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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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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 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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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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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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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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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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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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Usually when an executor is appointed to administer an estate, he or she does not think that the liabilities of the estate could actually become their own. However, in U.S. v. David A. Tyler and Louis J. Ruch, a federal judge ruled that an executor can be held liable for the unpaid federal income taxes of an estate. In Tyler, the executor of an estate conveyed real property to the son of the decedent. The son was also one of the executors of the estate. The estate had a large unpaid income tax liability at the time of the real property conveyance. The son, who was aware of the unpaid income tax, sold the real estate and claimed to have lost the proceeds in the stock market. As a result, the Internal Revenue Service found itself trying to get blood from a stone because real estate conveyance essentially drained the estate. Tax liens are not extinguished by death and do stay attached to an estate’s property. Interestingly though, the Internal Revenue Service found recourse not in the Internal Revenue Code, but under Title 31 of the United States Code in Tyler. Under 31 USC 3713(b), the fiduciary in charge of assets is liable for unpaid claims of the government if (1) the fiduciary distributed assets, (2) the distribution rendered the estate insolvent, and (3) the fiduciary had actual or constructive knowledge of the liability before the distribution took place. Clearly, this underscores the importance of executors being properly advised when distributing assets of an estate.
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In their wills, many parents choose to leave property to their children. Others may give their children certain property while they are still living. Children may also have an interest in property as a result of a trust set up by one or both of their parents. But, what if these children are still minors? Is it legal for a parent or natural guardian to transfer property to minors? Who is authorized to make decisions with regard to that property? Can the minors themselves make decisions to alter or sell the property?

Generally, “[t]he fact that a person is a minor does not prevent him from acquiring and holding title to property.” Watkins v. Watkins, 123 Fla. 267 (1936). However, complications often arise out of a minor owning real or personal property or having some other property interest transferred to him or her, such as having to pay property taxes on real estate. In this circumstance, the natural guardian of the child will have to assist the child. When the aggregate sum of the property does not exceed $15,000, the natural guardian(s) of a minor may “(a) settle and consummate a settlement of any claim or cause of action accruing to any of their minor children for damages to the person or property of any minor children; (b) collect, receive, manage, and dispose of the proceeds of any settlement; (c) collect, receive, manage, and dispose of any real or personal property distributed from an estate or trust; (d) collect, receive, manage, and dispose of and make elections regarding the proceeds from a life insurance policy or annuity contract payable to, or otherwise accruing to, the benefit of the child; and (e) collect, receive, manage, dispose of, and make elections regarding the proceeds of any benefit plan . . . of which the minor is a beneficiary, participant, or owner.” Fla. Stat. § 744.301(2). However, when the amount of the property exceeds $15,000, the rights of the natural guardians are limited and subject to review and permission of the court. Until the minor reaches the legal age of majority, he or she is under a type of “disability” because she lacks the capacity to enter into binding contracts. However, if the minor does not want to sell the property or does not need to sell the property, he or she may choose to hang on to the property until he or she reaches the age of majority.
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