Lins Law Group Blog

Florida Trust Administration

              A popular estate planning tool involves establishing a “Living Trust” also known as a “Revocable Trust.” The person establishing a Living Trust is known as the “Grantor” “Settlor” or Trustor.” In order to establish such a trust, the Grantor executes a document which sets for the terms of the trust. The trust instrument or trust agreement is executed with most of the same formalities of a last will and testament, i.e. witnessed by two witnesses who sign in the presence of the Grantor and of each other.

 

          The trust instrument designates a person or entity, known as the “trustee,” to be in charge of administering the trust. In many Living Trusts, the Grantor acts as the initial trustee but designates who will take over as successor trustee upon the death or incapacity of the Grantor. Upon the death or incapacity of Grantor to act as trustee, the successor trustee must step in and fulfill various responsibilities. This article is intended to assist successor trustees in knowing what those responsibilities are and how to fulfill them. The matters set forth herein provide a general overview of trust administration. The specifics of each case may vary and therefore the trustee should seek legal counsel in accomplishing each of these steps.

 

          Overview of Trustee’s Duties. A trustee is a fiduciary and is held to a high standard when it comes to administering a trust. In particular, a trustee has a duty to act in good faith and in accordance with the terms and purposes of the trust and of the interests of the beneficiaries. The successor trustee has a duty to inform and account. This means that the trustee must provide all qualified beneficiaries with the Notice of Trust described below along with a copy of the trust instrument. It also means that, if requested, the trustee must provide all beneficiaries with relevant information about the assets and liabilities of the trust and the particulars relating to administration.

 

          Acceptance of Trustee. Upon the death of the Grantor, the successor trustee must take steps to undertake his or her appointment as successor trustee. This can usually be accomplished by the successor trustee signing an Acceptance of Trustee accepting appointment and agreeing to administer the trust. Most often, the Acceptance of Trustee is prepared by an attorney who practices trust administration law. The Acceptance should contain the name of the Grantor, and the name and address of the successor trustee.

 

          Trust Identification. Once in place, the successor trustee should be aware of and perform certain trustee responsibilities. The source of these responsibilities is from 1) the trust instrument itself and 2) from certain

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statutes. In order to know what the trust instrument requires, the successor trustee should locate the most recent version of the trust instrument, including any amendments. That instrument should be reviewed with the assistance of an attorney.

 

         Notice of Trust. Next, the successor trustee should file a Notice of Trust as required by Section 736.05055, Florida Statutes. The Notice of Trust must be filed with the court of the county of the Grantor's domicile and the court having jurisdiction of the Grantor's estate. The Notice of Trust must contain the name of the Grantor, the Grantor's date of death, the title of the trust, if any, the date of the trust, and the name and address of the trustee. The Notice should be done as soon as possible after Grantor’s death, but in all events no later than 60 days after his/her death. If the Grantor's probate proceeding has been commenced, the clerk shall notify the trustee in writing of the date of the commencement of the probate proceeding and the file number.

 

         Initial Accounting. The successor trustee should immediately begin to identify and take control of the assets or property held in the trust. In connection with this step, the successor trustee will need to provide the beneficiaries with an Initial Accounting. As the assets of the trust are identified, the information needed to provide the initial accounting can be gathered. The initial accounting should include the assets in the trust together with their estimated value at the date of death. The successor trustee should keep thorough records of all assets and property which come into or which are distributed from the trust. These records will be used to provide the interim (if any) and final accountings. If administration continues in excess of one year from the initial accounting, it is advisable for the trustee to provide an annual interim accounting each year until the trust is terminated.

 

         Place of Administration. The successor trustee should designate a principal place of administration for the trust.

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law has some fairly specific provisions governing where administration can be designated so the trustee should consult with an attorney in making this designation. The designation should be provided to all beneficiaries. If the principal place of administration changes, written notice must be provided to the beneficiaries.    <ⷈ㶢>

         Tax Id Number. During the Grantor’s lifetime, the trust used the Grantor’s Social Security number as a tax identification number. Upon Grantor’s death, a new Trust Tax Id. number for the trust must be obtained. This can be done through use of a SS-4 which can be prepared by an attorney or a CPA.

          Creditors. The trust is obligated to pay for any legitimate expenses of the Grantor’s estate. In order to determine the existence of valid claims, it is advisable to publish a Notice to Creditors. This Notice should also be sent via certified mail to any known creditors of the Grantor. Creditors have up to 3 months after publication or 30 days after actual receipt of the Notice to Creditors to serve a claim. In connection with claims of creditors, the trustee should also determine what, if any, taxes must be filed and/or paid. Once the Grantor is deceased, the trust becomes irrevocable and taxes must be paid by the trust on any income earned by trust assets. This means that for each year after the Grantor’s death, the trustee is likely going to be filing a tax return for the trust. The trustee is best served in addressing the tax issues by obtaining the advice of a CPA or other tax professional.  

 

         Once all of the trust assets are under trustee’s control and once the creditors and taxes are identified, the valid claims of creditors can be paid and the remainder of assets administered and distributed as described in the trust. If creditors are paid, it is advisable to have them sign a receipt for the payment made. If a distribution is made to a beneficiary, it is best to have the beneficiary sign a receipt for partial or total distribution.

 

         Final Accounting. When all creditors have been paid and all trust assets have been distributed, the trustee should either provide a final accounting for the trust or get all beneficiaries to execute a waiver of final accounting. If the trust is one which has been court administered, the trustee should obtain an order of discharge from the local probate court.

 

 

Estate Planning Documents You Need in Florida

In every Florida estate plan, there are certain documents which you should have in place. These include the following:

 

        1.  Last Will and Testament. This document allows you to appoint a personal representative to oversee your estate and to designate your beneficiaries. You can also appoint guardians for your minor children. While a Will does not avoid probate, it acts as a “roadmap” for the probate court to follow in accomplishing your desires. If you die without a Will, Florida law will determine who inherits your assets and how your estate will be administered.

 

        2.  Living Trust. This document, also known as a “Revocable Trust,” goes beyond the Will and allows you to implement a means to pass along your property without requiring probate. The Trust also allows you to control the distribution to your beneficiaries over a period of time rather than all at once. In the right situation, a Living Trust can be used to effectively reduce estate taxes. While not every estate needs a Living Trust, you should at least consult an estate planning attorney to evaluate its benefits in your situation.

 

         3.  Durable Power of Attorney. In this document, you appoint a person or persons who can act for you on business, personal and financial matters in the event of your incapacity.

 

         4.  Living Will. This document expresses your desires in the event of your having a terminal illness, an end stage condition or are in a permanent vegetative state.

 

         5.  Healthcare Power of Attorney. In this document, you appoint a person or persons who can act for you on medical decisions in the event of your incapacity.

 

         6.  HIPAA Authorization.  This document allows your physicians and other medical providers to speak with your designated persons about your health condition.

 

Having these documents provides a comprehensive plan to protect you in the event of disability, incapacity or death. If something happens to you, your loved ones will have the means to provide for you and to settle your estate with as little inconvenience, cost and delay as possible. Because these documents involve complex legal issues, they should be prepared by an attorney who practices in the area of estate planning.

Considering the Impact of a Pre-Marital Agreement

Doing family law, many times I see the benefits of a couple entering into a pre-martial (also known as a pre-nuptial) agreement. This article discusses the major issues which arise upon entering into such an Agreement. As a preliminary matter, you must understand that upon entering into such an Agreement, your intended spouse and you are waiving certain rights (and their accompanying benefits or obligations) which otherwise would have been available to you under applicable law. In particular, the Agreement will impact your rights in the event of dissolution of marriage or death. Because of this, you should only enter into the Agreement if you have a clear understanding of your rights and of the impact the Agreement will have on those rights. If you have any doubts or questions, you should discuss them with an attorney before signing.

Set forth below are a few of the major areas impacted by a Pre-Marital Agreement.

1.  Equitable Distribution. In the event of dissolution of marriage, the court will determine marital and nonmarital assets and liabilities. The court has the authority to divide those assets and liabilities equitably (in other words, as the court determines is “fair”). As a general statement, assets and liabilities accumulated during the marriage and enhancements of assets brought into the marriage, are considered marital and subject to division by the court. Upon entering into a Pre-Marital Agreement, you are agreeing with your spouse how assets and liabilities will be determined to be marital or nonmarital. The Agreement defines marital and nonmarital assets and liabilities differently than would be the case under applicable law. Therefore, the Agreement could significantly lessen the assets to which you are entitled and could increase the liabilities for which you are held accountable.

2.   Alimony/Spousal Support. In the event of a dissolution of marriage, you might be entitled to receive support from your spouse in the form of alimony (either rehabilitative, lump sum or permanent alimony). Upon entering into a Pre-Marital Agreement, you may be waiving or limiting your entitlement to receive such alimony or support. Once waived, you can never go back and receive alimony in a divorce action.

3.  Spousal Elective Share. In the event of your spouse’s death, you would normally be entitled to receive either what your spouse leaves you in their Will, Trust or by beneficiary designation, or to elect to receive 30% of your spouse’s estate. By entering into the Agreement, you are waiving your spousal elective share and would only be entitled to receive what your spouse leaves you by gift or bequest.

4.  Homestead Property. Under Florida law, spouses have certain rights in and to the primary marital residence in the event of divorce or death. Upon entering into a Pre-Marital Agreement, you are waiving your homestead rights under Florida law and thereby consenting to the homestead being disposed of as set forth in the Agreement.

5. Attorney’s Fees and Costs. In the event of a dissolution of marriage, a significant issue to be resolved can be who will pay for the attorney’s fees and costs incurred. If the divorce is contested, these can be in the tens of thousands of dollars. Under applicable law, the divorce court can order one spouse to pay the other spouse’s attorney’s fees and costs. In particular, the spouse who has the lower income can be impacted since it is usually that spouse who is awarded the fees and costs form the higher income spouse. Often in a Pre-Marital Agreement, the issue of attorney’s fees and costs are addressed, thereby limiting or altering a party’s rights to recover these expenses.

 

For more information, please visit our sister sites: www.linslawgroup.com and www.mytampabaydivorce.com

Florida Divorce Overview

A Florida divorce proceeding formally begins with the filing of a Petition for Dissolution of Marriage. This document sets forth certain essential allegations upon which the dissolution will be based. These allegations first establish the grounds for the court to assert jurisdiction. For instance, at least one of the spouses must have been a resident of Florida for at least six months prior to the filing of the Petition. The allegations must also include such factual matters as the date and location of the marriage, whether there are minor children, that the marriage is irretrievably broken, the desired division of assets and liabilities, the desired responsibility for the minor children, payment of support and alimony, etc. Generally, accompanying the filing of the Petition are a Family Law Financial Affidavit and a Uniform Child Custody Jurisdiction Act Affidavit.  After being filed with the court, the Petition is served on the opposing spouse by a Deputy Sheriff or by a private process server. That spouse then has 20 days within which to serve his or her Response and Counterpetition. The spouse must also file a Financial Affidavit. During the first 60 days after the filing of the Petition, both parties are required to serve certain mandatory disclosure on the other party. This includes exchange of an array of financial documents including tax returns, bank statements, loan applications, deeds, titles, and other related financial records.Early in the divorce process, the court will schedule a Case Management Conference where preliminary issues will be addressed. The timing of this conference will depend on the county and the court involved but is usually in the first 60-120 days. If there are minor children involved, most courts will require each parent to attend a mandatory course entitled "Children, Parents & Divorce." In many Florida counties, this 3-4 hour course is offered several times a month, often at a local hotel conference room. At the end of the course, each participant receives a certificate which must be filed with the court.At the first or second case management conference, the court will often order the parties to attend mediation. At mediation, the parties and their attorneys meet with a third party mediator. The purpose of the mediation is to try to resolve some or all of the issues in dispute. The mediator's role is not that of a judge; he or she does not "decide" the case. Instead, the mediator tries to help the parties reach an agreeable middle ground. If issues are resolved, they are reduced to a written agreement which is later presented to the court as binding on the parties as to the issues addressed. If the case does not resolve in mediation, then the case may proceed to a final hearing or trial before the court. Under Florida family law, trials are always before the court and not with a jury. 

More free information is available at www.linslawgroup.com and www.mytampabaydivorce.com

Protecting Minor Children

Sometimes young adults do not think they need to do estate planning. A common mindset is “I’m in good health and I’m young, so why do I need to do any estate planning?” For those persons with minor children, this is a very dangerous and uninformed outlook. If both parents die leaving minor children, the state decides who will become the legal guardian of your minor children. This means that a judge who knows nothing about you, your children or your family, determines who will care for and raise your children. If you take no action in advance, you will have no say in the outcome.

 

You should have a Last Will and Testament or a Living Trust, or both, in which you specifically name the person you wish to serve as guardian of your minor children. In fact, it is advisable to name multiple persons (in order of preference) so that if one person cannot or will not serve, you have back-up persons appointed. Most times, your designation of guardian will be the person appointed to take legal custody of your children. In addition, designating a guardian will allow the person designated to act as the temporary guardian until the court decides on the permanent appointment. Imagine if you and your spouse died suddenly in an auto accident. It may take some time for a court to determine a permanent guardian. However, if you have a guardian designated in your Will or Trust, that person will likely be the person to take immediate custody of the children rather than the children ending up in the foster care system. You can also make sure that the person appointed has the values and parenting style you would want for your children.

 

About ten years ago, my daughter became friends with a girl whose parents were killed in a tragic accident. There were three minor children at the time. The parents had no Will in place. The children ultimtely got split among family members, with one child going to one aunt in another state and the other two going to a different aunt. Needless to say, that was probably not what the deceased parents would have wanted for their family! If the parents had designated a guardian, the result likely would have been different.

 

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The Importance of Uninsured Motorist Coverage

This week I had a client come into the office with horrendous injuries. Her medical bills are already in excess of $60,000 and her auto accident just happened two weeks ago. By the time all of her treatment and recovery are finished, she could easily have bills in excess of $100,000. Add to this her lost wages and pain and suffering and she has a substantial case. Unfortunately, the person who hit her had only a small liability policy. This means that the client likely will not recover enough to pay her medical bills, much less recover anything for herself.

In some cases, this would not be so catastrophic if the client had her own unisured motorist ("UM")coverage. With that type of insurance, if the "at fault" party does not have any or enough liability coverage, then the UM coverage would kick in and pay for the client's damages, including medical bills, lost wages, and pain and suffering. However, in a effort to save money, many people decline UM coverage. In order to do so, they actually have to sign a form saying they decline the coverage. If the insuarnce agent does not obtain the signed waiver form, the client may be able to establish a right to the coverage. If there is no UM insurance, the badly injured client will have a great case but no one against whom to collect. As a result, she will likely end up facing a dire financial and personal situation since she will have huge unpaid medical bills, she may be unable to work and will suffer in pain in the future. 

In order to protect yourself and your family, you should talk with your insurance agent about securing the most UM coverage you can reasonably afford.

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Five Good Reasons for a Living Trust.

Many people read that they need a Living Trust but don't have a clear grasp of why they need one. There are at least five good reasons that a Living Trust is a great estate planning vehicle.

1. Probate Avoidance. By creating a Living Trust and transferring your assets into the Trust, your family can avoid having to probate those assets at the time of death. This can save significant time (often in excess of a year) and expense (often as much 3% of the estate) involved in probating one's estate.

2. Estate Tax Savings. Living Trusts, when set up for spouses, can facilitate in maximizing use of the unified credit (presently $2 million per person) and the unlimited marital deduction. This can avoid estate tax on the first $4 million of a married couple's estate.

3. Controlled Distribution. A Living Trust allows the party giving the gift to control the amount and frequency of the distributions. This way, rather than a beneficiary getting a distribution all at once, the distributions can be spread out in time and amount. This can be especially desirable if there are concerns about a beneficiary's ability to handle an inheritance all at once.

4. Confidentiality. The administration of a Living Trust is not a public process. Probate, on the other hand, is generally a public court proceeding. This means that beneficaries of the probate estate can be determined by anyone. It can also mean assets of the estate can be discovered by third persons. By having assets distributed through the Living Trust, no one other than the beneficiaries and the Trustee know the details of the distribution plan.

5. Care in the Event of Disability. If you become totally incapacitated or incompetant, usually a guardianship or conservatorship will have to be established. This involves a court declaring you to be incompetant. The guardianship then falls under court oversight and can cause considerable expense. If you have a Living Trust and become incompetant, your successor trustee can take over your care without a public declaration of incompetance and without a court proceeding. This saves embarassment, inconvenience and considerable expense.

The Final Judgment in Divorce may only be the beginning!

This week I've had an unbelievable number of inquiries from parties asking me about seeking enforcement or modification of various parts of their divorce Final Judgments. I'm not sure what is the reason for the number of calls other than perhaps that the economy is struggling so family finances for many may be tight. Also, school is out and summer travel and visitation plans are coming into focus. These elements may be acting to fuel what may already be strained parental relations. So I'm not sure what's behind it all but post-divorce disputes are certainly "in the air."

The extent of post-divorce disputes surprises some parties. In many cases, when a person gets divorced they think that once they have the final hearing, things are over for good. Sometimes this is true and sometimes it is waaaaaayyyyyy off base! When there's no minor child, no alimony, no child support, and relatively easy property division, then the final hearing really may be the end of things. However, when there are minor children, then ongoing issues often arise involving visitation, payment of child support, etc. Also, if there is an order to pay alimony, the disputes can be frequent and sometimes very heated. Let's face it, former spouses hate paying anything to their "ex." So parties are surprised and often frustrated that not only did they have to go through what may have been an expensive, nasty divorce but now they face a similar experience in the post-divorce stage as well. Regrettably, that is a reality from which there is little ability to avoid unless both parties go out of their way to accommodate each other and if they'd done that, maybe they wouldn't have gotten divorced in the first place!

For more information on divorce, visit www.linslawgroup.com

Six Reasons Not to Add Your Children on Title

          Often I have new clients come in to consult on estate planning issues but who have already taken certain "planning" action on their own. Among the worst of these is the practice of adding their children or another person onto the title to their house. The thinking is that by doing so they will avoid probate. While this practice might in fact avoid probate, it can create far more problems than it solves.

          There are at least six good reasons not to add another person (other than a spouse) onto the title of your house. These include:

          1. In the event the person faces a liability or debt claim from a third party, your property can be at risk.

          2. In the event the person gets in trouble with the IRS, your property can be at risk.

          3. In the event the person goes through a divorce, your property can be at risk.

          4. In the event you want to sell the property, you must get the other person's permission.

          5. Placing another person's name on the title could be considered a gift, thereby triggering a gift tax consequence if the property exceeds $12,000.

          6. Placing another person's name on the title could jeopardize your getting government help with nursing home care.

          There are probably more reasons, but for now, these should be reason to follow this advice. When you consider making this type of transfer...DON'T. Instead, seek sound legal counsel on other ways to accomplish your objectives (such as by a Living Trust).

          For more information, visit www.linslawgroup.com

Avoiding the "Slam" in an Auto Accident

If you've ever been in a car crash, you know that the "smack" of another vehicle can really shake you up. Initially, you are stunned; then you check to see if you've been hurt. If someone is with you, you check on them as well. Nonetheless, you are rattled and probably are not thinking straight. As a result, it helps to know ahead of time what to do in case of an accident. Then, if you get into one, at least you will have it in your mind what steps to take and hopefully those thoughts will keep you on track.

First, immediately make provision for your safety and health. If you are injured, make sure that emergency medical services (“EMS”) and law enforcement are called. Have EMS examine you and if appropriate, have them transport you to an emergency room for treatment. If you are able, try to obtain the following information:

• the name, address and driver’s license number of all drivers involved in the accident;
• the name, address and policy number for all insurance companies of all drivers involved in the accident;
• the name and address of all passengers in any vehicle;
• the name and address of all witnesses to the accident;
• the name and badge number of the attending law enforcement officer;
• the report number for the accident report (obtain a copy of the report if possible).

After the immediate medical and other needs are attended to, talk to an attorney experienced in injury law. He or she can guide you through the steps that will follow. For example, almost immediately you will have representatives of your insurance company and the other driver's insurance company contacting you. While they may seem friendly, neither are really your friend. Their goal is to investigate your claim and if possible to find a way to deny paying it. An experienced lawyer can advise you so that they do not take advantage of you.

For more information, visit www.linslawgroup.com