Probate

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.

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).

Gifting property during life vs. after death: which is better?

December 22, 2022 | by Chepenik Trushin LLP

The estate tax, commonly referred to as the “death tax,” affects only certain estates with a taxable value beyond a set figure. For 2023, any estate exceeding a taxable value of $12.92 million is taxed at a rate of 40.00%. While this does not give cause for concern to the vast majority of individuals, these figures can and do change. The estate tax is often a topic of discussion in political debate and frequently changes. As recently as 2017, the amount to trigger estate tax was just under $5.5 millon. In 2008, the amount was $2 million. Future years could see a reduction in the presently-set amount, which could encompass individuals currently exempt from estate tax liability.

This variability poses concern from an estate planning perspective. While a relatively modest estate may be exempt from estate tax one year, it may very well be subject to the tax in another year. Thus, the higher the value of an estate, the more at-risk it is over time of owing an estate tax. To account for this, estate planners have utilized numerous strategies to reduce an estate before death and minimize potential estate tax liability. One such strategy is gifting property away on an annual basis during the testator’s life.

Individuals may gift a set amount of money each year without triggering any tax consequences. The federal government sets an annual exclusion that allows for a certain amount to be gifted tax-free each year to individual recipients. For 2023, the annual exclusion is $17,000 per recipient. In other words, if a mother gives $17,000 to each of her seven children in 2023, then $119,000 is removed from her ultimate estate tax-free. If such gifts are made on an annual basis (subject to each year’s gift tax exclusion amount, which may vary from year-to-year as the estate tax might), the mother can reduce her taxable estate substantially during her life, saving potentially millions of dollars in estate tax upon her death.

Estate planning and DNA implications

September 9, 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.

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.

Are you a “Dutiful Child”, who is a caregiver for your loved one? The Florida laws explained.

February 9, 2022 | by Chepenik Trushin LLP

Florida’s ‘Dutiful Child’ Exception

Throughout life, relationships and priorities often change, necessitating amendment to one’s Last Will and Testament to reflect these changes. However, sometimes these testamentary changes raise questions as to the testator’s motivations for the revisions, leading to a will contest. “Undue influence” upon the testator is one basis for challenging the validity of a will, trust, or other testamentary document. While litigating the issue of undue influence can be complex, the basic concept is straightforward: an individual is accused of improperly persuading a (often vulnerable and elderly) testator to draft or amend their will for that person’s individual benefit.

Florida courts consider several factors when assessing claims of undue influence over a testator, including the beneficiary’s arranging for the testator to prepare a will, knowledge of the contents of the will, and presence during the execution of estate planning documents. On paper, these factors seem like red flags pointing towards a finding of undue influence. Yet in reality, these are common actions of adult children simply caring for their elderly parents. So, how can an adult child helping their parent with estate planning justify these actions when faced with an allegation of undue influence?

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.

Elective share in Florida – When a wife or life partner (spouse) is not included in a Will

August 26, 2021 | by Chepenik Trushin LLP

Florida’s Elective Share: Part II

Our previous blog post two weeks ago addressed Florida law regarding the protection to surviving spouses provided by the elective share from the perspective of estate planning (Elective Share – what is it and why you should know more about it). This post focusses on the options of a surviving spouse after declaring elective share. However, electing against the decedent’s estate may not always be the most beneficial option for a surviving spouse. Depending on the circumstances, a surviving spouse’s pretermitted share of decedent’s estate can be much larger than their elective share, and therefore, in some cases, it may not be beneficial to utilize the elective share.

Intestacy and Pretermitted Spouse