Inheritance

Class Gifts: Leaving Assets to a Dynamic Group of People

September 9, 2024 | by Chepenik Trushin LLP

A class gift is a sum of assets that is given to and divided among a group of beneficiaries. The beneficiaries of a class gift are a group that can be expected to expand or contract between the time of will execution and the testator’s death. A class gift allows a testator to identify a group of beneficiaries in relation to their status or membership in a defined class, rather than identifying individuals particularly.

The Restatement explains that a class gift is “a disposition to beneficiaries who take as members of a group. Taking as members of a group means that the identities and shares of the beneficiaries are subject to fluctuation.” Further, the Restatement says that a “disposition is presumed to create a class gift if the terms of the disposition identify the beneficiaries only by a term of relationship or other group label. The presumption is rebutted if the language or circumstances establish that the transferor intended the identities and shares of the beneficiaries to be fixed.” RST (3d) §13.1.

A testator may want to leave a class gift if they want to devise property to a dynamic group, meaning a group whose membership can or may change over time. For example, a will may leave an asset to a group identified by language such as “my siblings,” “my nieces and nephews,” or “my children,” rather than by explicitly identifying the intended beneficiaries by name. A class gift avoids the necessity of revising the will when a member of the class later is born or dies. For example, a gift given “to my grandchildren” will include a grandchild already living when the testator executed their will, as well as other grandchildren later born following execution of the will. The enables the testator to leave a gift to all of their grandchildren without having to redo their will each time a new grandchild is born. Further, while groups are usually considered closed when the testator dies, there may be exceptions. For example, a child conceived but not born before the testator’s death could be considered a member of a group of the testator’s children.

Power to Disclaim: What happens when someone inherits something they do not want?

July 25, 2024 | by Chepenik Trushin LLP

Florida law defines “Disclaimer” as “the refusal to accept an interest in or power over property.” Fla. Stat. § 739.102(5). Further, Florida law states “A person may disclaim, in whole or in part, conditionally or unconditionally, any interest in or power over property, including a power of appointment. A person may disclaim the interest or power even if its creator imposed a spendthrift provision or similar restriction on transfer or a restriction or limitation on the right to disclaim. A disclaimer shall be unconditional unless the disclaimant explicitly provides otherwise in the disclaimer.” Fla. Stat. § 739.104(1).

This statute grants people the power to refuse a devise under a will or inheritance under intestacy. Individuals can refuse assets, right of survivorship, powers of appointment, etc. There are a number of reasons one may wish to disclaim their interest in an estate, including tax avoidance, protecting assets against creditors, or for personal reasons. When an individual disclaims an interest, it is important to note that they do not have a power to direct who takes the disclaimed interested in their place, and rather that the operative instrument or default statutory provisions govern who is to receive a disclaimed interest.

In Gardner v. Richardson, Mr. Gardner’s trust granted a life estate in a home to Ms. Richardson and gave the remainder interest to his children. After Mr. Gardner’s death, Ms. Richardson cared for the property. She lived in the home, paid the taxes and utility bills, and took responsibility for paying a portion of the mortgage. She banned Mr. Gardner’s children access to the home and wrote to the trustee, Wayne Gardner, saying she planned to live in the house until she died. The trustee filed an action to determine whether Ms. Richardson or Mr. Gardner’s children were responsible for paying the mortgage principal and interest. After the court held that Ms. Richardson was responsible for paying the mortgage interest, she attempted to disclaim her life estate even after living in the home for about two years. The trial court held that the disclaimer was ineffective, and Ms. Richardson appealed. The appellate court affirmed the court below and held that the disclaimer was ineffective because Ms. Richardson continued to occupy Mr. Gardner’s property to the exclusion of others, knew of her liability for the property’s expenses, and belatedly attempted to disclaim her life estate interest. Gardner v. Richardson (In re Gardner), 283 P.3d 676, 676 (Ct. App. 2012).

Establishing a Lost or Destroyed Will

May 21, 2024 | by Chepenik Trushin LLP

As with any other physical object, wills may be subject to being inadvertently destroyed or lost. Either scenario may cause a variety of issues for the nominated personal representative and beneficiaries of the decedent. Even when taking steps to safeguard the original of a last will and testament, such as by keeping the document in a safe or in a safe deposit box, unexpected situations can and do arise, such as natural disasters, fires, or even third parties who intentionally destroy or steal the document. When this occurs (i.e., when you are no longer in possession of the original document), what steps can be taken to establish the validity of a last will or testament that has been lost or destroyed? The answer to this question will depend on a variety of factors.

In Florida, whenever an original will has been lost or destroyed, there is a presumption that the testator intended to revoke the will by destroying it, and the proponent of the will has the burden of proving the contrary. Under Florida Statute 733.207, “[a]ny interested person may establish the full and precise terms of a lost or destroyed will and offer the will for probate.” Additionally, “[t]he specific content of the will must be proved by the testimony of two disinterested witnesses, or, if a correct copy is provided, it shall be proved by one disinterested witness.”

In the case In re Estate of Parker, the original last will and testament of the decedent had been lost or destroyed. Nevertheless, the personal representative possessed an almost identical typewritten draft of the will. In this case, the Florida Supreme Court pondered on the issue of whether this typewritten draft would constitute a “correct copy” of the will pursuant to section 733.207 of the Florida Statutes. After considering the dictionary definition of the words “correct” and “copy,” the Court held that “the words ‘correct copy’ means a copy conforming to an approved or conventional standard and that this requires an identical copy such as a carbon or photostatic copy.” In re Estate of Parker, 382 So. 2d 652, 653 (Fla. 1980).

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.

Estate planning, trusts and genealogical services, what you need to know.

February 28, 2022 | by Chepenik Trushin LLP

What to do with 23 and me?

Recent years have seen the rise in ancestry services such as Ancestry.com and 23 and Me. After performing a simple DNA swab, these services provide the subscriber with hereditary and genealogical information that can unlock family history, medical information, and perhaps even long-lost relatives. While these services provide substantial value for our personal lives, they may be problematic in the world of estate planning.

To illustrate, consider the following hypothetical. A man donates to a fertility clinic when he is 20 years old. Many years later, the man is happily married with three adult children. The man then creates a will that reads in part as follows: “I hereby leave my personal savings account, valued at $1,000,000, to my biological children to be divided equally.” This language creates a class gift to a particular class of people, his children, as opposed to naming specific individuals to benefit. While the man’s three children are included in this class gift, as was intended, so too is a fourth biological child resulting from the man’s fertility clinic donation years prior, whom the man never knew existed. Genetic information services can have both intended and unintended consequences, as the three children will find out if the fourth child identifies his father through an ancestry service and later seeks a distribution from the man’s estate under the class gift in the will.

Cryptocurrencies, Bitcoin and Death

November 11, 2021 | by Chepenik Trushin LLP

What Happens to my Bitcoin when I die? Estate Planning and Digital Currencies

Cryptocurrencies have gained significant popularity over the last decade, appealing to the masses due to their decentralized nature, virtual anonymity, and enhanced security.[1] For Federal income tax purposes, cryptocurrency is treated as property, and longstanding tax principles apply to all transactions involving cryptocurrency.[2] Thus, anyone who owns cryptocurrency should be treated like other assets and be addressed in an estate plan.

However, these currencies pose certain challenges for estate planning. Like securities, the value of cryptocurrencies can fluctuate with great volatility due to market pressures. In addition, the virtual currency cannot be kept in a physical bank account. This lack of physical presence poses issues if the holder did not properly take steps to track and pass on his or her cryptocurrency.

Do It Yourself Wills in Florida – be very cautious

October 8, 2021 | by Chepenik Trushin LLP

DIY Estate Planning: Can I Make a Will Myself?

While a steady drive towards technology has been growing for decades, the onset of the COVID-19 pandemic tremendously increased our reliance on technology, effectively changing the the way we do nearly everything, including estate planning. Do-It-Yourself (DIY) online services offering legal templates and forms have gained popularity in the wake of the stay-home orders, popular for their convenience and low cost. DIY estate planning forms, such as like a last will and testament, codicils and health care or financial powers of attorney, created without the guidance of an attorney can create several issues.

Take, for instance, the case of Aldrich v. Basile, which the Supreme Court of Florida called “a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance.”[1] In Aldrich, a women used a DIY will template that willed several assets to her brother. After creating this will, she inherited some property and large sum of money. Her will, however, did not contain a residuary clause, which accounts for all property not specially bequeathed in the will. Upon her death, her brother and nieces began suit to determine the rightful owner to the inherited money and property, each claiming it was theirs. The Florida Supreme Court held that because the will did not contain a residuary clause, the money and property would pass through intestacy (the law that happens when someone dies without a valid will), meaning it would be split according to the default Florida laws. This case demonstrates the detrimental impact of an online will template can have when it does not adequately address your estate’s specific, changing needs.