Archive for Areas of Practice
RELATIONSHIP SERIES – PART 1
The poignant documentary, “Bridegroom” written and directed by Linda Bloodworth–Thomason (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.
ESTATE PLANNING FOR SAME-SEX COUPLES IN 2014
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.
From Sochi: Telling Your Olympic-Sized Story
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!
HOW TO TALK TO YOUR LOVED ONES ABOUT ESTATE PLANNING
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.
PET TRUSTS: PLANNING FOR THE FURRY MEMBERS OF YOUR FAMILY
My dog is definitely part of my family. Whether I leave for five minutes or five hours, he is always overjoyed when I return. He is our resident clown, making my husband and me laugh after even the longest day at work. We often say we love him like a child.
Since you are reading this article, you likely feel the same about your pet. If I asked you what you do to keep your pet happy and healthy, I bet you could name dozens of things that you do to take care of your furry companion. But what would happen to Fido or Fluffy if something happened to you?
The sad truth is that most people fail to make proper arrangements for the care of their pets in case they are no longer available or able to do it themselves. They may assume that a family member or friend will step into their shoes, or even have an informal agreement to that effect. However, without a valid legal document in place, that family member or friend is not bound to care for your pet – properly, or at all!
The good news is that many states, including Florida, allow pet owners to plan for their pet by creating a pet trust. You can use a pet trust not just to name the person(s) who will take care of your pet in case of your disability or death, but also to specify what kind of care your pet must receive and provide the funds to pay for it. A qualified estate planning attorney should be able to create a pet trust as part of your overall estate plan. At Cramer Law Center, we would be happy to help you develop a comprehensive estate plan for your family, whether furry, human, or both!
ELDER ABUSE: A SCARY STORY FROM AUSTRALIA
In our last newsletter, we wrote about potential issues for a dutiful child caring for an elderly parent, but what about the risk that the caretaker child is neglectful or even abusive? This week we wanted to share a truly horrifying tale of an Australian woman’s failure to care for her elderly mother.
Cynthia Thoresen, as many aging widows do, moved into her adult daughter’s house when living alone became too daunting. The daughter, Marguerite, obtained a government benefit to help with Cynthia’s care, which became her only income. A couple of years later, Marguerite stopped taking her mother to doctors and filling her prescriptions. Already Marguerite is not looking like the dutiful caretaker child, but it gets much worse.
Sometime in November 2008, Cynthia fell in the house and broke her leg. When Marguerite finally called an ambulance approximately 3 weeks later, Cynthia was screaming from the pain. We will spare you the gory details of Cynthia’s condition, except to say that she had lain in bed with a broken leg and without any medical care or personal hygiene all that time. Cynthia died in the hospital a few weeks later from a blood clot caused by the broken leg.
Shockingly, Marguerite has not faced any legal consequences for her mother’s death. What is even more appalling is that she claimed to have been honoring Cynthia’s wishes by keeping her out of a nursing home. Although no plan can guarantee against elder abuse, we believe that thorough disability planning (legal, financial, and practical) can significantly limit opportunities for such horrific neglect.
“UNDUE INFLUENCE” AND THE CARETAKER CHILD
We often see a middle-aged “child” becoming the caretaker for an elderly parent. Sometimes siblings are grateful that such care is being provided. However, many times those same siblings become very unhappy if the caretaker child is left with a bigger slice of the inheritance pie, or worse yet, has become joint owner with mom on a bank account before mom’s death, so that 100% of those funds go to the caretaker child rather than being split equally under mom’s will. A lawsuit invariably follows against the caregiver child.
The question is whether we have a “dutiful” child whose sacrifices to care for an elderly parent were rewarded by a voluntary gift from mom or a “scheming” child who utilizes the close relationship to “unduly influence” mom to get the bulk of her assets. Undue influence is presumed when (i) a person with a confidential (close) relationship with the decedent, (ii) is active in procuring or securing the preparation or execution of a devise (will or other gift) and (iii) is a substantial beneficiary of that devise.
The problem, as was recognized in the recent Florida case of Estate of Kester v. Rocco, is that any child who is truly caring for a frail, elderly parent will most likely (i) have a close relationship with mom; (ii) help mom choose an attorney, drive mom to the attorney, and discuss mom’s plan; and (iii) receive a large part of mom’s assets under her plan, therefore meeting the undue influence test. However, the court in Estate of Kester said that undue influence should not be presumed when the only evidence presented was that the caregiver child had a close relationship with and often assisted his aging parent.
Although the guidelines aren’t perfectly clear, this recent case provides help for all those dutiful, caring children who want to take care of their elderly parent without worrying that they will be a target for their ungrateful siblings.
LEGISLATIVE UPDATE: BETTER PROTECTION AGAINST UNETHICAL LAWYERS
Florida attorneys have long been prohibited by our ethical rules from soliciting or accepting gifts from clients, including drafting a will or trust that names the attorney (or his close relative) as a beneficiary. The concern is that an attorney who is asking for or receiving a gift from a client has a personal stake and thus will not be able to properly advise the client regarding the transaction (what we call a “conflict of interest”). There is also the possibility that an attorney could exploit his relationship as a trusted advisor to obtain a gift from his client.
In the past, case law enforced this ethical rule by allowing an improper gift to an attorney to be challenged and, if certain things were proved, voided. There is now a new statute, effective October 1, 2013, which makes such improper gifts automatically void. This should provide better protection for clients (and their families) by decreasing the amount of time and money necessary to contest an improper gift. The statute also provides that the winner of such a contest will recover the costs and fees paid to bring the lawsuit.
Of course, both the ethical rule and the new law make exceptions for a gift from an attorney’s spouse and other close family members. Additionally, even an unrelated client can make a gift to an attorney under the right conditions. To read the full text of the statute click here.