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Archive for February, 2010


Thursday, February 25th, 2010 by

According to statistics, at least sixty percent (60%) of you reading this newsletter have not done any estate planning.   You have taken no steps to have your own will or trust prepared.  Nevertheless, you do have a will!  The State of Florida has drafted one for you.  So, if you have not yet taken things into your own hands, here is what your will says: 


(According to the State)


            (1)       I leave everything to my surviving spouse, so long as I have no lineal descendants.


            (2)       If I also have surviving lineal descendants, all of whom are the lineal descendants of my surviving spouse, then I leave the first $60,000 of my estate, plus ½ of the balance of my estate to my spouse.  I leave the remaining assets equally to my lineal descendants, per stirpes.  (“Per Stirpes”, . . . what?)


            (3)       If I have lineal descendants who are not the lineal descendants of my surviving spouse, then I leave ½ of my estate equally to those lineal descendants, per stirpes, and the other ½ of my estate to my surviving spouse.     


            (4)       If there is no surviving spouse, I leave everything equally to my lineal descendants, per stirpes.


            (5)       If I have no lineal descendants, I leave all of my estate to my father and mother equally, or to the survivor of them.


            (Still reading?  Keep going, it gets better . . .)


            (6)       If I have no surviving spouse, lineal descendants or parents, I leave everything equally to my brothers and sisters, as well as the descendants of any deceased brothers and sisters.  (Say what?)


            (7)       If there is none of the foregoing, I leave ½ of my estate to my paternal relatives and the other ½ to my maternal relatives in the following order:


                        (a)       to the grandfather and grandmother equally, or to the survivor of them; or

                        (b)       if there is no grandfather or grandmother, then to uncles and aunts and descendants of deceased uncles and aunts; or

                        (c)        if there is either no paternal kin or maternal kin, the estate shall go to the other kin who survive, in the order stated above.


            It does keep on going until you completely run out of living relatives, but you get the point.


            Now that you know what the State of Florida has in mind for you, is that what you want?  Terrific!  Is it time you took charge and began your own planning?  Please give us a call and we can help.

Categories : Newsletter
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Thursday, February 11th, 2010 by

We have just finished our series on the 6 common mistakes people make when naming guardians for their minor children.  If that series doesn’t convince everyone with minor children about the need for careful estate planning, then I give up!  But what about parents with adult children?  Why is it important for them to plan?


            I have heard many people say something to the effect of “why do I need an estate planning attorney, I’ll just add my adult children to the deed on my house and add them to my bank accounts.  Then I won’t have to pay a lawyer to design an estate plan, nor will I have to pay probate fees.”  These “self-help” remedies ARE viable estate planning alternatives, if done properly.  However, if you do not have a complete understanding of the gift tax law and know the difference between a “completed” lifetime transfer and “incomplete” transfer, then you may know just enough to get into trouble.


            As the gift tax law now stands, everyone may give away up to $13,000.00 to another individual in 2010 without filing a gift tax return.   You also currently have a One Million Dollar ($1,000,000.00) lifetime gift tax exemption amount, so no gift taxes would be owed until you have given away over your lifetime a cumulative total of over One Million Dollars.  However, if you give a gift to any one individual in a calendar year that exceeds $13,000.00, then a gift tax return is legally required to be filed.  So, let’s look at how the gift tax applies to joint bank accounts and “adding a person to the deed”. 


            Adding an adult child’s name to your bank account does not result in a completed gift until the child withdraws money from that account.  If the child (or sibling or other friend or relative) withdraws more than $13,000.00 from that account in a calendar year, then you must file a gift tax return.  


            There are other problems with adding an adult child to the bank account such as:  is it your intent to “give” the child complete access to the funds or are you doing it just “in case of an emergency”? If there is no written agreement as to the use of the funds, misunderstandings can occur which could result in ugly lawsuits between family members.


            Contrary to the joint bank account situation, adding an adult child to the deed is a complete gift at the time it is made.  This is so even if you are retaining a traditional life estate in your home and giving only a remainder interest to the child.  This is a taxable gift of a future interest based upon the full value of that remainder interest.  If it is valued in excess of $13,000.00, then you must file a gift tax return for the year in which the child is “added to the deed”.


            The problem with not knowing enough to file a gift tax return is that, although no taxes or civil penalties would be due until you have given away over One Million Dollars ($1,000,000.00), there is a criminal penalty for failure to file a gift tax return which could expose you to a fine of up to $25,000.00 plus 1 year in jail.  So, without proper legal advice, it is not inconceivable that you could end up in jail for “adding a person to the deed”.


            The moral of this story is that before you can decide “I can do this myself”, stop and think whether you really know enough about the legal ramifications of what you are about to do.  Most of us have no trouble with calling a plumber or an electrician to perform work which we are not trained to do.  Consulting with a lawyer is no different – and sometimes even less expensive!

Categories : Newsletter
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