute.
The children have been involved in probate litigation, because the mother did not specify what furniture and household items stayed with the house. The children are arguing about who gets the dining room table, living room couch, whether the dishes and toaster remain with the house, etc. One of the children has been appointed personal representative. That child has been accused of breach of fiduciary duty and other misdeeds by the other siblings. The probate litigation is ongoing and creating unnecessary expense which is reducing the size of the probate estate. This is just another horror story I have seen as a Jacksonville, Florida Probate Lawyer.
JACKSONVILLE, FLORIDA PROBATE LAWYER’S HORROR STORIES FROM THE REAL WORLD Story #2
As a Jacksonville, Florida Probate Attorney, I recently was involved in a Duval County, Florida probate case where a mother of 9 children died without leaving a will. The mother owned two homes at the time of her death. Under Florida’s law of intestate succession, each child would be entitled to obtain a 1/9 interest in each property. Because one of the properties was her homestead, the interests in the homestead descended on the date of death. One of the children is in jail and another is a drug addict.
The lack of the mother’s estate planning led to a volatile dispute between the heirs. One of the less responsible family members moved into the house and promptly trashed it. Because the siblings cannot even communicate, much less agree, and the dispute between heirs continues, Duval County, Florida has two additional blighted parcels of real estate in its midst. This is just another horror story I have seen as a Jacksonville, Florida, Probate Attorney.
JACKSONVILLE, FLORIDA PROBATE ATTORNEY’S HORROR STORIES FROM THE REAL WORLD Story #1
As a Jacksonville, Florida Probate Lawyer, I see many examples of how poor planning results in increased probate costs. Recently, a client had to open a St. Johns County, Florida probate case so that the decedent’s 1% interest in a parcel of New York real property could be transferred. Even though we utilized the least costly probate procedure known as “summary administration,” the probate costs still were three (3) times greater than the value of the property being transferred to the probate estate.
Ordinarily, it would not have been cost effective to open a St. Johns County probate case at all, but because the real estate was owned by a total of 14 relatives, family pressures were brought to bear to make sure that everyone was able to agree and participate in the sale of the property. So, just obtaining this small inheritance for a St. Augustine, Florida, resident, resulted in major probate expense that could have been avoided if family members had better communicated their estate planning concerns. Large families particularly must develop a better plan to dispose of real property than to leave small percentages of ownership to multiple siblings, nieces and nephews. This is just one of the horror stories we see frequently as a Jacksonville, Florida Probate Lawyer.
3 COSTLY MISTAKES MADE BY FAMILIES WITH SPECIAL NEEDS CHILDREN
As a Jacksonville, Florida special needs lawyer, I realize disabled and special needs children have unique planning needs. Unfortunately there are many misconceptions when it comes to securing the financial future your child deserves. Even well-meaning caregivers and service organizations don’t always understand legal issues and can give bad advice. It is really critical for these families to fully understand their options because these misconceptions can result in costly mistakes. Below are just a few.
COSTLY MISTAKE #1: Procrastination. It is critical that all parents with minor children do estate planning. You just never know when you might become incapacitated or die. But, it is even more critical that parents of special needs kids plan early. That is because a child without special needs will be able to work and provide for their own financial well-being when they become adults. However your special needs child may never be able to do that. Plan early because your failure to properly plan for there can never be undone.
COSTLY MISTAKE #2: Disinheriting your child to preserve government benefits. Many children and adults with special needs rely on government benefits such as SSI and Medicaid for their basic needs (including health insurance). There are some well meaning people and attorneys who would suggest that you disinherit your child to protect his or her benefits. But government benefits provide only enough to secure food, clothing and shelter. So what happens after you become incapacitated or pass away? Will your child be able to maintain the life that you have so carefully crafted for them? Probably not.
If your child is likely to require government assistance to meet his or her basic needs, you should consider establishing a Special Needs Trust. If done properly, a Special Needs Trust can protect your child’s public benefits and help them maintain their lifestyle even after you are no longer there to support them.
COSTLY MISTAKE #3: Creating a “do-it-yourself” or generic special needs trust. Special Needs Trusts should be created by a lawyer who has expertise in this area of the law. That is because special needs trusts are subject to both federal and state laws and the laws of each state can vary. It may be possible to create a do-it-yourself or generic “form” trust that can protect your child’s government benefits, but most likely they are not designed to meet your child’s particular needs. It is critical to design a trust that will ensure that your child’s specific requirements are considered. For example, your child may require, or greatly benefit from, special group programs, individualized physical therapy, or other things that a generic trust simply doesn’t address.
A properly drafted and funded Special Needs Trust can ensure that your child has sufficient assets to care for them in the way you plan throughout their lifetime. But be sure to see an experienced special needs attorney at the Cramer Law Center and don’t rely on what others may be telling you.
Thanksgiving: A Time for More than “Talking Turkey”
In 1621, Plymouth colonists and Wampanoag Indians shared an autumn harvest feast. This is generally acknowledged as one of the first Thanksgiving celebrations in the colonies (although Native American groups are believed to have organized harvest festivals and other celebrations of thanks centuries before the arrival of Europeans). And while days of thanksgiving were celebrated by individual colonies and states in the years that followed, it was not until 1863 that President Lincoln formally proclaimed a national Thanksgiving Day, to be held on the last Thursday in November.
For many Americans today, Thanksgiving is a time to put aside worries about work and calories, try to make the best of having to watch the Detroit Lions attempt yet again to play professional football, and focus on what matters most in life: FAMILY.
At Cramer Law Center, P.L., we would like to take this opportunity to wish you and yours a very happy Thanksgiving. And, because we are estate planning attorneys who care about you and your family, we can’t help but use this opportunity to remind you of something important: Thanksgiving, with the family gathered round, is an ideal time for everyone to talk with each other about their healthcare wishes. We know that having this conversation may be difficult, but it is truly necessary.
By explaining your feelings to your loved ones, you spare them the stress and pain of having to make such decisions on their own, without the benefit of your insight. In effect, sharing your feelings, goals and wishes in advance, as best you can, is a way for you to show your love for your family and concern over their emotional well-being.
So now you’re convinced, but you don’t know how you’d begin the conversation? You can always blame it on us. (“My attorney really wants me to talk with you about this …”) We’re happy to take the rap.
We hope that this Thanksgiving is one of the best ever for you and the rest of your family. And if you want to speak to those closest to you about your healthcare wishes but want a different way to start, we can show you other ways to begin the conversation. Chances are, you will find that it is not as difficult as you imagine, and will actually draw your family closer together.
Be safe and have a wonderful holiday!
Jeff, Melinda, and Val
ALZHEIMER’S DISEASE – DISABILITY PLANNING
Former Supreme Court Justice Sandra Day O’Connor has authored a compelling Op-Ed piece in yesterday’s New York Times arguing that this country needs to make a greater financial commitment to finding medicines that will delay the onset of Alzheimer’s disease or, better yet, cure it. The likelihood that a person will develop symptoms of Alzheimer’s or other forms of dementia doubles every 5 years after age 65. One of every two persons over age 85 is afflicted. This disease is 100% incurable and robs people of their memory, judgment and dignity. It depletes families both emotionally and financially.
By 2050, it is estimated that 13.5 million Americans will be stricken by this disease. We are sure that you will agree that developing a well designed and adequately funded national strategic plan to combat this disease is necessary.
In the meantime, we continue to urge everyone to make both financial and legal plans to deal with this eventuality. The comfort and dignity of you and your loved ones can be maximized by proper planning. By preparing, in advance, detailed instructions to your caregivers on matters of daily living that are important to the preservation of your dignity, you can make a substantial difference in your quality of life if suffering from dementia. Examples of small things like indicating your favorite foods or whether you like the room temperature warm or cool can make a large difference. We can help with both the legal and personal planning. I also am available if you just want to talk. In addition to my professional experience, my 86 year old mother has dementia and I have been through some of the stress and anguish which accompanies this disease.
THE GUARDIAN ADVOCATE
When children with developmental disabilities reach age 18, they become “adults” in the eyes of the law. Parents no longer may legally make financial and health care decisions for their adult children. If the developmental disability is severe enough to prevent the adult child from caring for him or herself, the parents must apply to become their child’s legal guardian in order to continue making important decisions for their developmentally disabled child – such as consenting to medical, dental, and surgical procedures; managing money or property; applying for governmental benefits and entitlements; and deciding on residential choices.
Fortunately, Chapter 393 of the Florida Statutes is specifically designed to meet the unique needs of persons with developmental disabilities. The person who would be appointed to care for an adult with developmental disabilities is called a “guardian advocate.” Even though the term is different from the term “guardian” as used in Chapter 744 of the Florida Statutes, the authority given by the court to each is the same. However, Chapter 393 is less restrictive, less costly and much preferred in order to care for persons with developmental disabilities.
Because of the streamlined process, guardian advocacy proceedings are consuming less court time and thereby reducing attorney’s fees. For example, there is no need to pay for an examining committee of three professionals, as is required in Chapter 744. The statute does not require a separate hearing to determine incapacity and there is no adjudication of incapacity. Existing professional evaluations and plans identifying needs may be used to identify rights which the developmentally disabled individual cannot handle. The judge will review the reports, evaluations and support plans and then appoint a guardian advocate to perform only those functions that the person is unable to perform. All of those rights that the developmentally disabled person cannot manage will be given to the guardian advocate to handle.
We are fortunate to have this streamlined guardian advocate procedure available in Florida. Parents with developmentally disabled children should be aware of this statute and plan ahead for when a child with developmental disability reaches 18 and becomes an “adult.” Cramer Law Center has helped many persons through the guardian advocate process and is available to help others through the process.