Homestead Protection

September 18, 2023 | by Chepenik Trushin LLP

The process of preparing and executing a will and proceeding to probate can be complicated, emotional and stressful. Regardless of whether a decedent has executed a will, trust or any other estate planning documents, probate proceedings can be unpredictable and can give rise to major anxiety for all parties involved. This feeling is often magnified when loved ones must also deal with a decedent’s creditors. Very often, beneficiaries and loved ones are not aware of each and every creditor who may file a claim for repayment against the decedent’s probate estate. While there are rules limiting the amount of time that creditors are allowed to bring any claims, it can nonetheless be unnerving not knowing how much, if anything, will be left in the estate after all creditor claims have been settled.

In Florida, one way the property of a decedent is protected from creditor claims is through the protections afforded to homestead real property. Under the Florida Constitution, one’s homestead property is exempt from forced sale during the owner’s lifetime. Further, this exemption inures to the surviving spouse or heirs of the property’s owner upon that person’s death. In order for a property to count as a homestead, the title holder must live on the property and it must be both their primary and permanent residence. That’s not to say, however, that the title holder is not allowed to leave the homestead for a period of time, own other properties, etc. The owner may, though, only claim one property as his or her homestead.

Once it has been determined by the probate court that the property in question should be considered homestead, the property will officially be exempt from creditor claims. However, there are still a few exceptions to be wary of. Creditors can still defeat the homestead exemption for: (1) taxes and assessments specified under Article X, §4(a) of the Florida Constitution, (2) encumbrances voluntarily entered into, (3) liens that attach before the homestead was created, and (4) liens for work performed on the property.

Avoid Intestacy and Probate

June 15, 2022 | by Chepenik Trushin LLP

Estate planning 101 from the late Tony Hsieh, CEO of Zappos

Tony Hsieh was the CEO of Zappos for over twenty years before retiring and taking up a series of different business ventures. Zappos is an online retailer that deals specifically with shoes and clothing on an international sale. Hsieh was an early investor, and then CEO, for this online clothing empire. On November 27, 2020, Tony Hsieh succumbed to his injuries resulting from a house fire at his residence, leaving behind assets worth over $700,000,000. Quite a large sum.

Like many celebrities who have passed away with large estates, including Aretha Franklin and Prince, Hsieh did not leave an estate plan in the unfortunate eventuality of his death. Having no plan in place governing his wishes, Mr. Hsieh’s family is now left in the unenviable position of having to deal with the administration of Mr. Hsieh’s estate and the claims of many individuals seeking a potion of same. At least ten individuals have submitted claims for a portion of Mr. Hsieh’s estate, seeking more than $130,000,000. Many of these claims concern different specific devises listed on thousands of yellow Post-It notes. Some Post-It notes are about particular items such as artwork and furniture, while others concern ownership interests in Mr. Hsieh’s business ventures.

Single parents and estate planning issues

May 13, 2022 | by Chepenik Trushin LLP

How can a single parent avoid homestead to protect a minor child?

Florida homestead laws are complex, confusing, and enormously important for homeowners with or without an estate plan. Florida homestead law applies to three categories: (1) creditor protection against reaching a primary residence, (2) property tax exemptions and limitations on annual property value increases, and (3) restrictions on how a homeowner may devise property if there is a surviving spouse or a minor child.

Under this third category, Article X, Section 4(c) of the Florida Constitution states that a homestead property cannot be devised if the owner is survived by a spouse or minor child, except to the spouse if there is no minor child. This section only pertains to devises, or post-death transfers of property. A homeowner is free to mortgage, gift, sell, or deed the property freely while the homeowner is still living. If the homestead is jointly owned by both spouses, then the property can be freely transferred as long as both spouses join on the conveyance.

Your legal responsibilities as a named personal representative in estate planning documents

April 7, 2022 | by Chepenik Trushin LLP

Est. of Pounds v. Miller & Jacobs, P.A., No. 4D21-1362, 2022 WL 39211 (Fla. 4th DCA 2022).

If a will does not specify who should serve as personal representative of an estate, parties can fight over this position through litigation. But what happens if one person obtains a settlement on behalf of an estate, and then another person is appointed as personal representative? The court answered this question in Estate of Pounds v. Miller & Jacobs, P.A., No. 4D21-1362, 2022 WL 39211 (Fla. 4th DCA 2022), giving us insight into why these situations are problematic and why good estate plans need to be carefully drafted.

The decedent died in a motorcycle accident, leaving behind his minor child as the sole heir of the estate. The child’s mother and the decedent’s mother both showed interest in serving as personal representative of the estate, which comes with certain perks, such as earning a personal representative fee, and responsibilities, including distributing estate property. The child’s mother was not married to the decedent.

Inheriting real estate property in Florida? Here’s what you need to know

July 13, 2021 | by Chepenik Trushin LLP

Should I disclaim my Inheritance? When It’s Right to Say No

Florida law allows a beneficiary to “disclaim” any interest in or power over property that has been left to them. A disclaimer is a legal tool to refuse the acceptance of an interest in or a power over a property, governed by a series of statutes called the Florida Uniform Disclaimer of Property Interests Act, and by relevant federal tax law.

Why Disclaim?

Tax planning, Estate planning, Trust documents – Be proactive now and do not regret indecisiveness in 2021

April 15, 2021 | by Chepenik Trushin LLP

Bernie’s “For the 99.5% Act”: Is It Time to Start Thinking about Tax Planning?

For the year 2021, each individual has $11,700,000.00 of estate tax credit (or $23,400,000.00 for married couples), otherwise known as the “applicable exclusion amount.” For estates that exceed the applicable exclusion amount, the tax rate is up to 40.00% of the amount in excess of the applicable exclusion amount. The current estate tax credit is scheduled to maintain that level, indexed for inflation, until December 31, 2025, at which point the applicable exclusion amount will be reduced to approximately $6,000,000.00 ($12,000,000.00 for married couples). However, since the Biden administration proposed major estate tax reform, there has been much discussion about whether the estate tax credit will be reduced earlier.

On March 25, 2021, Senator Bernie Sanders introduced the “For the 99.5% Act,” which proposed, among others, the following tax reforms:

Handwritten Wills and the Importance of Witnesses – What you need to know because it is complicated

March 15, 2021 | by Chepenik Trushin LLP

Larry King’s Handwritten Will Ordeal

The recent passing of the broadcasting legend, Larry King, has resulted in his family not only mourning him but also fighting amongst themselves over his true last wishes. Larry, together with his wife, Shawn Southwick King, had executed estate planning documents in 2015, where he named her the personal representative of his estate. However, the couple faced some difficulties and Larry filed for divorce in August 2019. Just two months later, he executed a new handwritten will, leaving his entire estate valued at $2 million dollars to his five children. Two witnesses also signed their names to the hand-written will.

Larry’s eldest son, Larry King Jr., submitted the 2019 will to the court and has petitioned to be appointed the temporary administrator of Larry’s estate. However, Shawn has filed an objection to the 2019 will, claiming that the will is invalid and that Larry King Jr. exerted undue influence over his father towards the end of his life, and insisting that the 2015 will is the valid one.

President Biden’s potential move on Estate Tax – What you need to know now

February 18, 2021 | by Chepenik Trushin LLP

2021 Biden Administration Proposed Tax Changes: Will My Estate Be Subject to Estate Tax?

Over the course of the last several decades, the federal estate tax credit has increased to the point that only very high net-worth individuals and families need to concern themselves with estate tax planning. For the year 2021, the “applicable exclusion amount” is $11,700,000.00 per individual (23,400,000.00 for married couples). The gift tax exclusion amount is the same, that is, each individual may give $11,700,000.00 during their lifetime without incurring any gift tax. If the sum of lifetime gifts and assets transferred at death is greater than the applicable exclusion amount, then such transfers will be taxed at a rate as high as 40%.

However, the Biden administration has proposed a reduction of the applicable exclusion amount to $3,500,000.00 per person for estates, $1,000,000.00 for lifetime gifts, and increase the tax rate to up to 45%. Such a change is made more likely by the fact that, in January, the Democratic party has consolidated power in both branches of the U.S. Congress. Last year, there was even fear that, if such a change came in to effect at any time during 2021, congress could make the change retroactive to January 1, 2020, prompting many families to make gifts before the end of the year to ensure their use of the current applicable exclusion amounts.

Enforcing a contract to create a Will is complex – read the details

November 4, 2020 | by Chepenik Trushin LLP

Contracts to Create a Will

A last will and testament must be the consequence of a person’s free will (which is why they are aptly referred to as “wills”). Nevertheless, a person may execute a contract during life to include certain terms and/or beneficiaries in their will in exchange for goods or services.

Enforcing a contract to create a will is more complex than enforcing a normal contract. With these types of agreements, it may be impossible to tell whether the testator lived up to his or her side of the bargain until their estate plan is revealed after their death. Additionally, the terms of a will do not come into effect until death, so there may not technically be a breach of the contract until the decedent’s death. Further, if you were supposed to be a part of the decedent’s estate plan, but were not included, it’s possible you may never even receive notice regarding the administration of the decedent’s estate.

Florida Homestead Protection 101 – what to know

October 9, 2020 | by Chepenik Trushin LLP

Homestead Protection: Can You Lose It in Probate?

A person’s home (homestead) is often the most important asset in their estate plan because of the monetary and sentimental value that is inherent in a person’s main residence. Florida has special rules that govern a person’s primary residence, known as homestead property. Unless a creditor is the IRS, a mortgagee, or a laborer that performed work on the home, a homestead property is safe from creditors’ claims. Essentially, the homestead is exempt from a forced sale of the property unless there is a special creditor.

To qualify for homestead protection, a person must be a permanent resident of Florida, and the homestead must be that person’s primary place of residence, among other rules. This means that second homes and investment properties are ineligible for such protection. However, there is no monetary cap associated with the exemption, so a Florida resident that invests millions of dollars into their primary residence will receive full protection.