Archive for Uncategorized
WHEN IS THE “RIGHT TIME” TO BEGIN ESTATE PLANNING?
Recently, I was asked by a young, healthy, successful, single female professional when she should start thinking about estate planning. Although I wanted to scream “yesterday!”, I did not. Instead, I hemmed and hawed so that it would not appear that I was trying to “sell” my services or to be unnecessarily alarmist. Then I attended a presentation concerning estate and financial planning issues for people with chronic illness, which reinforced my backbone so that I may answer this type of question more forthrightly in the future.
Estate planning is not only about protecting others by planning how you leave your assets after death. In fact, you should start by protecting yourself and planning for the possibility that you may become disabled. There are 120 million Americans today living with chronic illness or disability. They are not all elderly. Sixty percent (60%) of those living with chronic illness are between the ages of 18 and 64. The time to protect yourself is now.
Another young, 30-something female professional friend of mine recently was diagnosed with multiple sclerosis. Statistics show that eighty percent (80%) of those diagnosed with MS are women (seventy percent (70%) of those are single), and the diagnosis most often is made when the female is in her 30’s. If you wait to begin estate planning until after you are diagnosed with a chronic illness, it may be too late. Although you can have legal documents prepared after such a diagnosis of a physical illness, the opportunity to purchase long-term care insurance, disability insurance or even a life insurance policy to provide the protection and financial means to pay for the estate plan, may be gone. If you become mentally disabled, it will be too late to do any planning at all.
So, the true answer is that it is never too soon to start your estate planning. We are here to help.
GETTING MARRIED? PLAN TOGETHER – Why Use an Estate Planning Attorney to Prepare a Prenuptial Agreement
People contemplating marriage often consider the advisability of a prenuptial agreement, particularly in a second marriage. What difference does it make if you go to a divorce attorney to prepare the prenup or seek the advice of an estate planning lawyer? Plenty! Let me share a recent story with you that comes from my work as a Jacksonville, Florida estate planning lawyer.
A client came to me after being told by her fiance’ that she would have to sign a prenuptial agreement prepared by “his” attorney. This was less than two (2) weeks prior to the scheduled wedding ceremony. She was assured by her fiance’ that she was being asked to sign a “standard” prenup. However, its terms sought to have the soon-to-be wife waive every legal right she conceivably could have acquired as a result of the marriage and also stated that the parties’ assets and funds would at all times be kept separate during the marriage. As you might suspect, my client was quite upset and felt blind-sided by this request. She pushed back by refusing to sign the agreement and presented a counterproposal for, perhaps, more than she otherwise would be legally entitled. This upset the prospective husband. Rocky negotiations ensued and the wedding was postponed.
What is the moral of this story? Tone and context is as important as content. By going to a divorce attorney to prepare the prenup, it was presented in a threatening manner. The prospective husband presented it to the prospective wife as a precondition to the marriage from “my attorney”. This caused bitter feelings and led to angry negotiations. Contrast this scene to the couple instead sitting down with an estate planning attorney to discuss how “we” want “our” financial arrangements during the marriage (and beyond) to unfold. The estate planning lawyer will counsel and provide options to this couple for what “we” want to accomplish; protection of children from a prior marriage, their family issues, asset protection, etc. and the role that a prenuptial agreement will play in their overall estate plan. The parties thus are able to begin their marriage discussing difficult financial and legal issues together in a supportive environment, instead of apart in an adversarial one.
The choice of an attorney, including the type of attorney, to prepare a prenuptial agreement is an important one. If you or one of your friends are contemplating taking this step, please carefully consider the different outcomes that may result from this decision. Plan together, for the journey of marriage…
TO DELAY IS HUMAN, TO GET ON WITH IT DIVINE
Why do people wait so long to consult a lawyer about estate planning? Most people are aware that this is something that needs to be done. Most people can find the time to do it. The culprit is procrastination. There is a natural tendency to postpone difficult tasks that don’t have to be done right away. To sit down with an attorney to discuss preparing a Will, forces you to think about the world when you are not in it. Doing so can lead to protection for your family. Finding a way to tackle procrastination can lead to a positive outcome in other areas of life as well.
What if you are beyond the point of procrastination and you are now into the realm of superstition. You believe it would be “tempting fate” to make a Will. Why court the evil eye? With your luck, you will make a Will and then get run over on your way to Kinko’s to make copies for your family. You haven’t even bought cemetery plots yet, what’s the rush? Well, what if superstition works the opposite – like carrying an umbrella and then it doesn’t rain? No, superstition is not a good reason to put off estate planning.
I hear you…I hear you. Nevertheless, most people who finally make their way into our office to do their estate planning find a comforting peace of mind after the planning is completed. What are you really waiting for?
MARCH 17TH IS ST. PATRICK’S DAY!
The Irish have observed St. Patrick’s Day on March 17th for more than a thousand years. Traditionally, Irish families would attend church in the morning and celebrate in the afternoon with dance, drink and a feast consisting of bacon (not corned beef) and cabbage. Today, St. Patrick’s Day is celebrated all over the globe. The world’s oldest civilian parade, the New York City St. Patrick’s Day Parade, features over 150,000 participants and is attended by nearly three million people. Boston, Chicago, Philadelphia, Savannah and other cities also host massive parades.
Clearly, St. Patrick achieved an enduring legacy. Yet very little is known about the man himself, what he truly believed and valued most in life. Would he approve of green hats, green rivers and green beer (perhaps consumed with a wee bit too much exuberance)? We simply do not know. And, of course, Cramer Law Center was not there to help him make his wishes known, by designing a customized estate and legacy plan.
Fortunately, many of you have allowed us to create such a plan for you and your loved ones. A plan that provides for your financial and healthcare needs today, and ensures you give what you want, when you want, to whom you want… today, tomorrow and beyond. A plan, in short, that protects your loved ones and legacy. It is important to note that for your plan to continue to serve as an accurate expression of your wishes, you should have it reviewed and updated at least once a year, or whenever a significant change takes place in your life or that of your family.
So this St. Patrick’s Day, don’t just think about whether you should have corned beef or bacon with your cabbage. Think about your legacy, and contact us to make sure your plan addresses any changes to your personal or family situation.
END OF LIFE PLANNING
Two of the statements I hear most frequently from seniors are “I don’t want to go into a nursing home” and “I don’t want to be put on machines”. However, without proper legal documents in place, your medical decisions may end up out of your hands. This delicate subject seems to be difficult for many families to even bring up. Although we know there is a need to prepare, we tend not to want to think about someone in the family becoming terminally ill or tragically injured. Sometimes a diagnosis comes that leaves a family time to prepare, but many times there is an unexpected crisis which can leave a family reeling to making decisions. Many people lack understanding or misunderstand advanced health care directives. We are happy to explain the designation of healthcare surrogate, living will, power of attorney or even how guardianship works.
If you or someone you know has ever made one of the two statements at the beginning of this article, we invite you to stop in and talk with us. There is never a charge for an initial consultation to explore your estate planning goals.
GIFTING AND THE GIFT TAX
Many people are confused about the rules which apply to giving gifts. There is good reason to be confused. First, there are two different gift tax exclusion figures, which change frequently. Then, there is the question of basis. This newsletter will attempt to provide a basic understanding of the gift tax rules.
First, there is an ANNUAL EXCLUSION. The amount of the annual exclusion for 2011 is $13,000. With this exclusion, you can give a gift to any one person in the amount of $13,000 or less and not have to report it or even file a gift tax return. If your spouse also wishes to make a gift to an individual, a married couple can effectively give away $26,000 to any member of individuals without having to file a gift tax return.
Then there is the LIFETIME EXCLUSION. The lifetime exclusion was $1,000,000 through 2010, but for the years 2011 and 2012 has been temporarily increased to $5,000,000. If you give away more than $13,000 to an individual at any one time, you must report it to the IRS on a gift tax return. However, you will not be subject to gift tax until you have given away a cumulative total of $5,000,000 over your lifetime. For couples, this means there is a $10,000,000 lifetime gift exclusion. For example, if you wish to give your son a $50,000 gift for a down-payment on a new house, you simply file a gift tax return to report this gift and apply $50,000 of your lifetime gift exclusion to eliminate any tax being owed.
As you can see, there are a wealth of opportunities presented in 2011 and 2012 to utilize gifting strategies as part of your estate plan. However, we must remember that property received as a lifetime gift generally takes a “carry over” basis. This means that the basis in the hands of the person who receives the gift is the same as it was in the hands of the person who made the gift. Thus, if given a gift of stock that was purchased many years ago for $1,000, but is worth $10,000 at the time of the gift, the basis is $1,000. This means that if the person who received the gift turns around and sells the stock for $10,000, the gift recipient will owe $9,000 in (capital gains) income tax.
However, if the property is left to beneficiaries in a Will or a Trust and received after a decedent’s death, then that property takes a “stepped up” basis meaning that in our same example, the stock recipient would have basis of $10,000 and there would be no capital gains tax due if the beneficiary turned around and immediately sold this inherited stock.
One final concept to be aware of is the difference between a “completed gift” and an “incomplete gift”. Here is an example of which many people are not aware. If you put a child’s name on the deed to your house, you have made a completed gift at that moment of the full value of your house, or at least the value of the interest you have deeded to your child. This gift must be reported on a gift tax return. On the other hand, if you put your child’s name on your bank account, you have made an “incomplete gift” and it will not be completed until the child actually withdraws money from the account to use for his or her own benefit. When the child does withdraw money, you must report the gift.
Gifting also has serious implications if you are going to need to apply for Medicaid benefits within five (5) years of making certain gifts. So, you can see that there are both opportunities and pitfalls with respect to gift giving. As a Jacksonville, Florida Estate Planning attorney, my purpose is to guide my clients so as to maximize the opportunities and minimize the pitfalls.
FEBRUARY IS RESPONSIBLE PET OWNERS MONTH
According to the Humane Society of the United States, 39 percent of U.S. households have at least one dog and 33 percent have at least one cat. Together, we own more than 77 million dogs and 93 million cats! Then there are the 12 million birds and 7 million horses, together with our tropical fish, ferrets, hamsters, gerbils, guinea pigs, lizards, snakes, turtles…you get the picture. We Americans really love our pets.
Responsible Pet Owners Month was created to remind us about the importance of properly caring for our companion animals. What does responsible pet ownership entail? Much of the emphasis is on dogs and cats, since they are far and away the most popular. Spaying or neutering stands at the top of the list. Every year, 8 million cats and dogs, many of them strays, wind up in animal shelters across the country. Of these, more than half are put down.
Responsible pet ownership of a dog includes proper training, feeding a balanced diet, cleaning up after your dog on walks, regular grooming, providing plenty of attention and exercise, and making sure your pet has an up-to-date identification tag implanted, or at least on a collar.
As an estate planning law firm, we think this is also a good time to remind you that while companion animals are sometimes our very best friends in life, they are often not provided for in estate plans. Shelters and veterinarians euthanize an estimated 500,000 pets each year when their owners die before them. While an outright gift to an animal is void under law in some states, the creation of an honorary trust for the care of your beloved animal companions is generally permissible. For example, you can leave your pet to a specific caregiver and create a trust to benefit the caregiver, with specific instructions on how to utilize the funds left for the pet’s care.
The main objective of using a trust to care for your pet is to provide a flexible method for managing financial assets for the benefit of any pets that survive you. By using a trust, you can designate a party to act as guardian or caretaker for the pet. Furthermore, a trust allows you to leave specific instructions concerning the standard of care and special needs of your beloved companion animal.
In honor of Responsible Pet Owners Month, we suggest that you give your beloved companion some extra treats this week. But not too many—that would be irresponsible!
WHO CAN BE THE PERSONAL REPRESENTATIVE OF A FLORIDA PROBATE ESTATE?
As a Jacksonville, Florida Probate Lawyer, I often am asked who can be appointed personal representative in a Florida probate estate. In Florida, the term “personal representative” is used, rather than the term “executor” or “executrix” as the title of the person who is under a duty to settle and distribute the estate of a decedent in accordance with the terms of the decedent’s Will and the Florida Probate Code.
If there is a Will (a testate estate), the person nominated in the Will to serve as the personal representative, or his or her successor, has preference in appointment. If the persons nominated are unwilling or unable to serve, then the person selected by a majority in interest of the beneficiaries (persons entitled to the estate) has the next priority. A third priority in a testate estate is any devisee (person who inherits) under the Will. If more than on e devisee applies to serve as personal representative, the court may select the one best qualified.
If there is no Will (an intestate estate), then the surviving spouse has first priority to serve as personal representative. Next would be a person selected by a majority in interest of the heirs. Third would be the heir nearest in degree. Again, if more than one such heir applies, the court may select the one best qualified.
Who is not qualified? A person is not qualified to act as a personal representative if the person has been convicted of a felony, is under the age of 18 years, or is mentally or physically unable to perform the duties. A nonresident cannot qualify as a personal representative unless that person is a blood relative of the decedent, a legally adopted child or adoptive parent of the decedent, or the spouse of a blood relative.
As a Jacksonville, Florida Probate Lawyer, I can answer your questions about qualifications and preferences in appointment of personal representatives in probate cases in Clay, Duval, Nassau, and St. Johns counties, and any other area in Northeast Florida.
PRENUPTIAL AGREEMENT AS PART OF THE ESTATE PLANNING PROCESS
As a Jacksonville, Florida Estate Planning Attorney, I frequently am preparing prenuptial (or “antenuptial”) agreements for clients. Prenuptial Agreements are not just necessary to plan for divorce. A prenuptial agreement is also an essential estate planning tool, particularly in second marriages.
From an estate planning perspective, we most often see prenuptial agreements in cases of second marriages when one or both of the parties individually owns real and personal property which they are bringing into the marriage. In Florida, married parties acquire certain rights in the property of their spouse unless an interest in that property is waived through a valid prenuptial agreement effectively segregated in some fashion. Florida laws concerning the “elective share” and “homestead” property convey certain rights to spouses and dictate how certain assets will be divided at the death of the first spouse.
Thus, an antenuptial agreement should address property acquired before the marriage, property which will be acquired during the marriage, debts which preexisted the marriage, how assets acquired during the marriage are to be divided, who can manage and dispose of certain assets during the marriage and how will property be divided in the event of a divorce. So, in cases of second marriages, particularly when there are children from prior marriages, the prenuptial agreement is an important part of the planning process. You can protect your wealth and your children by signing a prenuptial agreement, having a current trust or will and paying very close attention to how assets acquired during the marriage are titled. This way, you can have peace of mind even if you don’t live “happily ever after.” That is why we are preparing prenuptial agreements as Jacksonville, Florida Estate Planning Attorneys.
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.
