Opening an Estate

Paternity in Probate bench court – timing is everything, be aware

May 28, 2019 | by Chepenik Trushin LLP

Seeking Paternity in Probate: Are You Out of Time?

When an estate enters probate and is being distributed, the distribution is usually between family members. Family members can include spouse, children from the marriage, parent, adopted child, aunt, cousin, etc. If there are issues or questions about the status of these individuals, they are usually litigated after the estate holder passes. But what if you are a child born out-of-wedlock? What status do you have and what rights do you have to the estate?

Under Fla. Stat. § 732.103, any children from the marriage are automatically deemed heirs of the estate, and entitled to a share of the intestate estate. But out-of-wedlock children have to establish paternity if they want to share in the distribution of the estate. But do these individuals have the opportunity to litigate the paternity after the father has passed? The opportunity is there, but it is subject to a statute of limitations under Fla. Stat. § 95.11(3)(b). The statute imposes a four year limitation for paternity actions generally, starting from the date the individual turns eighteen.

Florida Anti Lapse law, estate planning and potential will contest environments

December 5, 2018 | by Chepenik Trushin LLP

Florida Anti-Lapse Statute

When preparing a Will, it is assumed that the beneficiaries that you name will outlive you. If you expect someone to die before you, it would not make sense to leave any of your wealth and assets behind for them. However, unexpected things happen. Unfortunately, testator’s live beyond the life of their beneficiaries all the time. Sometimes, people do not update or even think about their Will for decades and those named years ago as beneficiaries have passed away. What happens to the gift(s) left for someone who is now deceased?

This concept is known as “lapse.” The original, common law understanding of lapse, was that if a beneficiary predeceases the testator, the specific gift will fall back into the residuary estate of the testator, not the estate of the deceased beneficiaries. For example, if the will states “Car to X, everything else to Y,” and X dies before the testator, the car will fall back to the residuary estate and go to Y. If both X and Y die, the testator’s estate will pass through intestacy.

Charitable trusts help to reduce estate taxes, learn more

October 11, 2018 | by Chepenik Trushin LLP

FLORIDA CHARITABLE TRUSTS: ALTERNATIVE BENEFICIARIES AND CY PRES DOCTRINE

Due to applicable tax exemptions and tax deductions, charitable trusts are a great tool for preserving the value of your property intended for charitable purposes and for reducing taxes payable by your remaining estate (intended for purposes other than charitable ones). Naturally, the main goal when setting up a charitable trust will be the fulfillment of the philanthropic objective of your choice. While the law comes to aid with mechanisms to fill in the blank spaces in the will or trust agreement, well-meant but poorly executed provisions in the documents may defend these mechanisms and obstruct the desired purpose.

Charitable purposes may include relief of poverty; advancement of arts, sciences, education, or religion; promotion of health, governmental, or municipal purposes. Fla. Stat. 736.0405(1). This list is, of course, non-exhaustive. A specific charitable purpose and beneficiary organization will usually be designated in the document. Even if it is not, the court will select one or more charitable purposes or beneficiaries that will be consistent with the settlor’s original intent, at least to the extent it can be ascertained. Fla. Stat. 736.0405(2). But what if the agreement names a purpose and a beneficiary, but the beneficiary does not exist? Or exists at the time the agreement is made, but ceases to exist before it is supposed to take the bequest? Or what if the stated purpose is impossible to fulfill? In those situations the cy pres doctrine applies to help execute the bequest in accordance with the general spirit of the will or trust agreement.

Florida Supreme Court brings clarity to Attorney-Fiduciary privilege (different from the attorney-client privilege)

September 17, 2018 | by Chepenik Trushin LLP

FLORIDA SUPREME COURT ADOPTS “ATTORNEY-FIDUCIARY PRIVILEGE” RULE

The attorney-client privilege is one of the oldest legal concepts and the backbone of providing effective legal services. It keeps the communication between an attorney and her client secret and protects it from disclosure, with some exceptions, even when other rules compel disclosure. It is the attorney’s duty and the client’s right―an assurance that she may communicate with her attorney frankly and openly.

The privilege covers communication relating to legal representation between the lawyer and her client that the client intends not to disclose to third persons. Fla. Stat. § 90.502. This privilege is not, however, absolute and many jurisdictions have recognized an exception in fiduciary relationships. This exception allows beneficiaries of a trust to obtain privileged communication between the trustee who administers the trust for their benefit and the attorney who advised the trustee on her fiduciary duties.

A Will seems simple, but when executed, it can be a rocky road

January 10, 2018 | by Chepenik Trushin LLP

How to comply with formal requirements of Will execution

Florida law places great emphasis on compliance with its statutes regarding execution of wills. This is to assure the authenticity of such an important document profoundly affecting many lives, and prevent fraud and imposition in its execution. The statutory provisions, which appear in Florida Statute §735.502, set out four main requirements for executing a will. Failure to comply with the formal requirements can invalidate the will and force the estate to pass through intestate succession. It is therefore important to comply with and understand these formal requirements.

Firstly, the will must be in writing. This means that the document can be handwritten, typed, or printed. Florida does not recognize oral wills (nuncupative wills) or wills without witnesses (holographic wills). Nuncupative wills are allowed in only few jurisdictions and typically require witnesses and some exigent circumstances such as a car accident or a heart attack. Contrarily, many states recognize holographic wills and have different requirements as to their validity.

Ademption, knowing what is not part of your estate

December 26, 2017 | by Chepenik Trushin LLP

When devises are actually not part of the estate

Many unexpected things can happen in the period between the execution of a will and the actual death. For example, a decedent may devise the family house in Key West to her granddaughter. Several years after executing the will, the decedent gets into financial troubles and sells the Key West house. With other matters on her mind, the decedent never gets to adjust the will and passes away. Does the granddaughter still have a right to the house? Does she get money instead? Does she get any value at all?

The legal term describing a situation when a particular asset devised in the will is not part of the estate is ademption by extinction. The Florida statutes cover ademption in Section 732.606 for specific devises, and Section 732.605 for securities. Ademption is not uncommon; the decedent may have owned the asset and later sold it, or could have never owned it all. The situation would be different if the grandmother gave the granddaughter the Key West house as a gift before passing away. In that case, the granddaughter’s devise would have been satisfied during the grandmother’s lifetime. Accordingly, this legal concept is called ademption by satisfaction and is not discussed in this blog post.

Prince, George Michael and Carrie Fisher; Estate Planning 101, what are we learning?

August 14, 2017 | by Chepenik Trushin LLP

MORE MONEY, MORE PROBLEMS? 6 DO’S AND DONT’S OF ESTATE PLANNING AND INTELLECTUAL PROPERTY

At the end of last year it seemed as if every day there was a new report of a celebrity dying unexpectedly. As fans around the world mourned the death of some of Hollywood’s most iconic figures, reports of their estate planning, or lack thereof, also filled the headlines.

Prince: Intestacy and streaming music rights collide

Your estate and assets, make sure you know what actually counts for your beneficiaries under Florida laws

July 11, 2017 | by Chepenik Trushin LLP

Ademption: When devises are actually not part of the estate

Many unexpected things can happen in the period between the execution of a will and the death. For example, a decedent may devise the family house in Key West to her granddaughter. Several years after executing the will, the decedent gets into financial troubles and sells the Key West house. With other matters on her mind, the decedent never gets to adjust the will and passes away. Does the granddaughter still have a right to the house? Does she get money instead? Does she get anything at all?

The legal term describing a situation when a particular asset devised in the will is not part of the estate is ademption by extinction. The Florida statutes cover ademption in Section 732.606 for specific devises, and Section 732.605 for securities. Ademption is not uncommon. The decedent may have owned the asset and later sold it, or could have never owned it all. The situation would be different if the grandmother gave the granddaughter the Key West house as a gift before passing away. In that situation, the granddaughter’s devise would have been satisfied during the grandmother’s lifetime. Accordingly, this legal concept is called ademption by satisfaction and is not discussed in this blog post.

Taxes and gifting, estate planning makes a huge difference

June 26, 2017 | by Chepenik Trushin LLP

Estate Planning: Income Tax Strategies

Law firms have had to take a spike in income tax rates, a decline in the estate tax rate, and an increasing annual estate tax exemption threshold into account in devising estate planning strategies. There has been a decreasing gap between the income tax rates and estate tax rates: estate tax has moved to a maximum rate of 40% and a $5.45 million exclusion in 2016, from a 55% percent tax rate and a $675,000 exclusion in 2001; the maximum tax rate on ordinary income is 39.6%, up from a low of 35 percent in 2003; the maximum long-term capital gains tax rate increased to 20% from 15% in that same time frame. Furthermore, in 2013 an additional 3.8% surtax was added for net investment of individuals, estates, and trusts over statutory threshold amounts in certain cases. While these numbers might make you think that estate planning is only necessary for the super wealthy, financial planners advise that it is not. Taxes are just one consideration of estate planning: it is critical to plan for an orderly transfer of assets or for other circumstances such as incapacitation.

The capital gains tax rate – the long-term rate of 20% plus the 3.8% surtax – is significant because it affects the basis of assets. When a decedent dies, her beneficiaries get the benefit of a step-up in basis, which is appreciated assets held in the decedent’s estate are readjusted to fair market value at the time of inheritance. Through this mechanism, the beneficiary receives an income tax advantage because she is not liable for the capital gains tax on any appreciation that occurs up to the point she inherits the asset.

Use of Homestead Property and the impact on estate administration

May 8, 2017 | by Chepenik Trushin LLP

The importance of a Semicolon – Does property partially used as primary residence and partially for business purposes qualify as Homestead?

Does property partially used as primary residence and partially for business purposes qualify as homestead under Article X, Section 4 of the Florida Constitution? Surprisingly, the answer apparently rests on a semicolon.

This question was addressed in 2003 by the Florida Court of Appeal for the First District in Davis v. Davis, 864 So. 2d 458 (Fla. 1st DCA 2003). The facts of this case are as follows: Mr. Horace Davis lived with his wife Carolyn on a contiguous piece of property measuring less than 160 acres outside of municipality in an unincorporated portion of Nassau County. The property included the couple’s residence and on a portion separate from the residence, Mr. Davis operated a mobile home park generating profit through rent. Mr. Davis died in 2000 having written a will.