Although you are not required to leave assets to your natural children either, the law tends to favor them during the reading of a will. That is, if your children are not included in your will at all, then the law will presume that you forgot them and reallocate some assets for their benefit. Therefore, if you truly want to disinherit a child, you need to make sure to fill out requisite paperwork to guarantee that they do not receive any portion of your estate.
]]> Furthermore, there is nothing in the law that requires parents to treat their children equally. Although one child may be financially stable, receiving only a small number of assets, another might have special medical or personal needs that require additional funding. If you choose to plan for an unequal distribution, you may choose to explain your reasoning in the estate documents, though that is not required.Experts stress the fact that stepchildren are not required to be included in any estate plan, even in a disinheritance clause. They are not considered automatic heirs like a natural child, so they can be safely left out of the estate plan without legal threat.
If you are struggling to craft a useful estate plan for your family, consider consulting the services of a qualified probate attorney. These professionals can help you learn more about rules and regulations in the state of Florida to help you get the most from your assets and holdings.
Source: hometownlife.com, "Inheritance: Clearing up confusion regarding children/stepchildren" Rick Bloom, May. 05, 2013
]]>Stepping into the role of parent for your grandkids can be a rewarding experience. You must provide a nurturing, stable home for the children, a luxury that they may not have had before moving in with you. As these changes are happening, you may be making moves to accommodate your own retirement needs, many of which did not include financial planning for kids' sports, medical needs, childcare provisions or other necessities.
]]> There are a few legal steps you can take to protect yourself and your grandchildren during this major transition. It is essential that you establish some form of legal guardianship over the children; whether you formally adopt them is your decision. Next, you will need to create or revise your estate plan to accommodate your grandchildren. This could include changing beneficiaries on life insurance policies, altering provisions for trusts and even purchasing additional insurance.Further, it is important that your family knows your wishes and needs in the event of a long-term care situation. You must ensure that your assets are protected, not only for your heirs, but also for your own future health needs.
If you have recently become physically responsible for your grandchildren, consider consulting a qualified probate lawyer to help you revise your estate plan. These relatively complicated legal documents could have serious ramifications if not properly completed. Your attorney can help you understand your rights and responsibilities where your grandchildren are concerned.
Source: fiftyplusadvocate.com, "Raising your grandchildren? Estate planning a must" Linda T. Cammuso, Apr. 25, 2013
]]>For most people with more than $25 million net worth, the answer is easy: Purchase more tax--free bonds. About two--thirds of these ultra--rich individuals tend to invest in the bonds, largely because they are safe and protected from additional tax penalties. Still, bonds provide little in return because of today’s low rates, so they are primarily beneficial for those not seeking additional revenue.
]]> Many wealthy Americans are also focusing on fixing their estate plans to maximize their tax benefits. More than half of this population, in fact, is revisiting estate documents to look for extra tax savings. IRS rules have settled on taxing those with more than $5 million in assets after death, a rule that could prompt some to transfer their holdings into various types of trusts.Finally, nearly half of the wealthy set intend to lower their tax rates by providing contributions to their favorite charities. The charitable deduction has decreased, though, leaving the effectiveness of this strategy up for debate within estate planning circles.
If you are a high net worth Floridian concerned with potential tax burdens associated with your estate, you should contact a probate attorney to help manage your holdings. Attorneys can work in tandem with financial planners to help you get the most for your money through both your will and other estate documents. These lawyers can also help you understand your rights and responsibilities as related to the estate planning process, making sure your heirs’ minds are at ease after you pass.
Source: millionairecorner.com, "How do the wealthy plan on decreasing their taxes?" Catherine McBreen, Apr. 24, 2013
]]>First, it is important to realize that domiciles are different from residences. Of course, your home helps establish you as a resident of the state of Florida, but it is only one component of a domicile audit. Tax professionals encourage their clients to take more preventive measures to ensure the acceptance of their domicile paperwork. The initial step in this process is to simply send domicile forms to the clerk at the county courthouse with the help of your accountant. Your federal tax return must come from your new Florida domicile.
]]> Next, declare your new residence in your estate plan. Florida law requires either a family member or a resident of Florida to serve as the executor of your will. If you have named a friend from another state, you may be required to modify your arrangements.Finally, people seeking domicile in Florida need to file their homestead exemptions in January or February, shortly before tax time. You will need to provide proof of your permanent address, which includes voter and vehicle registration. If you have country club memberships and other club affiliations, you should also change your status to "nonresident" as soon as possible.
Probate and estate planning attorneys can educate and assist those who are seeking a change of domicile to Florida. Consider contacting a qualified legal professional to support you through the domicile change process.
Source: naplesnews.com, "Family business: Domicile and residence - Is Florida your preferred state?" Kim Kantor, April 10, 2013
]]>During previous administrations, federal and state estate taxes were complementary; the federal tax amount would be decreased by a tax credit for the state estate tax. That credit expired in 2005, however, leaving states to create their own procedures for estate taxation. Now that the federal government is becoming more permissive, certain states are taking advantage of lower national rates to pad their own coffers.
]]> Tax rates among states vary by significant sums. Consider the difference between New Jersey, which taxes estates worth more than $675,000, as compared to New York, which only taxes those over $1 million. Tax rates for those valuable estates can reach 16 percent. Even more surprising: States can tax your life insurance payouts at the same high rates. Experts say that those modest thresholds are likely to affect even middle-class workers.Furthermore, some states levy inheritance taxes as well as estate taxes. In other words, the estate is taxed before it is distributed, and the heirs are taxed before they receive the payouts.
Florida is one of the most popular retirement locations because of its lenient tax structure. For those Floridians who may have moved to other states, however, estate planning becomes significantly more complicated. States are constantly updating and changing their estate tax rates, giving most people a reason to continually update their estate planning documents. Discussing strategies with an attorney that knows Florida law is always a great decision, regardless of your estate's value.
Source: Kiplinger, "Beware states with their own estate taxes," Sandra Block, May 2013
]]>First, it is important to note that wills only take effect after you die. These legally binding documents allow you to name someone to distribute your property after your death. This person is known as an executor. That person settles debt claims from creditors and oversees the distribution of your holdings. Wills do not control funds that pass automatically to beneficiaries, such as retirement accounts, pensions and other assets.
]]> Wills are necessary even if you have a trust, largely because they allow the creator to settle legal claims. Probate administrators can help transfer assets to a trust if they were not properly moved before the creator's death.Trusts are valuable to estate plans, as well, because they help owners transfer assets such as homes, rentals and nonretirement brokerage accounts. Trusts are not only applicable after the creator dies; rather, they go into effect immediately. A trust will help the owner avoid the need for a court-supervised probate process after death, largely because accommodations have already been made in advance. Trusts can also help alleviate estate tax burdens, depending on their structure and value.
Why would someone want a will, then, instead of a trust? People with less than $150,000 in probate assets should use the will plan. In that case, the assets can be transferred using an affidavit procedure that is faster and less expensive than creating a trust. Trust estates are generally beneficial for those with larger financial holdings. They are also useful for people with minors listed as beneficiaries or heirs who may be incapacitated. People with questions about their trusts or wills should consult a qualified attorney for assistance.
Source: Lake County News, "Estate planning: What is the difference between a trust and a will?" Dennis Fordham, March 30, 2013
]]>Your state may not require income taxes on trusts. If so, you are free to proceed with your trust planning as you personally see fit. Trust income is taxed in most jurisdictions, though, which can lead to confusion and sometimes financial consequences. States that tax these estate plans tend to have varied regulations and criteria for income tax-related to trusts.
]]> CPAs may serve as your financial adviser and trustee, but they also know how to prepare the income tax forms for the trusts you create. These professionals should be well-versed in your state's tax laws so they can help you get the most for your trust money.One of the most difficult financial situations involving trusts occurs when the creator of the trust moves to a different state. If you are just arriving in Florida, for example, your trust will be subject to the rules of the new jurisdiction. As a result, you could be required to pay income tax on a trust even before you formally turn it over to your heirs. In many instances, trust owners are unaware that they are required to pay these taxes, and they face financial stress later as a result.
Furthermore, trust tax issues can arise based on the states of residency for the trustee and beneficiaries. The location from which the trust is administered also has an effect on the taxes you pay.
Help your successors navigate the uncertain world of estates and tax laws by making adequate preparations for your estate well in advance of your passing. Consulting a qualified Estate Planning attorney in your state could make the difference between a generous inheritance and a meager one.
Source: On Wall Street, "Trust, but verify your estate tax planning," Roger Russell, March 21, 2013
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There are a lot of feelings to account for in a blended family's situation. Parents want to please the children that came from the previous marriage and also the children that they inherit from their new marriage. The newly married spouses might even have additional children of their own, which should also be accounted for in the estate plan.
]]> Before any of the long-term arrangements are planned out, spouses in this situation need to take into account where certain money is coming from and how certain expenses are handled. In these families, spouses often find themselves either paying or receiving child support payments. Even if it involves collaborating with an ex-spouse, men and women are advised to shore these details up as they can cause financial confusion later on.After that, spouses must tend to important estate-planning issues. One such task includes updating beneficiary designations on life insurance policies. This will allow a husband or wife to include, or exclude, anyone they wish, due to the change in circumstances.
The new husband and wife also need to decide how assets will be dispensed in the event one or both of them pass away. Long-term care specifications must also be made.
Just like any other family, blended families must make sure they have common estate planning tools in place, like a living will and durable powers of attorney.
Estate plans are only effective when they are updated as necessary. Failing to update an estate plan could cause intended beneficiaries not to reap the benefits of the estate while unintended ones might.
Source: Aiken Standard, "ON THE MONEY: Blended families can cause financial headaches," March 23, 2013
]]>For example, take a recent occurrence out on the west coast that captured national headlines. An elderly woman was denied CPR and she died as a result. This shows that even with a tight estate plan, confusion can abound in certain emergency situations.
]]> This is why end-of-life care experts in Florida have introduced a document for such occasions. It is referred to as the Physician Orders for Life-Sustaining Treatment. Through the document, men and women can note their preferences on such end-of-life care issues as CPR, hospice, pain control and feeding tubes. This is to fill in any gray areas that fall between a living will and a "Do Not Resuscitate Order" -- both of which estate planners should still have.A bill to sign this document into law was drafted in 2006, but failed. A new bill is poised to reach lawmakers again next year. If the bill passes, the documents will be accepted at all health care facilities throughout Florida.
Living wills can be individually prepared and are not signed by a doctor. For this reason, hospitals and other care facilities are often leery of trusting them in the case of an emergency. A lot of this fear stems from the litigious nature of our society.
A "Do Not Resuscitate Order" is signed by a doctor but only deals with stopping and starting a patient's heart and breathing. It does not specify a patient's wishes on things like feeding tubes or the use of other machines.
These types of estate plans simply cannot wait. When a person is incapacitated, they cannot voice their own wishes, leaving caregivers at the mercy of a living will, "Do Not Resuscitate Order," and, now, possibly a Physician Orders for Life-Sustaining Treatment.
Source: SunSentinel.com, "To do CPR or not? New form can help answer that question," Diane C. Lade, March 15, 2013
]]>You do not, of course, have to leave all of your worldly possessions to your pet, though that is one option. Who could forget the famous dog Trouble, whose heiress owner Leona Helmsley left her $12 million from her personal fortune? No matter how much money you have, you can make provisions to protect your pet from an unwanted fate when you pass away.
]]> People with pets should first consider who will be responsible for their care. Experts recommend naming at least one or two backup caretakers in case of emergency. If you are leaving your pet to someone who is not a family member, you should set aside money for that pet's care after your death. Some people set up small trusts for this purpose, while others simply include the financial gift in their will.One local couple has even provided a thank you gift for their pets' caretakers. After the dogs die, the caretaker will be allowed to access the remaining funds in the trust. Others have created estate plans that will gift all assets to their animals. This is a wise move for people who do not have nearby relatives who might be willing to take in the pets after the owners' deaths.
A comprehensive estate plan should not only consider the financial obligations to your human family members, but also to your fuzzy family as well. Consult a qualified attorney to determine how much money you should set aside for the care of your pet after your death.
Source: My Fox Tampa Bay, "How to provide for pets in your will," Cynthia Smoot, Feb. 26, 2013
]]>One lawyer said that in his experience he has seen far more instances of families accepting the wishes of a loved one as laid out in a will rather than fighting over it. Still, controversy can arise over such matters. The remedy is careful planning.
]]> First, a person must take a look at their family and gauge the likelihood that they might argue over the wishes of a living will. Families that don't get along right now will probably not magically get along with each other once the loved one has passed on.With knowing the tendencies of certain family members, a man or woman must be brutally honest with their estate planning attorney. Letting an attorney know any worries they have will help the professional construct a plan to avoid such issues. Some people opt for what is called an "in terrorem clause," which automatically disinherits a beneficiary if they try to challenge a will. Be careful, though, because this clause is not recognized by every state.
Forming a plan of action is one thing, but committing to it 100 percent is a whole other issue. Estate planners will want to put the plan in action right away and stick firm on it. Going back and forth will only further muddy the waters, which begs for major issues once an estate is passed on to beneficiaries.
In order to funnel assets to their proper destination, it takes careful planning. An efficient estate planning expert always has a clear vision of the future, which includes identifying possible roadblocks. The key is to plan for those obstacles and avoid them.
Source: NWI.com, "ESTATE PLAN: Plan for a fight," Christopher W. Yugo, March 2, 2013
]]>The noble effort of taking out a life insurance policy to ensure the fiscal health of heirs upon one's death is all for naught when the money is not claimed. Surprisingly, roughly 25 percent of all life insurance policies go unclaimed after the policyholder passes away, according to the CEO of an end-of-life planning firm.
]]> In fact, in Florida alone, the state settled with MetLife because it was found that the insurance giant did not pay 15,000 families a combined total of $9 million it owed in benefits. Holders of life insurance policies and their beneficiaries need to be proactive and make sure that the money they are owed makes it into their bank accounts.For starters, a policyholder needs to clearly communicate to beneficiaries that the policy exists and that they are in line to receive the money. Giving beneficiaries documentation - at the very least, a policy number - will help them remain conscious of the policy. Beneficiaries must keep this information in a safe place where they will be able to find it. These materials can now be stored virtually, so they will not get lost or damaged.
Policyholders also need to make sure that information the insurance company has for them is accurate, which can be done in a number of ways. This information is available for free with Medical Information Bureau Reports, which tracks individually underwritten life and health insurance policies that were taken out in the previous seven years.
Anyone who thinks that money floating around in limbo might be intended for them can contact either the insurance company to check, or the unclaimed property division in their state.
Money is specifically earmarked for loved ones through a life insurance policy. Policyholders and beneficiaries must work to ensure it reaches its intended target.
Source: MarketWatch.com, "What good is life insurance if no one collects?" Jennifer Openshaw, Feb. 20, 2013
]]>For instance, most spouses come into a marriage with what are called premarital assets. Just as the name would suggest, these are assets that a person brings to the marital table. In the event of a divorce, these assets would stay with their rightful owner. Marital assets are assets acquired during a marriage. These would be split during divorce.
]]> If a spouse intermingles the two, premarital assets could forever be transformed into marital assets. This is done when premarital assets are retitled or mixed in with marital assets. This is commonly seen with such assets as 401Ks, 403Bs and pensions.A future spouse's debt is another thing that will play a big role in planning for the future as a couple rather than a single individual.
A prenuptial agreement is a very common estate planning tool that allows a spouse-to-be the power to protect their assets or income. These arrangements are most beneficial for spouses entering a second marriage and those with a considerable amount of assets.
Spouses heading into their second marriage could have children from their previous marriage. A prenuptial agreement would help ensure that children from the first marriage are still entitled to the estate of their parent.
Prospective spouses that have wealthy parents might consider a prenuptial agreement as well. This would ensure they receive their inheritance without their partner laying claim to half or all of it in the event of death or divorce.
Prenuptial agreements are often considered the unromantic side of estate planning, but they have helped many spouses throughout Florida, and the rest of the country, protect their assets.
Source: SouthSource, "Planning financially to be legally bound," Laura Jerpi, Feb. 7, 2013
]]>That is precisely what happened in the case of a deceased man's estate. The man had accumulated vast wealth as a prominent developer, who owned a number of properties throughout Florida and another state.
]]> The woman disinherited a share of her father's fortune after she and a trustee that she had appointed challenged the terms of the man's trust.The woman's developer father passed away in 1995. Upon his death, he held $70 million worth of property and had acquired $50 million in debt. The man's estate plan dictated that a trust fund be divided up into 12 equal amounts and given to his six children - each received a generation-skipping trust and a trust in each of their respective names.
An added estate-planning wrinkle that proved to be the daughter's demise was that the man had a "no contest" clause on the trust. This stated that anyone that challenged the terms of the trust would not be allowed to benefit from it.
Despite the "no contest" clause, the woman filed lawsuits in two separate states concerning her father's estate. The trustee she was working with was a personal friend and had little to no experience in estate-planning matters. For this, the woman was disinherited from the estate, a decision upheld by a state supreme court.
The deceased developer had a meticulous estate plan in place. He clearly knew what he wanted to do with his fortune and organized his estate accordingly. This case shows how a solid estate plan can provide clarity to situations like this, instead of allowing trustees or family members to try to distort it for their own personal gain.
Source: The Telegraph, "Supreme court rules against former Tamposi heir cut out of late developer's trust," Patrick Meighan, Feb. 1, 2013
]]>While some of you might have dodged federal estate taxes, you would do yourself a world of good by forming asset protection to prepare for state estate and inheritance taxes that might be on the books where you live.
]]> State estate and inheritance taxes are not something everyone accounts for. If you do not account for this tax, the money that was left behind for children or other heirs could be ravaged by the state government. This is a reality for most as 21 states throughout the country, including Washington D.C., have estate and inheritance taxes.There are some measures you can take to avoid state estate taxes, though.
Moving to another state where these taxes are not on the books is one way. Luckily for Florida residents, state estate taxes are not an issue, which is why many wealthy out-of-state residents try vigorously to establish Florida as their primary residence.
For those that don't want to pick up their lives and move, there are other alternative ways to avoid state estate taxes. While more complex avenues like credit shelters and a Spousal Lifetime Access Trust can help, gifting is another very simple way. Each person has a $5 million lifetime gift allowance. On top of that, they can give $14,000 per year to as many individuals as they want without facing gift taxes.
Failing to account for state estate taxes can prove detrimental. Luckily, right now, Floridians do not have to jump this estate planning hurdle.
Source: Forbes, "Four Ways To Beat State Death Taxes," Ashlea Ebeling, Jan. 28, 2013
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