Estate Administration

FIRPTA – Be Aware!

August 1, 2016 | by Chepenik Trushin LLP

FIRPTA: Increased Withholding and Other Changes

Most professionals have familiarity with the Foreign Investment in Real Property Tax Act (“FIRPTA”), especially those that have foreign clients investing in U.S. real estate. On December 18, 2015, the President signed into law the Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”). The PATH Act significantly alters FIRPTA withholding for foreign persons disposing of investments in U.S. real estate. Realtors, accountants, closing agents and title companies need to familiarize themselves with the changes.

The PATH Act increases the FIRPTA withholding rate from 10 percent to 15 percent on certain dispositions and distributions of United States Real Property Interests (“USRPIs”).^[1] Similarly, the withholding rate for the transfer of a partnership interest or the beneficial interest in a trust or estate has been increased from 10 percent to 15 percent.^[2] The new withholding rate applies to all such dispositions that take place after February 16, 2016.^[3] However, the new FIRPTA rules allow for a 10 percent withholding rate where the amount realized on the disposition of property being used as a residence is between $300,000.00^[4] and $1 million.^[5] In other words, if a foreign person sells his or her personal residence for $999,000.00 the amount to be withheld shall be $99,900.00. However, if the foreign person sells his or her personal residence for $1,000,100.00, the amount to be withheld on the sale shall be $150,015.00. The amount withheld is offset by the gain on the disposition of the USRPI and is refundable to the extent the amount withheld exceeds the underlying tax liability.^[6] The increased FIRPTA withholding rate is not an actual increase in tax, but a means of ensuring compliance with U.S. tax law. An exemption found in the old rule remains in place, providing that a foreign person is not subject to FIRPTA withholding where the property sold is used as a residence and the amount realized does not exceed $300,000.00.^[7]

Does ingesting medical based pot make you incapable of creating a will or trust?

July 12, 2016 | by Chepenik Trushin LLP

Possibility of the Effect of Marijuana on Estate Planning

In the 2014 legislative session, the Florida Legislature passed the Compassionate Medical Cannabis Act of 2014, which authorizes certain physicians to prescribe low-THC cannabis for use by specified patients. Nearly two years later, due to legal challenges, Floridians still have not been able to receive this medical treatment. However, because the law may become effective in the near future, certain questions must be addressed, particularly questions regarding the intersection of marijuana use and testamentary capacity.

One of the legal prerequisites for making a will in Florida is that the maker (the testator) must have testamentary capacity, that is, a sound mind. Insofar as lack of testamentary capacity is one of the grounds frequently used to challenge the making and execution of a last will and testament, the testator’s testamentary capacity may be called into question if he or she had been prescribed medical marijuana and had, in fact, taken medical marijuana during any aspect of the preparation or execution of the subject will.

Personal representative designation in Last Will and Testament – Convicted Felons

June 20, 2016 | by Chepenik Trushin LLP

Florida Limitation on Convicted Felons Serving as Personal Representatives in Probate Administration

When contemplating preparing a last will and testament, there are many options that have to be considered before drafting can begin. One important consideration is deciding who to nominate as the personal representative of your estate.

A personal representative is a fiduciary who is appointed by the court to administer the decedent’s estate.. Depending on the jurisdiction, a personal representative may also be known or referred to as an executor, administrator, or other name. Florida Statute § 733.301 outlines who has preference in appointment as the personal representative in various scenarios. When the decedent dies testate, meaning with a last will and testament, preference is given to the personal representative nominated in the will. If the nominated personal representative is unwilling, unable or unfit to serve, any successor nominated in the will has preference. In the event all nominated personal representatives are unwilling, unable or unfit to serve, preference goes to the person selected by a majority in interest of the persons entitled to the estate. If there is no person selected by a majority, preference goes to a beneficiary under the will, and if more than one beneficiary applies, the court may select the person best qualified.

When Wills mean Business

June 14, 2016 | by Chepenik Trushin LLP

When Wills Mean Business: Planning for Your Business’s Future

Planning for the future is not only necessary in your personal life, but also in your professional life, especially if you either own a business or invest in a business. Putting an estate plan in place early on, and keeping it updated to reflect changes in the business, can protect your business in the event of your death. Two South Florida examples illustrate the necessity of planning ahead for your business.

In November 2015, Pebb Enterprises LLC, based in Boca Raton, suffered the loss of two of its managing principals and five employees in an airplane crash. The plans put in place by the principals kept the company in business after the devastating event. In contrast, after the death of its president, Naples based Vantage Lighting was undervalued and dissolved, because the president died without a will.

Qualifying as a Personal Representative in Florida

May 27, 2016 | by Chepenik Trushin LLP

When thinking about creating a will, there are many considerations that have to be factored in before putting anything in writing. An important consideration is deciding who to appoint as the personal representative for the estate.

A personal representative is an individual who is appointed to administer the decedent’s estate through probate. Under Florida Statute § 731.201, a personal representative is an umbrella term that could refer to an executor of a valid will or an administrator appointed by the probate court for an intestacy estate in cases where there is no will or there is an invalid will. Under Florida Statute § 733.302, in order to be a personal representative, an individual must be a resident of Florida and sui juris, considered to be competent under the statute. The Probate Code gives preference in the appointment of a personal representative in the event of either testate or intestate estates. For an estate with a valid will, preference is given to the personal representative named in the will, or a person selected by a majority of interested persons, or a devisee of the decedent. Under Florida Statute § 733.301, for estates without a will or with an invalid will, preference is given to the surviving spouse, then to a person selected by a majority of the interested parties, and then to the heir nearest in degree to the decedent. Continue Reading

One of My Relatives Passed Away, Do I Have to Pay Their Debt?

December 23, 2015 | by Chepenik Trushin LLP

The last thing you want to deal with when grieving the passing of a loved one is incessant phone calls, emails, and possibly even personal visits from creditors who are seeking to collect the debt owed by your loved one. Unfortunately, these unethical and sometimes illegal practices are not uncommon. Creditors often take advantage of a family member’s grief and lack of knowledge on the law governing a decedent’s debts in an effort to get the family member to answer for the decedent’s debts.

Well, here is something that might come as a bit of a surprise to you: you do not have to personally pay those creditors!

Removing a Personal Representative in Florida

January 12, 2015 | by Chepenik Trushin LLP

When a Florida resident passes away, regardless of whether he or she had a valid will, a person will be appointed to act as personal representative to administer the estate of the deceased. If the deceased executed a valid will, he or she may have named the personal representative in the will, or if the personal representative was not specifically named, the power of appointing the personal representative may have been granted to a named individual. See Fla. Stat. § 733.301(1)(a)(1). If the deceased either died without a will, or had a will but neither named a personal representative, nor granted the power to appoint a personal representative, then the personal representative is appointed in accordance with the order of preference set forth in Florida Statute § 733.301. See Fla. Stat. § 733.301(1). For a person who dies without a will, the personal representative will be “[t]he surviving spouse,” “[t]he person selected by a majority in interest of the heirs,” or “[t]he heir nearest in degree. If more than one applies, the court may select the one best qualified.” See Fla. Stat. § 733.301(1)(b). For a person who died with a will which did not specify a personal representative or grant someone else the power to name the personal representative, the personal representative will be “[t]he person selected by a majority in interest of the persons entitled to the estate,” or “[a] devisee under the will. If more than one devisee applies, the court may select the one best qualified.” See Fla. Stat. § 733.301(1)(a).
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Fiduciary Duty of the Personal Representative of an Estate

November 27, 2013 | by Chepenik Trushin LLP

Billionaire Ron Perelman is being accused of spending up to $30 million in legal fees from his daughter’s inheritance defending unsuccessful lawsuits against his former in-laws. After the death of Perelman’s second ex-wife, Claudia Cohen, he was appointed the “executor” of her estate, which in Florida, is referred to as the “personal representative” of an estate. Their daughter, Samantha, was named the beneficiary. Claudia Cohen was the daughter of Robert Cohen, who created the Hudson County News Company, which operates a chain of newspaper and magazine retail stores. Perelman claims that Claudia’s father and brother cheated Samantha out of a share of the family’s lucrative media business and filed at least four lawsuits after Claudia’s death. The Cohens claimed that Perelman just wanted to obtain part of the $80 million divorce settlement that he lost to Claudia and that Claudia had a great relationship with her family. As proof of that, the Cohens contended that Claudia’s will expressed her love for her parents, brother, and sister-in-law and her desire for her parents to have liberal visitation time with Samantha.
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Who Owns Items Bought with Money from a Joint Checking Account?

May 22, 2013 | by Bart Chepenik

“Who owns what and how?” Those are always the first questions asked when evaluating estate assets. Personal property is generally not titled because it is usually clear who the owner of the item is. Chances are no one will be confused about the ownership of your shoes or watch. Real property and accounts, on the other hand, can easily be titled in the name of more than one person. One common way to do this is by creating a joint tenancy in the title to the property. A joint tenancy grants equal ownership of the property and gives the right of survivorship to the other tenants. The right of survivorship simply means that when one tenant dies, their share of the property is transferred to the surviving tenants. This transfer is automatic and divides the deceased tenant’s share in equal parts to the survivor(s).
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Removing a Non-Tenant from Estate-Owned Property

May 8, 2013 | by Bart Chepenik

What happens when someone is illegally living in estate owned property and will not leave? Easy. Evict them. Right? Yes, if the person is a tenant of the property and the estate is the landlord. Eviction actions arise out of disputes between landlords and tenants and can be filed in both county and circuit courts. However, what happens in situations where the person occupying the estate-owned property is not a tenant of the estate? In these cases, ejectment is the proper cause of action. So, where and how does a person bring an ejectment claim to recover estate-owned property? In such situations, circuit court is the proper venue. This can include probate courts, whose general duty is to settle estates. While there is nothing expressly disqualifying a probate court, as a circuit court, from hearing an ejectment claim, if the a probate court cannot adequately administer justice, the claim must be heard in a circuit court of general jurisdiction.
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