Florida Probate Litigation Lawyer Blog

Retired? How you can use a LLC and FLP in your Estate Plan

March 1, 2012 | by Bart Chepenik

Florida is famous for its unique attributes. The state is known for having plenty of sunshine, ocean breezes and its “snowbirds”, or its senior citizen residents who return to Florida every winter to take advantage of all the Sunshine State has to offer. Florida has retained the highest percentage of senior residents in the country, with 17.3 percent of citizens older than age 65 in 2010. From 1990 to 2000, Palm Beach County’s 65-plus population grew 25 percent while Broward County saw a 1.4 percent increase in its senior population. Miami-Dade County saw a 17 percent increase in 65-and-older residents in the past 10 years. And while some Broward and Palm Beach cities now have fewer senior residents than before, many still retain vibrant retirement communities, which boost their 65-plus-population percentage high above the 13 percent national average. In Tamarac, where 38 percent of the population was 65 or older in 2000, seniors continued to make up 28 percent of the population in 2010. In Palm Beach County, seniors made up well over 50 percent of the population in the small communities of Briny Breezes, South Palm Beach and Highland Beach.

Senior citizens have their own unique needs when it comes to financial planning and protection of assets. Every senior should aim to utilize the variety of planning devices are available that will allow them to save taxes and protect assets. These devices include trusts, family limited partnerships (FLPs), and limited liability companies (LLCs).

Some concerns senior citizens have are the same concerns as the general population. For example, they, like others, want to save on taxes. They want to pay the IRS the least amount of federal income tax possible. If they decide to give gifts, they want to minimize the transfer taxes involved. The elderly, like others, want to protect their assets from creditors. If they are involved in a business, they may want to shield themselves from the effects of judgments against the business.

However, some concerns are unique to seniors. For example some elderly individuals may face nursing home care and may worry how their Medicaid eligibility will be affected. The elderly may also be concerned about the probate process and may want to control the process to reduce the cost and publicity involved.

Recently, family limited partnerships (FLPs) and limited liability corporations (LLCs) have emerged as financial planning techniques people can use to protect assets from creditors, save taxes, and maintain control over their affairs. Family Limited Partnerships (commonly called FLPs) can facilitate moving wealth from one generation to another. Partners of an FLP are either General Partners (GP) or Limited Partners (LP). General Partners have the responsibility for managing the FLP and its assets. Limited Partners generally have just an economic interest in the FLP. Limited Partners have no ability to control, direct, or otherwise influence the operations of the FLP. They can neither buy additional assets, nor sell existing assets, and they cannot act on the Partnership’s behalf. So why would setting up an FLP ever benefit a senior citizen who wishes to transfer money to a family member? First, FLPs allow one family member, typically the GP, to move assets to other family members (often children who are LPs), while still retaining control over the assets. Because the LPs have no rights of control, they cannot liquidate their partnership interest. The General Partner decides the timing and amounts of distributions. That is, a distribution cannot be made to one partner (GP or LP) unless all partners receive their pro rata portion of any disbursements. Secondly, when calculating the fair market value of a transfer for tax purposes, the transferred money is typically valued less than if the money transfer had been in cash. The interest in a FLP is not liquid and therefore the interest holder may not receive a distribution until sometime in the near (or distant) future. Thus, the fair market value for transfer tax purposes is usually less than the interest transferred.
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Estate Planning with Artwork

February 16, 2012 | by Bart Chepenik

Miami-Dade, Broward and West Palm Beach counties are home to some of the finest art in the country. Alongside the many fine art galleries located in South Florida there are private art collectors and individuals who own valuable and sometimes extensive collections. These collections make up part of their estate and careful consideration should be given as to the distribution of these pieces. An experienced estate planner can help you decide when and to whom the art should be gifted.

Often art collectors wish to gift art to their children or members of their family. Art collectors should consider several factors when deciding to do this. The first consideration is that a 28% income tax rate is locked in for the children who receive the art and there are significant expenses for appraisals and the risk of a gift tax audit. Also the giver should consider if the art is something that the children are even interested in receiving. Children’s tastes may be different than the parents, and the children might not appreciate the gift as much as the parents hope. Also, if grandchildren live in the house, there may be a risk of damage to the art!

Sometimes the best and simplest plans when dealing with fine art in an estate is to consider giving the art to public charity. Generally speaking, the art owner gets an income tax deduction for the full value of the art, without ever having to recognize the gain. There are 4 major issues:
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A Cruise Ship Accident and Death at Sea

January 26, 2012 | by Bart Chepenik

Florida Statute 731.103(3) creates a presumption of death if a person is missing for five years. Once this happens, the person’s estate can be probated and their assets can be distributed. However one does not always have to wait for five years to pass. With enough circumstantial evidence, a person can be presumed dead before the five years is up. In an interesting Florida case involving a West Palm Beach family, the West Palm Beach Court of Appeals dealt directly with this issue.

In the mid 1990’s a wife attempted to have the court declare her husband deceased before he was missing for five years. The lower courts said that the courts could not do so until five years had passed. On appeal the court found that the wife had presented enough circumstantial evidence to allow the court to declare the husband deceased and allow for probate of his assets.

Her husband had been a crew-member of the cruise ship, Club Royale. As Hurricane Erin approached on August 2, 1995, the captain of the ship took it out of port and tried to ride the hurricane out in the open sea off the coast of Cape Canaveral. In the hurricane, the ship capsized and sank. The United States Coast Guard conducted an extensive search by aircraft and surface vessels to search for survivors for four days. It combed over 41,000 nautical miles of open-ocean and found eight crewmen alive on two separate life rafts. It recovered the body of a ninth crew-member on a third raft. Eventually the Coast Guard located 27 of the 30 life rafts from the ship. It found no trace of the husband or the Captain of the ship.
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Estate Planning for Same Sex Couples

January 9, 2012 | by Bart Chepenik

For same sex couples, having effective estate planning documents and correctly titled property is very important. Without documents expressing the wishes of the couple, there may be undesirable results in the event of a death or serious illness of a partner. If the couple’s wills are not executed properly, upon one partner’s death, property may pass intestate to a relative rather than to the surviving partner. Without a health care surrogate document, if one partner is sick in a hospital the other partner may not have rights to make important decisions for them. The current laws of Florida do not recognize same sex marriages so same sex couples living in South Florida have little protection outside of legal documents that their property and assets will pass to the surviving partner in the event of a death. There are many same sex couples living in Miami Beach, Ft. Lauderdale, Wilton Manors and other South Florida communities who can benefit from a comprehensive estate plan. It is important that same sex couples seek out the assistance of an experienced attorney to make sure their deeds, wills, trusts and powers of attorney are airtight and will carry out each person’s wishes in the event of death or serious illness. In this evolving area of law, same sex couples should have peace of mind that their post death wishes are secure.

An important step for same sex couples to take is to make sure their property is titled properly. Couples can hold property as joint tenants with rights of survivorship. This allows the property to pass to the surviving partner without the property having to go through the probate process. A same sex couple might believe their properties are titled correctly, but unfortunately sometimes deeds are titled incorrectly by mistake. If a deed is incorrect the property may be held only as tenants in common, meaning the property would not pass automatically upon death, but it would be subject to probate.
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Lost or Destroyed Wills

December 23, 2011 | by Bart Chepenik

The situation may arise where a person who had a will prepared dies and then the will cannot be found. If a family member dies and you cannot find their will to admit to probate, the court will presume that your relative intend to destroy the will and that your family member wished for their estate to pass according to intestate laws. If you want to prove that there was indeed a will, you have to will have the burden to produce evidence that a will existed.

Anybody interested in the estate may establish the terms of a lost will and offer it to probate. An interested person generally means someone who may have been named in the decedent’s will or who would stand to inherit if no will is found or proved. This may include a brother of the decedent living in Miami-Dade County, a niece living in Broward County or even an old neighbor living in New York.
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What Control Does a Personal Representative Have Over Assets Held in a Professional Association?

December 19, 2011 | by Admin

Many questions may arise when a person passes away and the person’s professional association holds some assets. The professional association may be a corporation, which is a separate legal entity from the person. In this case the personal representative will not have automatic entitlement to the business assets. This remains true even if the deceased person owns 100% of the corporation. For example if a person owns a successful corporation that operates throughout several South Florida counties and the owner passes away, his probate administration may be conducted in Broward County. The personal representative of the estate may wish to reach the corporation’s assets to satisfy the deceased person’s estate obligations. However, Florida courts have decided against letting a personal representative receive automatic control of the business or its assets.
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Fees For Guardianship Services

December 8, 2011 | by Bart Chepenik

Some residents of Miami-Dade or Broward County may currently serve as guardian for a ward or may become an appointed guardian in the future. A ward means a person for whom a guardian has been appointed. A person may need a guardian because they become incapacitated or because they are a minor. The responsibilities of a guardian will vary depending on the ward’s needs. A guardian is defined in the Florida Statutes Section 744.102 defines a guardian as a person who has been appointed by the court to act on behalf of a ward’s person or property, or both. A guardian for a ward can live close by or in a different location. For example, if a Miami-Dade County resident becomes incapacitated, their guardian may reside in the same county, in another county in Florida such as Palm Beach County, or even in another state.

Often after someone is appointed guardian they will have questions about their responsibilities and compensation. Florida Statute Section 744.108 specifically addresses the issue of fees for guardians. The statute allows for a reasonable fee for services rendered and reimbursement for costs incurred on behalf of the ward. The court will take into account different factors including the time and labor required, the difficulty of the questions involved, the fee customarily charged in the area for similar services, the amount of income earned by the estate, and the responsibilities and potential liabilities assumed by the guardian. The court will also consider the nature and length of the relationship with the incapacitated person, the experience, reputation, diligence, and the abilities of the person performing the service. Therefore it is highly important for a guardian to keep accurate records of costs associated with the guardianship responsibilities.
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Trustee Duties

November 15, 2011 | by Bart Chepenik

A trustee has many important duties. They have obligations to beneficiaries and to the trust. Their duties may be altered by the trust, by the creator of the trust or even by the beneficiaries. A trustee should be chosen carefully to ensure they can fulfill the purposes of the trust. According to the Florida Statutes section 736.0801, the trustee has the duty to administer the trust in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the laws of Florida. A settlor (trust creator) may choose anyone they wish to serve as trustee. It could be a family member trustee located locally in Miami, Ft. Lauderdale, or West Palm Beach. A trustee could also be a corporate trustee located within Miami-Dade County, Broward County or somewhere else.

The trustee also has a duty of loyalty, required by the Florida Statutes section 736.0802. The trustee has to administer the trust solely in the interests of the beneficiaries. A conflict between the trustee’s fiduciary obligation to the beneficiary and the trustee’s own personal interests may make a transaction voidable by a beneficiary affected by a transaction. Some transactions which presume a conflict between a beneficiary and trustee involves situations when the transaction is entered into by the trustee with the trustee’s spouse, the trustee’s children, siblings, or parents.

For example, if a trustee sells $500,000 worth of trust assets to her husband at a lower price of $400,000 there is a potential for a conflict between the obligations the trustee owes to the beneficiary and the trustee’s own personal interests. The beneficiary has remedies available. However, if the transaction may have been authorized by the terms of the trust; approved by the court; or if the beneficiary does not commence a judicial proceeding in time, the beneficiary may loose the relief available to her. It is important that a beneficiary of a trust contact an attorney in this situation to see what relief is available to them. Even a transaction not concerning trust property may involve a conflict between personal and fiduciary interests if the transaction concerns an opportunity that properly belonging to the trust.
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Who Needs a Durable Power of Attorney?

November 10, 2011 | by Bart Chepenik

What if an accident or illness made it impossible to manage your financial affairs? Would your loved ones have to go to the Dade County or Broward County courthouse to get the authority to handle your affairs? No one likes to consider such grim possibilities, but the truth is that almost every family will eventually face this kind of difficulty. Durable powers of attorney can certainly make life easier for you and your family if times get tough.

Living Wills in Florida

October 24, 2011 | by Bart Chepenik

The living will is an important estate planning tool. Because this form of “will” is used while an individual is still alive (but no longer able to make decisions) it is dubbed the “living will.” The purpose of a living will is to allow you to make decisions about life support and directs others to implement your desires in that regard. Doctors in all parts of Florida, including Miami-Dade County and Broward County are familiar with these documents. In some cases a living will may forbid the use of various kinds of burdensome medical treatment. A living will can be very specific or very general. More specific living wills may include information regarding an individual’s desire for such services such as pain relief, antibiotics, hydration, feeding, and the use of ventilators or cardiopulmonary resuscitation. Living wills may need regular updating to ensure that the correct course of action can be chosen.

Living wills are needed because advances in medicine allow doctors to prolong and sustain life although the person will not recover from a persistent vegetative state. Some people would not desire to remain in that state while others would. The living will allows you to make the decision of whether life-prolonging medical or surgical procedures are to be continued, or withheld or withdrawn, as well as when artificial feeding and fluids are to be used or withheld. It allows you to express your wishes prior to being incapacitated. Your physicians or health care providers are directed by the living will to follow your instructions. You may change the living will prior to becoming incapacitated.
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