Archive for Newsletter
Happy Thanksgiving from all of us at Cramer Law Center!
Looking back over the past year, we have found many things for which we are thankful; here are just a few:
1. The addition to our team of our administrator extraordinaire, Deborah Cosio;
2. A successful move to a new, larger office space that better suits the needs of our growing business;
3. Record attendance at our monthly Truth About Estate Planning Workshops;
4. The many wonderful new clients who chose to join the Cramer Law Center “family;”
5. And, as always, our current clients and planning partners who continue to believe in our process and support our growth.
We hope that you have had a wonderful year as well and that you are able to enjoy the holiday with your loved ones!
STAR TREK AND ESTATE PLANNING: Live Long and Prosper Part I
Life: the Final frontier. These are the voyages of the estate planning process….
As we know life is a voyage, not unlike space or any other voyage into the unknown. Star Trek is one of those great TV classics that almost everyone has seen at some point. The mission of this newsletter is to make a serious point about your life voyage and highlight ways to make it less stressful, for you and your family, without going into warp drive! Cramer Law Center’s mission is to help you navigate the possible bumps.
We have a process to help you plan that is light years ahead of traditional estate planning. It begins with a 3-step approach that considers the now, the future and beyond, taking all factors into consideration.
What does all this have to do with Star Trek? Well, it so happens that actor Leonard Nimoy will turn 83 years old next year. He will probably be remembered by most of us as Spock, the highly logical Vulcan in Star Trek. His catch phrase was “Live Long and Prosper.”
With appropriate planning, that slogan can reflect our new longer lives!
Live Long and Prosper, but, you have to plan for it…………………
Downton Abbey Every Manor House has Its Issues!
hile watching Downton Abbey, with all the splendor and pageantry of the upper-class British aristocracy included, it occurred to me how fortunate we are today to be able to control what happens to our estate when we pass away.
Lord and Lady Grantham of Downton Abbey have three daughters that cannot inherit the estate. Lady Mary, the eldest daughter, must marry a male Crawley in order to keep the Abbey in her family. As you can imagine, this creates excessive amounts of discord and mayhem for everyone, especially as Maggie Smith, who plays the imposing Dowager Countess of Grantham, tries to orchestrate the affections of the girls into the arms of Matthew, heir to Downton Abbey. Even with all of the Dowager’s scheming, Mary falls in love with Matthew and he with her. This allows the family to remain in the ancestral home.
Fortunately, we no longer have to live with the absurdity of antiquated inheritance law. However, this does not mean that the future of your estate should be left to chance (unless you are lucky enough to live with Maggie Smith!). Many families wait too long to make an estate plan with dire consequences resulting. For example, in blended families where one parent has remarried and the new spouse does not get along with the children, inheritance complications and family drama can ensue, which can tear a family apart – if the family does not create a plan to suit their unique needs! Such a situation is, unfortunately, not all that uncommon.
Don’t despair! Whether you live in Downton Abbey or a little home in Jacksonville, Florida, we can help! Cramer Law Center will help you formulate a plan that will work for you and your family.
Pip, pip! Cheerio!
LLC Owners, Be Aware and Be Prepared! Part 2
As we discussed in our last newsletter, on May 3, 2013, the Florida legislature passed the new Florida Revised Limited Liability Company (“LLC”) Act. This new LLC act will apply to all Florida LLCs by January 1, 2015. In our last newsletter, we explained some of the important changes LLC owners will face under the new LLC act. This newsletter will address some aspects of Florida LLC law which have not changed and therefore will continue to have a substantial effect on your business.
One unchanged provision of Florida LLC law that every current or potential LLC owner should be aware of involves creditor protection. If you are the owner of a single-member LLC (you are the sole owner and the only person listed on the LLC documents), did you know that your personal creditors might be able to take your LLC’s assets? Were you aware that the same LLC assets should be protected from the same creditors if your LLC had more than one member?
If you owe someone money for personal reasons (i.e. for your mortgage) rather than for business reasons (i.e. for rental of office space), Florida LLC law may block that creditor from reaching money, property, and other assets belonging to your LLC. The amount of protection offered under these circumstances depends on whether your LLC has one member or more than one member. As is mentioned above, the personal creditor of the owner of a single-member LLC may be able to collect what is owed him from the LLC’s assets. However, when the personal creditor of one member of a multi-member LLC comes calling, Florida law says that he cannot directly reach the assets of the LLC. The creditor instead will be limited to obtaining a “charging order” directing the LLC’s manager to pay him any income or profits that would otherwise be distributed to the member that owes him money. This provides significant protection for the multi-member LLC because the creditor generally will not be able to force the manager to make distributions.
Another notable provision of Florida LLC law that remains on the books is Section 608.4225 of the Florida Statutes. This provision places anyone who manages an LLC under a duty of care and a duty of loyalty to the LLC. These are serious standards of conduct which, if violated, can result in personal liability for the manager or managing member.
If you are a business owner, hopefully you now understand the importance of staying abreast of Florida law as it relates to your business. We would welcome the opportunity to talk to you about keeping your LLC current.
BIG NEWS !!! WE’RE MOVING!
Cramer Law Center is moving! We have outgrown our Baymeadows location, but we’re remaining in the Mandarin area. Starting April 1, 2013 (no foolin!), you can find us at CONCORDE I, 3030 Hartley Road, Suite 290. We’ll be in the Concorde complex, which is behind the Wells Fargo Bank, just north of I-295 and San Jose Boulevard. The new office will be located on the opposite side of San Jose Boulevard from the Whole Foods Market. Even though we have to pack and unpack, we’re excited about the move. Not only will we have our own larger space, but we’ll also have access to a 30-seat training facility in the adjacent building to use for our workshops. The move is just in time, because we had a record crowd at our March “Truth About Estate Planning” workshop! Hopefully, we won’t have to turn away anyone in the future.
While we’re talking about us, here are some quick tidbits about our team: Jeff recently had a grandson and was excited to visit him in Santa Fe, New Mexico; Amelia has returned from Indianapolis completing the first phase of her cutting-edge estate planning training with the National Network of Estate Planning Attorneys; Valentina was a pace setter in the recent 26.2 With Donna National Marathon for Breast Cancer; and Debbie was the second runner up in Carriage Club’s 2013 Annual Chili Cook-Off!
To see photographs of us in our new office space and stay up-to-date on all of the activities at Cramer Law Center, please “Like” our Facebook Page at facebook.com/cramerlaw.
Cramer Law Center offers full, flat fee estate planning services including wills, trusts, durable powers of attorney, health care surrogate designations, living wills, designations of preneed guardian, and more.
The next “Truth About Estate Planning” workshop will be held at the Cramer Law Center Concorde 1, 3030 Hartley Road, Suite 290, Jacksonville, Florida 32257 on April 4, 2013 at 10:45 a.m. Please call us at (904) 448-9978 to reserve your seat.
ANOTHER ESTATE PLANNING HORROR STORY FROM THE REAL WORLD
Recently, I consulted with a young woman who has been married approximately one (1) year. Her husband is waiting on a liver transplant and has been for some time. Despite his precarious health situation, the couple did not do any estate planning after being married. She told me she felt like they had “plenty of time” to get around to estate planning.
However, while the husband was recovering from a fairly routine knee surgery, something went horribly wrong and he now suffers from brain damage. He no longer is capable of making decisions on his own. In fact, before his condition was fully understood, he emptied his bank account and ran up his credit cards to buy a boat (which wasn’t even worth close to what he paid for it) and the family is now broke, except for his social security and retirement income.
The wife came to me to talk about establishing a guardianship for her husband. When I explained that it would cost a minimum of $5,000 to $6,000 to establish a guardianship, she indicated that they could not afford to do this. All of their savings are gone. Had they only come to me for basic estate planning, the total cost would have been $1,250 for a complete will package for both of them, there then would have been no need for a guardianship. Instead, the only planning that the husband had done has placed an additional burden on his wife.
He had a several year old power of attorney in which he named an old Army buddy in south Florida as his agent. The Army buddy would prefer not be involved and to let the current wife handle everything. Unfortunately, he is forced to be her go-between because he is the only one with the legal power to manage her husband’s finances.
We always explain that the cost of estate planning involves not only the initial cost, but the costs of updating or “failing to update.” Here is a vivid example of both the financial and emotional cost of “failing to update.”
“THE PLAYERS” OF ESTATE PLANNING
The beginning of May always brings national attention to the Jacksonville area when the Players Championship comes to town. For one week each year, the Players is the hot ticket in town and for good reason; the tournament, which is part of the PGA tour, brings international golf superstars to town and raises millions of dollars for local charities. As Jacksonville estate planning attorneys, we find two different meanings in the words “the players”: we are reminded of all the positive energy that flows through the city at the time of the tournament, but also think about the players of estate planning.
Your estate planning “players” are the people you choose to protect your assets during your lifetime and distribute or manage them after your death. This would include the trustee(s) of your trust, the executor(s) of your will, and anyone to whom you have given a durable power of attorney. Other important players are those individuals to whom you have granted access your health care information or the power to make health care decisions for you, such as your designated health care surrogate.
The players you choose for your estate plan should be people that you trust completely and who know you well enough to make the decisions you would have made. They must also be willing and able to perform their duties. If it has been more than a couple years since you designated your estate planning players, you should review them to ensure that your choices are still appropriate and relevant today.
GEORGE WASHINGTON: ESTATE PLANNER
I have just returned from Indianapolis where I attended the 49th Collegium of the National Network of Estate Planning Attorneys. I wanted to share the highlights of my trip, including continuing my technical education, benefitting from the experience of preeminent colleagues, and a reminder of estate planning done right by one of the founding fathers.
I first took an intensive two day course concerning irrevocable life insurance trusts. An “ILIT” is a technique that can be used to allow life insurance proceeds to escape the estate tax. Although this has not been that much of a concern in recent years with the individual estate tax exemption ranging from $3.5 million to $5 million, if that exemption is lowered to $1 million on January 1, 2013, as is currently the law, then we expect many more people will inquire about setting up ILITs. Besides the technical component of the education, we also learned from life insurance professionals about concerns that life insurance policies previously placed inside ILITs run the risk of “blowing up” (becoming far more expensive then anticipated) and sabotaging the purpose for which the ILIT was constructed. This highlights the importance of monitoring the performance of your ILIT on a regular basis.
Besides having the time to focus on legal technical subjects, what I most enjoy about these gatherings is learning best practices from leaders in the estate planning field. We heard from Susan Bradley, author of the book “Sudden Money,” and from John A. Warnick, chairman of the Purposeful Planning Institute, concerning ways to go above and beyond the norm to assist our estate planning clients to “leave their wisdom along with their wealth.”
Passing on wisdom along with property is one of our core planning philosophies, and I was reminded that it goes back to the time of the founding fathers. In George Washington’s Last Will and Testament, he left his collection of swords to his nephews and, in addition to personal observations directed to each nephew, he said the following:
“These swords are accompanied with an injunction not to unsheathe them for the purpose of shedding blood, except it be for self-defense or in the defense of their country and its rights, and in the latter case, to keep them unsheathed, and prefer falling with them in their hands to the relinquishment thereof.”
Estate planning really can provide the setting for bringing out the very best in people. We would be happy to help you hand down your life experiences as well as your assets.
NEW LEGISLATION: PART II
For those of you who are married and have not had your own Will or Living Trust prepared, the Florida Legislature has just changed your “Will”. The bill was sent to the Governor for his signature on June 13th and was signed in June 21st.
Previously, your government-made “default will” provided that if you are survived by a spouse and children of that spouse, the surviving spouse would receive the first $60,000 of your estate and then one-half (½) of the remaining estate. The other half (½) would be divided equally among your children (or their descendants). That now has been changed. In the traditional marriage situation, where all of the decedent’s surviving children are also the children of the surviving spouse, the surviving spouse now receives one hundred percent (100%) of your estate (providing the surviving spouse has no children or grandchildren [descendants] from another relationship).
This change in the “default will” does bring the state’s version of estate planning more in line with the typical choices of married couples. Most married couples do choose to leave everything to their surviving spouse.
In cases of second marriages and/or blended families, the State’s “default will” remains unchanged. Fifty percent (50%) of the estate goes to the surviving spouse and the other fifty percent (50%) is divided equally among the decedent’s lineal descendants (children/grandchildren). This new law does not have any effect on Florida’s current elective share, homestead, exempt property or family allowance provisions.
So, if you like the Will the Florida legislature has prepared for you, stand pat. If you’d like to make your own choices and/or learn how the laws mentioned in the previous paragraph affect your “default will”, call us…we can help.
NEW ESTATE TAX LAW: EFFECTIVE JANUARY 1, 2011 – DECEMBER 31, 2012
We begin the New Year with temporary estate tax relief. The key word is “temporary.” Congress, at the last minute, finally has acted to modify the estate, gift and generation-skipping transfer taxes. However, this modification of the estate, gift, and generation skipping transfer taxes will last only for two years, unless Congress passes a more permanent law. If Congress does nothing, on January 1, 2013, the estate tax exemption will be reduced to $1,000,000.00 and the estate tax rate will increase to 55%. Essentially, the last Congress has “punted” forward the sunset provisions of EGTRRA (the Economic Growth Tax Relief Reconciliation Act) for two years. No one can predict what will happen then. This newsletter will highlight the key elements of this temporary estate tax relief.
1. First, the estate tax has returned. However, it has returned with a much larger personal exemption of $5,000,000.00 and a lower 35% tax rate.
2. Second, the gift tax is reunified with the estate tax, so that everyone now also has a $5,000,000.00 lifetime gift tax exclusion amount and a 35% gift tax rate.
3. Third, the generation skipping transfer tax exemption will be Five Million Dollars ($5,000,000.00) in 2011, indexed for inflation beginning in 2012. The GST tax rate for 2011 and 2012 will be 35%.
4. Fourth, there is now “portability” of the unused exemption between spouses. This means that a husband and wife together essentially have a $10,000,000.00 exemption, the unused portion of which can pass between spouses without any special estate planning being required. In the past, we have often used two trusts, in husband and wife planning, to obtain such a doubling effect of the exemption amount. However, such portability is assured only for two years and the availability of this portable exclusion amount requires an election to be made on a timely filed estate tax return. Moreover, the provision does not allow a surviving spouse to use the unused generation skipping transfer tax exemption of a predeceased spouse. So, we likely will continue to recommend trust planning for many of our clients.
What is the effect of this temporary estate tax relief on estate planning going forward? The $5,000,000.00 gift exclusion amount and GST exemption beginning in 2011 provide an individual with the ability to make $5,000,000.00 in lifetime gifts to family members or others without having to pay gift taxes; and provide couples with the opportunity for making gifts of up to $10,000,000.00 without having to pay gift taxes. This paves the way for immediate gift planning opportunities to reduce the value of your gross estate. This can be done by giving simple gifts or by utilizing leveraging strategies such as gifts to grantor trusts and other techniques to effectively transfer far more than $10,000,000.00 out of your estate. However, gifting strategies should consider the cost basis rules. Let us know if we can assist you in the gift planning process.
There still are several reasons for continuing to use bypass trusts at the first spouse’s death, such as asset protection and flexibility, which we will discuss in detail at our “Truth About Estate Planning” workshops throughout the upcoming year.