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RELATIONSHIP SERIES – PART 3

Friday, April 18th, 2014 by

Our Relationships Series previously has covered the unique estate planning challenges faced by blended families and by same-sex and other unmarried couples.  Today we will address another group that is in dire need of proper planning: families with children under the age of 18.

In Florida, as in other states, the law recognizes children as vulnerable members of society and therefore limits their legal rights and responsibilities until they reach the age of “majority,” or adulthood, on their 18th birthday.  For example, a child who is not yet 18, called a “minor” in legalese, cannot own property or sign contracts.  Instead, he must rely on his parent(s) to make decisions regarding his person (i.e. where he will live and go to school, what medical treatment he will receive) and his property (i.e. what to do with any assets he may receive).

As parents, we exercise these rights as a matter of course while raising our children.  We are able to do so without any legal process or reporting because we are the “natural guardians” of our minor kids.  But what would happen to your minor child if you were no longer alive or otherwise unable to take care of him?

When there is no natural guardian available, a court must authorize someone (a “guardian”) to step into your shoes and make decisions about your child’s person and property until he turns 18.  If you do not plan properly, the court will decide who the guardian will be based on who steps forward, and who the law prefers, rather than your wishes.

Even if you do have a plan that expresses who you want to be guardian(s) of your minor child, it may not fully protect him.  In the short term, your sudden unavailability, even if temporary (i.e. unconscious after a car accident), may lead to your child being taken into foster care.  In the long term, your plan may result in your child getting complete freedom and a big check at the age of 18 rather than receiving continued guidance.

If you would like to learn more about planning to protect your family, you are welcome to attend one of our monthly Truth About Estate Planning workshops.  The October 7th workshop will be specifically tailored for families with minor children.

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THE LATEST DO-IT-YOURSELF NIGHTMARE

Friday, April 4th, 2014 by

We are constantly warning clients and friends alike of the dangers of do-it-yourself estate planning.  The odds are just too high that a fill-in-the-blanks estate plan will fail.  We hate to say we told you so, but here it is straight from the pen of Justice Pariente of the Florida Supreme Court:

“I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance.  As this case illustrates, that decision can ultimately result in the frustration of the testator’s intent, in addition to the payment of extensive attorney’s fees — the precise results the testator sought to avoid in the first place.”

 

The case that Justice Pariente is referring to is Aldrich v. Basile, where the Court recently was asked to interpret a do-it-yourself will.  Ann Aldrich wrote her will on an “E-Z Legal Form.”  Ann’s big mistake was that her will gave away specific assets (i.e. my gold watch to my sister) but it did not contain a residuary clause.  A residuary clause basically says “here is what to do with any asset I did not specifically mention.”

Ann’s will may have given away all of her assets at the time she made it, but she later inherited more assets from her sister.  She did not update her will to include the new assets, but instead expressed her intent in a separate handwritten note that “all” of her worldly possessions should go to her brother.  Unfortunately for Ann and her brother, this note was not a valid way for Ann to update her will or direct what to do with the assets not specifically given away.  Further, the will itself, without a residuary clause, was not sufficient to “effectively dispose of” any assets not specified.

The end result was that Ann’s heirs under Florida’s intestacy statute (the State’s default will) shared in the property that Ann wanted to go solely to her brother.  Even though it seemed clear what Ann really wanted, she didn’t express it in a legally enforceable way, so the Court had to follow the terms of the will.  As the Court explained, the will was not ambiguous (which would have allowed them to consider Ann’s intent) – it was just missing some critical words!

The internet may provide data, information, and knowledge. But it does not, and cannot, provide legal advice.  Please don’t do estate planning without first obtaining creative, wise, and experienced legal advice.  The parties in the Aldrich case were fighting over an $87,000.00 bank account.  The legal fees most certainly wiped out the bulk of that inheritance.  Don’t let that happen to you or your loved ones.

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RELATIONSHIP SERIES – PART 2

Monday, March 24th, 2014 by

Scenario No.1 – Single Mom with Kids Marries Single Dad with Kids

 

Although this type of “stepfamily” is becoming more and more common, it comes with significant hurdles to overcome.  If you are part of a blended family like this, you are probably well aware of the psychological obstacles.  The marriage will bring changes: most likely a new home and new routines and maybe even a new job or school, new town, or new roommate.  All of this change puts stress on both the couple and their children, who may feel a sense of loss over having to share their biological parent not only with the new spouse but also with their new “step” siblings.

However, many blended families don’t know that they face unique estate planning obstacles as well.  The most likely estate plan for a married couple is matching wills which say: “I leave everything to my spouse and thereafter equally to my children.”  We generally call these “I love you” wills, but, as we have written before, they can send the opposite message to children in blended families.

What many people don’t understand is that a will is only effective to transfer assets once.  For example, we’ll look at a fictitious blended family, Bill and Mary Sample, who have the estate plan described above.  When Bill dies before Mary, all of his property legally passes to Mary and the “thereafter” clause in his will is null and void.  Not only do Bill’s kids not get anything at the time he passes away, Mary is then free to leave all of her property, including everything she inherited from Bill, to her children (or her next spouse, etc.).  Imagine how Bill’s children will feel when someone else inherits their father’s home and prized possessions!  Unfortunately, this happens all too often.

In order to ensure that each member of your family receives what you want them to have, and to prevent fighting, name-calling, and litigation among your children and the “evil” stepparent or stepsiblings, a revocable living trust should be considered.  By leaving assets in trust, you can provide for both your spouse and your children and even explain why and how you want to take care of each.  A clear expression of your wishes can go a long way toward preventing WWIII!

If you would like to learn more about revocable living trust planning, you are welcome to attend one of our monthly Truth About Estate Planning workshops.

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Movies About Estate and Legacy Planning: Nebraska

Monday, March 17th, 2014 by

One of 2014‘s Academy Award nominees for Best Picture, Nebraska, touches on some estate and legacy planning issues.

An elderly alcoholic with dementia, Woody Grant, portrayed by Bruce Dern, is convinced he has won a $1million sweepstakes (in a magazine sales promotion) and wants to travel from his home in Billings, Montana to Lincoln, Nebraska to collect his winnings.  His wife and 2 sons know this is a scam and that he is delusional.  Nevertheless, after Woody sets out on foot several times the youngest son agrees to take his dad to Lincoln.

The director, Alexander Payne, has tackled estate planning issues before in his movie “The Descendants”.   His movies are usually bleak and set in Nebraska.  This one has an eerie bleakness and is also shot in black and white, during winter.  Nevertheless, the well-written – well-acted film delivers strong performances by Dern (Best Actor nominee) and June Squibb (Best Supporting Actress nominee) as his ascerbic, wise-cracking wife, which make the movie actually enjoyable to watch.  The bonding of father and son on their road trip is the key to the story, as they stop in Woody’s hometown of Hawthorne, Nebraska, where his son learns more about his dad’s past in a couple of days then he had in the previous 30+ years.

The true sadness is that Woody never shared his hopes and dreams with his sons.  The reason he wanted to receive the $1 million dollar sweepstakes was to leave his boys something.  He felt he had failed because he had nothing material to leave them, and therefore his life didn’t matter.  The two sons enjoyed the antics of their father and loved him regardless of material wealth.  The youngest son actually sold his car, so that his dad could drive back through his hometown in a pick-up truck waving and pretending he had won the prize!

(He did win the prize…the love of his family.) Living Matters.

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RELATIONSHIP SERIES – PART 1

Friday, March 7th, 2014 by

The poignant documentary, “Bridegroom” written and directed by Linda BloodworthThomason (who created and wrote the television series “Designing Women”), vividly illustrates the human cost of a same-sex couple’s failure to do any type of estate planning.  It tells the story of Tom and Shane, two young men in a loving, committed, 6-year-long relationship that was tragically cut short by an accident.  The heartbreaking tale of what happened after the accident proves just how critical appropriate estate planning documents are for same-sex and other unmarried couples.  Click here to watch an overview of the film on YouTube.

After Tom’s accident, his family, who disapprove of his relationship with Shane, takes over and refuses to allow Shane to visit Tom in the hospital.  They even prevent Shane from attending Tom’s funeral.  Without a marriage license or proper estate planning documents, Shane has no rights under the law, resulting in the anguish which haunts Shane to this day and is so eloquently portrayed in the documentary.  The true tragedy is that, regardless of whether Tom and Shane could have been legally married at the time of Tom’s accident, they should have been able to plan in a way that would have given Shane legal rights similar to those of a spouse. 

At the very least, same-sex and other unmarried couples in Florida can execute critical lifetime planning documents including a designation of health care surrogate and general durable power of attorney.  Under Florida law, Tom could have named Shane as his health care surrogate, i.e. the person to make health care decisions for him if he became unable to do so.  This would have permitted Shane to be in the hospital room, consult with doctors, and direct the medical care provided to Tom.  A general durable power of attorney would have given Shane access to Tom’s finances to pay for the necessary care.

Death planning documents, at a minimum, should have included a will naming Shane as Tom’s personal representative.  This would have given Tom the right to plan and pay for the funeral, as well as to ensure that Tom’s assets were distributed according to his wishes.  Living trust planning could have gone one step farther, allowing Tom to include more detailed instructions to take care of and protect himself and Shane.

Some relationships cry out more than others for a need to do estate planning.  Same-sex and other long-term relationships without marriage are a key example.  Our next installment of the Relationship Series will discuss why “Blended Families” are another.   

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ESTATE PLANNING FOR SAME-SEX COUPLES IN 2014

Friday, February 21st, 2014 by

The Heckerling Institute on Estate Planning, held every January, is the nation’s leading conference for estate planners.  This year’s most-discussed topic was big changes in planning for same-sex couples.

The discourse focused on last year’s major decision of United States v. Windsor.  In Windsor, the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA) which defined “marriage” and “spouse” for federal purposes as only applicable to heterosexual couples.  The result is that a marriage between any two persons now will be recognized under federal law if it is recognized under the law of the state where it occurred.

The practical result is that same-sex married couples now have access to federal estate and tax planning tools.  This includes use of the marital deduction, portability, disclaimers, joint income tax returns, grantor trusts, spousal rollover of qualified retirement accounts, joint ownership of property, split gifting to maximize annual gift tax exemption, marriage settlement agreements, and GST transfer planning (i.e., reverse QTIP).

On the other hand, same-sex married couples will feel the impact of the “Marriage Penalty” on their tax rates, mortgage interest deductions, and more, just like heterosexual married couples.

Although the Windsor decision has clearly brought about significant change, it did not invalidate DOMA as a whole.  Instead, it left intact Section 2 of DOMA, which allows the states, U.S. territories, and Indian Tribes to refuse to recognize same-sex marriages performed in other states, territories, or tribes.  As a result, the lack of uniformity of laws among the states will continue to create issues for same-sex couples to navigate with the assistance of tax and estate planning professionals.

The focus at Heckerling was on the tax and financial implications of these new laws.  Stay tuned for our “Relationship Series” where we will focus on the more personal and human side of planning in different relationships.

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From Sochi: Telling Your Olympic-Sized Story

Monday, February 10th, 2014 by

The 2014 Sochi Olympics are in full spectacular, suspenseful, stirring swing. We enjoy watching the events play out, but we also love tuning into the segments about each Olympian, discovering their path to the biggest games in the world and learning their inspirations and motivations. They have amazing stories to tell just about how they got to where they are today. And then imagine the stories they will have to tell about this experience for the rest of their lives!

These first few days of competition really got us thinking and talking here at the office about an aspect of our work as estate planning attorneys not often discussed: our ability to help preserve a story, to preserve wisdom in addition to financial wealth. It’s just one of many reasons we love what we do.

Maybe you aren’t in Russia this winter, but that doesn’t mean you don’t have an Olympic-sized story to share and pass on. As you consider or begin the estate planning process, we hope you’ll talk with us about the legacy you’d like to leave. We have special tools to help you record your stories!

Read about a real-life case in which a unique history was unfortunately lost due to lack of planning in one of our blog posts from 2013.

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MORE ESTATE PLANNING LESSONS FROM DOWNTON ABBEY

Friday, February 7th, 2014 by

          My wife is a big fan of Downton Abbey, so at least once each season we are obligated to reference this hit PBS series in our newsletter.  We have already written about general estate planning issues raised in the early seasons of the show.  Fortunately, the opening episode of Season 4 provided a wealth of interesting new material.

          Season 3 ended with Matthew Crawley tragically killed in a car accident.  The 36-year-old heir to the Abbey left a wife, Lady Mary, and baby boy behind.  Season 4 opened with the family still grieving and thinking that Matthew died without a will.  England’s intestacy laws at the time recognized only male heirs, so the baby was believed to now be the 50% owner of Downton Abbey.  The family was seen arguing over who could best represent the baby’s interests.  Then Lord Grantham discovers a letter hidden in one of Matthew’s books that turns out to be a hand written will, leaving his entire estate to Lady Mary.  A legal opinion confirms that the will is valid.

          Lessons learned?

1.       As we’ve written before no one is “too young” to create a thoughtful estate plan.  Matthew was only 36, but had a wife and baby, and was heir to a large estate.  He needed a comprehensive plan.

2.       Don’t rely on chance.  Leaving your will hidden in a book is not a good idea.  Make sure that the location of your estate plan documents is known to your trusted family members and helpers.  Also, don’t rely on a last-minute handwritten will to be valid.  Unlike early 20th Century England, Matthew’s will would not have been valid in 21st Century Florida.  Without 2 disinterested witnesses and a notary, Matthew’s letter would have no legal effect.  Knowing his intentions, but not having them carried out would be all the more frustrating.

          As you watch Downton Abbey, enjoy the fading grandeur of the British aristocracy and the secrets and machinations of the characters who live both upstairs and downstairs.  But do learn from the characters’ mistakes, especially when it comes to estate planning.  To learn more about modern day estate planning, attend our next “Truth About Estate Planning” workshop. 

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HOW TO TALK TO YOUR LOVED ONES ABOUT ESTATE PLANNING

Friday, January 24th, 2014 by

We have heard many excuses to avoid discussing wills, trusts, and everything else relating to estate planning.  The most common stem from concerns that it is too personal or sensitive a subject.  Some even believe that talking about their potential demise will cause it to happen.  However, having a conversation about estate planning with your loved ones is an opportunity for you to explain your wishes, discourage future discord through transparency, and open the door to better planning through better understanding.  Here are some tips on where to begin:

Timing is Key:     Consider your audience and when and how to approach them.  If the person you want to talk to is busy or does not respond well to surprises, you may want to schedule your conversation.  On the other hand, it may be best to broach the subject unannounced on an occasion you know you will provide time to discuss it without distraction, such as on a long drive or walk.

Start with a Story:  You may find it easier to begin with a current event or a friend’s experience rather than diving straight into more personal concerns.  Relating a story about how someone else’s estate plan – or lack thereof – affected his loved ones may also help you convey why the conversation is important to you.

Break it Up:  Depending on your individual circumstances, and the personalities of your loved ones, it may be better to plan to have more than one conversation.  To facilitate a true discussion where all parties feel they are heard and understood, consider addressing each topic, or even each family member, on separate occasions.

After you get the conversation started, let us help you define your wishes and learn about your options.  Attending one of our monthly estate planning workshops is both a great way to keep the discussion going and the first step in our estate planning process.

For more great tips on initiating an estate planning conversation, click here for the Forbes slideshow that inspired us.

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ESTATE PLANNING LESSONS FROM THE GIRL WITH THE DRAGON TATTOO

Friday, January 10th, 2014 by

 

When Stieg Larsson died suddenly in 2004, he was well-known in Sweden as an investigative journalist, political activist, and expert on right-wing extremism.  His partner of more than thirty years, Eva Gabrielsson, whom he did not marry due to security concerns, was the natural, and presumably intended, beneficiary of his estate.  However, Stieg failed to make a valid will expressing this intent and his assets therefore passed by operation of Swedish law to his father and brother, from whom he was nearly estranged.

This estate planning foible would not have been noticed outside of a small political circle in Sweden had it not been for the publication after Stieg’s death of three crime novels, which became the internationally known and bestselling “Millennium Trilogy,” beginning with “The Girl with the Dragon Tattoo.”  Eva, who encouraged Stieg to write, and collaborated with him on, the novels, was denied any share of the profits and, what she claims is worse, any input on their publication and movie rights.  Instead, Stieg’s father and brother have received the copyright to his literary works and a huge monetary windfall in addition to the meager estate that existed at Stieg’s death.

          Stieg Larsson is just the latest in a long line of artists who became worth far more in death than they were in life.  His story illustrates the importance of planning now to protect your loved ones, even if your present circumstances do not appear to warrant it.  Although we are not all future bestselling authors, there is often a much greater value than we realize in both our life’s work and planning to ensure that our loved ones receive it.

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