Florida Probate Litigation Lawyer Blog

Settlement in Guardianship Litigation

March 13, 2013 | by Bart Chepenik

Children worry about their elderly parents, particularly when the parents begin new relationships. Children may be particularly worried when their parent gives or loans money to a new significant other. This sometimes leads to children seeking to have a parent declared incapacitated, thereby preventing the parent from having control of his or her financial affairs. This was the case in Jasser v. Saadeh, 97 So.3d 241 (Fla. 4th DCA 2012). In that case, Mr. Saadeh, an 80-year-old-man, loaned money to a new girlfriend that he met after the death of his wife. When his children found out, they sought to have their father declared incapacitated. After the children filed for a determination of incapacity, a settlement agreement was reached, in which Mr. Saadeh signed a trust agreement that put his belongings into an irrevocable trust, for which he was the sole lifetime beneficiary, with his children as the remainder beneficiaries. Mr. Saadeh was told that if he signed the document, the proceedings would be over. However, after the settlement order was entered into, and based on reports that Mr. Saadeh was not in fact incapacitated, the court questioned whether the settlement was valid. Mr. Saadeh retained counsel and contested the formation of the trust. The court ultimately found that the trust was void, and Mr. Saadeh’s assets were returned to him.
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Making Remittances to Cuban Nationals

March 6, 2013 | by Bart Chepenik

Until the last two years, it has been illegal in the United States to make remittances to any Cuban nationals. The United States put an embargo in place as a sanction against Cuba in the 1960s, which was intended to make U.S. dollars inaccessible to the Cuban government. The embargo included a freeze on Cuban assets in the United States, regardless of whether the assets were owned by the government or a private individual. If a Cuban national had any ownership interest in property in the United States, the property was blocked from being transferred. These accounts are called “Cuban Blocked Accounts.” Also, once the sanctions were in place, if a person subject to the jurisdiction of the United States made a remittance to a Cuban national, then he or she would face severe criminal penalties. However, in 2009, President Obama removed certain restrictions affecting relationships between individuals residing in the United States and those residing in Cuba. These policy changes have made it possible to make remittances to Cuban nationals during a person’s lifetime, as well as remittances in the form of an inheritance, subject to certain restrictions.
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Florida’s Pretermitted Spouse Statute

February 27, 2013 | by Bart Chepenik

In today’s always changing and fast moving society, many individuals marry, divorce, and remarry over the course of their lives. Often times, a husband and wife will execute a joint will or separate wills during their marriage, leaving a substantial portion of their assets to one another. But, what is the effect of divorce upon a will if a new will is not executed subsequent to the divorce? Will the ex-spouse obtain assets that he or she was bequeathed or devised in a will executed during the previous marriage? Will the deceased’s current spouse be entitled to any of the deceased’s property that was bequeathed to the former spouse?

The Florida legislature has addressed these concerns in the Florida Statutes. In Florida, under what is known as the “Pretermitted Spouse Statute,” a spouse who marries an individual after that individual has executed his or her will is entitled to receive a share of the deceased individual’s estate equal in value to what the surviving spouse would have received if the deceased had died intestate (i.e., without a will). Fla. Stat. § 732.301. The surviving spouse is entitled to collect his or her pretermitted share from other property that was supposed to pass through intestacy and from property that was devised to beneficiaries under the will. Fla. Stat. § 733.805. The surviving spouse will continue taking devised property from individuals under the will until the pretermitted share is fully satisfied.
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What Happens When Nobody Can Find Your Will

February 21, 2013 | by Bart Chepenik

Even when a person creates a will, it is possible that nobody will be able to find that will when the testator passes away. Fortunately, Florida law allows for the contents of a will or a codicil (an addition, supplement, or amendment to a will) to be proven even if the will cannot be found. Fla. Stat. § 733.207 provides that the contents of a will that was lost or destroyed can be proven if either: (1) two disinterested witnesses testify as to the contents of the will, or (2) a correct copy of the will is provided and one disinterested witness testifies as to the contents of the will.
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The IRS and Your Lottery Winnings

February 13, 2013 | by Bart Chepenik

The odds of winning the recent Power Ball jackpot were somewhere around 1 in 175 million. While the chances of hitting that $575 million dollar jackpot were absurdly low, the odds of winning a smaller jackpot are much less daunting. If you are one of the lucky to hit a lottery jackpot, do not get lost in the excitement. The money is not yours free and clear. All lottery winnings constitute income under the Internal Revenue Code, and, therefore, come with tax implications. Have no doubt, lottery winnings are taxable income, and Uncle Sam needs to get his taste of the action. Lottery winnings are taxed at a marginal rate of 35% to the winner or winners. There can also be gift taxes associated with sharing the winnings with friends, family members, or a group that purchased the winning ticket. Thus, with the excitement of hitting the jackpot, comes the necessity for planning.

How you claim your lottery prize can make a difference. Do you want to take the annuity? Or the lump sum? Do you want to claim the prize personally? Or set up a trust? Or set up a business entity like a limited liability partnership? What happens when there is a group who contributed to the winning ticket?
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Planning for a Loved One with a Disability: Special Needs Trusts

February 5, 2013 | by Bart Chepenik

A special-needs trust, also known as a supplemental-needs trust or a disability trust, is a trust established for an individual with a disability who qualifies for government benefits from that disability, in order to provide income supplemental to the government benefits without rendering the individual ineligible for the benefits. Special-needs trusts are an important tool because, once a person has a certain amount of assets, he or she will become ineligible for his or her government benefits. However, a friend or relative of a disabled individual, or that individual him or herself, may want to ensure that there is sufficient income available in order to maintain a certain quality of life. A relative of an individual with special needs may also be interested in establishing a special-needs trust because the monetary costs of that person’s care can be high, particularly on an extended or long-term basis.
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Can settling your probate case provide you with a tax break?

January 29, 2013 | by Bart Chepenik

With estate tax rates that could reach 55 percent in 2013 along with a falling exemption, it is not surprising that taxpayers will look for every way possible to reduce their tax burden, and one potential way of accomplishing this is with deductions. Typically, after an estate is valued, it is entitled to certain deductions from its value. For example, if an estate was valued at $ 20 million and the estate was entitled to 3 million dollars of deductions, the taxable estate would only be $ 17 million. The most common deductions are the charitable deduction and the administrative expense deduction. Generally, when a sum of money is paid by an estate, it is considered deductible if it is supported by adequate consideration and not attributable to the testator’s testamentary intent, i.e., the testator must not have intended to give anything away and some type of service must be provided for the estate). I.R.C. 2053(c)(1)(A). Thus, distributions to beneficiaries are usually not deductible. In Estate of Bates v. Comm’r, the Tax Court disallowed a deduction by the estate because the deduction related to a settlement from a claim brought by a beneficiary. Decedent had a longstanding and extremely close relationship with the claimant, expressly provided that he would receive estate assets, and memorialized her testamentary intent. In addition, the court resolved the amount of estate assets that the claimant was entitled to receive, and the settlement payment was paid in full satisfaction of any claim relating to the estate.
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How the New Investment Income Surtax Affects Estates and Trusts

January 23, 2013 | by Bart Chepenik

In order to finance the Patient Protection and Affordable Care Act, Congress has imposed a new 3.8% surtax on certain passive income starting in 2013. Typically, passive income includes interest, dividends, rents, royalties, capital gains, and other payments in which the investor does not actively participate in management. The surtax applies to home sales if the profit from a home sale is more than $250,000 ($500,000 for a married couple). For estates and trusts, the 3.8% surtax will be imposed on the lesser of (1) the undistributed net investment income of a trust or estate, or (2) the amount by which adjusted gross income exceeds the top inflation-adjusted bracket for estate and trust income, which is expected to be approximately $12,000 in 2013. The surtax applies to individuals who receive distributions of net passive income from trusts and estates. These rules do apply differently to grantor trusts because the income from grantor trusts passes directly through to the grantor’s tax return.
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Self-Settled Trusts and Using Multiple Jurisdictions to Protect Your Assets

January 15, 2013 | by Bart Chepenik

In the past few years, a number of states, such as Nevada, Alaska, and South Dakota, have enacted legislation that permits the use of self-settled or “asset-protection” trusts. Basically, these trusts allow a person to be the beneficiary as well as the grantor in a trust. As the name implies, these trusts are usually implemented to legally shield debtors from claims by creditors, or at the very least, to provide a deterrent against creditor claims. However, given public policy concerns, these trusts may have a hard time being respected by courts and actually providing asset protection. Critics note that domestic trusts are still domestic. Consequently, judgments in other states must be honored by the state in which the trust is located and a trustee can potentially be compelled to give up the trust’s assets as a result of such a judgment. Classically, this has not been much of a concern for these trusts’ foreign counterparts. Judgments rendered by U.S. courts have little to no weight in foreign jurisdictions. As a result, a creditor would have to separately pursue a claim and obtain a judgment in the foreign jurisdiction, which usually has highly unfavorable creditor laws, if it wants to reach the assets of a foreign trust. This makes it not only extremely difficult, but also expensive and time consuming, to obtain a judgment to get the assets in a foreign trust.
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Deathbed Marriages

January 9, 2013 | by Bart Chepenik

It is well known that many wealthy individuals come to sunny Florida to retire. Unfortunately, Florida also has its fair share of people looking to take advantage of Florida’s wealthy, elderly population. For example, it is not uncommon for a younger man or woman to marry a high net worth individual whose life expectancy is nearing its end. This type of marriage is commonly referred to as a “deathbed marriage.” In Florida, people used to be able to enter into valid marriages while one spouse was literally on their deathbed with only minutes to live. Luckily, a change in the law has opened the door to challenge this type of marriage.

Deathbed marriages are a common way for unscrupulous individuals to take advantage of the elderly. The younger spouses of the newly deceased have the right to the decedent’s homestead and anywhere from thirty percent to one hundred percent of the decedent’s estate under the Florida elective share statute, or intestacy, statute. It used to be that heirs could not challenge the validity of deathbed marriages. Under Florida law, marriages even minutes before death were valid and other potential heirs had no standing to challenge them. However, Florida Statute Section 732.805 drastically changed this. Most notably, the statute gives a decedent’s heirs standing to challenge a deathbed marriage.
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