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Estate Planning

Estate Tax

By Estate Planning, Tax Law

The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 ). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your “Gross Estate.” The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.

Once you have accounted for the Gross Estate, certain deductions are allowed in arriving at your “Taxable Estate.” These deductions may include mortgages and other debts, estate administration expenses, property that passes to surviving spouses and qualified charities. The value of some operating business interests or farms may be reduced for estates that qualify.

After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit.

Most estates do not require the filing of a federal estate tax return. Under current law, a filing is required for estates with combined gross assets and prior taxable gifts exceeding $5,000,000 or more for decedent’s dying in 2011.

August 2, 2012
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Definition of a Florida Power of Attorney

By Elder Law, Estate Planning

A Power of Attorney is a legal document appointing authority to another individual to act as your Agent on your behalf.   The authority granted depends on the specific language you choose to include in your Power of Attorney.

 

A Power of Attorney is an important and powerful legal document.  One should always consult an attorney to have the appropriate preference made for clear instruction on how you would like your affairs managed if you are unable to do so yourself.

 

Most Power of Attorneys give their Agent  the right to sell vehicles, real or personal property on your behalf, to enter into a contract on your behalf, to handle financial transactions or to sign legal documents for the maker of the Power of Attorney.  Your Agent must always act in your best interest.

 

The designated person appointed to act on your behalf is called an Agent or Attorney-in-Fact.  Any competent person over the age of 18 or, in certain situations, some financial institutions can serve as an Agent.  It is very important to choose someone reliable and trustworthy.  The Attorney-in-Fact is a fiduciary who is held to a high standard of care and record keeping.  Power of Attorneys are a valuable tool to avoiding a guardianship if you become incapacitated.
Contact our office to schedule an initial consultation for any Estate Planning, Medicaid Planning, or Veterans Benefits needs.

 

June 18, 2012
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Simple Will vs. a Revocable Living Trust by Babette B. Bach, Esquire

By Elder Law, Estate Planning, Probate

Simple Will vs. a Revocable Living Trust :
Simple Will:  A very effective tool to designate who gets what after death.  Probate is required but this is not usually a difficult process.  The average cost of probate is 3% of the probate assets and the average length of time to complete is six months.  Many assets are not part of the probate estate such as jointly titled real estate, IRAs, annuities, life insurance policies and jointly held assets.

 

Revocable Living Trusts;   These are more complex documents which provide for the trustee to manage assets while the settler is alive but incapacitated or deceased.  It can hold assets in trust for a variety of reasons after the settlor’s death.  Typical reasons may include, a spendthrift child, a disabled descendent, an income trust for the life of a surviving spouse, then residue to children upon death of surviving spouse, Charitable foundations, Pet trusts, generation trusts and tax planning etc.  There is still administrative work to do to administer a trust. Typical costs run about 2% of the trust estate.  It takes about the same amount of time to administer a trust as to probate a Will.

If you need legal advice for estate planning, Medicaid planning, or VA planning, please contact our office for an initial consultation.

 

Babette B. Bach, Esquire, Board Certified Elder Law

Fredric C. Jacobs, Esquire, Board Certified Tax Law
Bach & Jacobs, P.A.

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

April 24, 2012
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Probating a Lost Will in Florida by Babette B. Bach, Esquire

By Probate

Often family members are given copies of wills for safekeeping, but trouble arises when someone dies and the original will is lost.  In Florida, when an original will is known to have existed but can not be located, there is a presumption that the person destroyed the will with the intent to revoke it.  Therefore, a party probating a lost will must present evidence at a hearing to overcome this presumption.  Don’t panic, as it is possible in most cases to overcome this presumption.

 

Florida courts will allow testimony at a hearing from a disinterested witness to prove the execution and contents of a lost will.  If there is an exact copy of the lost original will, the testimony of only one witness to the will execution is required.  However, an unsigned draft of a will does not constitute an exact copy.  If there is no exact copy of a signed will, then the testimony of two disinterested witnesses are required to prove the execution and content of the document.  In every case, a hearing is required in order to satisfy the requirements of Florida Statute 733.207 and relevant Florida case law.

Contact the law firm of Bach & Jacobs, P.A. for an initial consultation.
Babette B. Bach, Esquire, Board Certified Elder Law
Fredric C. Jacobs, Esquire, Board Certified Tax Law
240 S. Pineapple Avenue, Suite 700
Sarasota, FL 34236
(941) 906-1231
www.bachjacobs.com

February 8, 2012
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Are IRA’s exempt from IRS levies for unpaid taxes of the owner of the IRA?

By Tax Law

Are IRA’s exempt from IRS levies for unpaid taxes of the owner of the IRA?

IRA’s are not exempt from IRS levies for the unpaid taxes of the owner of the IRA.  While it is the policy of the IRS to avoid levying against a taxpayer’s IRA or qualified pension plan benefits, it can do so as a last resort (Internal Revenue Manual 5.11.16).  It is also well settled that the IRS lien and levy powers contained in the Internal Revenue Code take precedence over any asset protection provisions in state law, such as FL Stat. 222.21.  The good news is that there is a Tax Court case which holds that in the case of death benefits payable under a qualified pension plan, the IRS levy does not attach to the death benefit, even if the IRS levies against the delinquent taxpayer’s pension account before the death (Asbestos Workers Local 2004-1 USTC 50129).  There does not appear to be any similar case involving IRA death benefits but the analysis should be the same.  It is somewhat similar to IRS levies against life insurance policies owned by a delinquent taxpayer who dies.  While the IRS can reach the cash surrender value, it can’t reach the pure insurance portion of the death benefit payable to a third party beneficiary.

February 22, 2011
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Succession Planning with Fred (VIDEO)

By Estate Planning, Tax Law

 

Fred: In the tax and business areas, I have also represented and advised business owners on succession planning. That is, how do you get a business from one generation down to the next in the most efficient way, both from a tax standpoint and also from a governing standpoint. Frequently, when a business is passed from the founder to the next generation, you have controversies and disputes between the children in the operation of the business. In many cases some want to sell, some don’t want to sell. You can provide for that and prevent those kinds of disputes with well thought-out succession planning in the form of buy/sell agreements, employment agreements and operating agreements that will state with some specificity just who has the right to make the decisions, and who is going to be running the business while still treating all of the beneficiaries of a business owner equally.

October 12, 2010
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Special Needs Trust with Babette and Fred (VIDEO)

By Estate Planning

 

Babette: One of the things that an elder law attorney specializes in is estate planning for a disabled beneficiary. Many of our clients have children or grandchildren who are suffering from various disabilities and receive governmental benefits. If they receive medicaid, they need to do a special needs trust in order for that beneficiary to be able to receive an inheritance and have their governmental benefits protected. We often work on a team approach doing the estate planning for a family that’s very concerned about a disabled beneficiary.
Fred: The special needs trust is a very exacting document. You must draft the document so that the beneficiary, that is, the disabled person, gets all the benefits from the trust that the creator of the trust intended but at the same time, does not get kicked off medicaid or another governmental benefit. The way you accomplish that is to give to the trustee, whether it be a family member or perhaps a trust department of a bank, the complete discretion as to whether or not to distribute income or principle benefits to the disabled beneficiary so long as everything is done in the best interests of the beneficiary.

September 29, 2010
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Living Trust with Fred (VIDEO)

By Estate Planning

Fred: Many times clients express concern about the costs and delays of going through the probate process. One of the ways to avoid that is to establish what’s called a living trust during your lifetime. A living trust involves a document whereby you create a trust. The creator of the trust is both the trustee and the creator. That person puts substantially all of their assets into the name of the trust. Upon the death of that person, their property passes under the terms of the trust document, and those assets are not subject to probate and can be distributed to the beneficiaries in a relatively short period of time in accordance with the terms of the trust document. There is less time involved, and in some cases less expense in winding up the affairs of the trust as opposed to a probate estate. In the case of a probate estate, at every stage along the process you must get the approval of the court to do such things as making distributions, hiring outside consultations, and things of that sort. The revokable living trust is not a panacea. It does not accomplish all things and in some cases may actually be disadvantageous to a person. I personally feel that the probate process is more protective of beneficiaries, particularly in the case of minor beneficiaries such as young children. I think it’s an advantage to go through the probate process where there are young children who absolutely must be protected if both the mother and father are deceased.

 

August 31, 2010
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Litigation with Babette and Fred (VIDEO)

By Elder Law, Probate

 

Babette: Both Fred and I have litigation experience, and unfortunately in elder law, even with good planning, sometimes you end up in court. Fred: The typical case is a gentleman passes away, and leaves substantially all of his assets to a person or persons other than his natural beneficiaries, and by natural beneficiaries we mean typically the children of the decedent. Many times, people, particularly elderly people, come under the influence of persons and are induced to leave portions of their estate to those persons. In many cases the elderly person did not fully realize what he or she was doing. In a typical case, someone will come into the office and say, “my goodness, this is my dad’s will. I hardly know this person! how could he have possibly left so much to so-and-so? Can you do anything about this?” And at that point, Babette takes over.
Babette: On the other hand, there are times when an elderly person knows exactly what they’re doing, and they intentionally disinherit an heir. We can get very involved in preparing that case for litigation, even while the testator is alive and preparing the will, because we anticipate that it might be contested at a later date and so we develop the case right then and there on the spot. Unfortunately, that’s not always the case, but we believe in a person’s right to leave their estate to who they choose. That is one of the liberties we have in the United States and in the Florida Constitution. In protecting the elderly that means protecting their freedom of choice. Not every state is the same.
Fred: In those types of situations, we will frequently videotape the person who is making the will. We will record the signing of the will, we will ask that person questions like, “who you are? Do you understand what you’re doing? Who are your beneficiaries? What is the nature and extent of your financial assets? How come you’re not leaving so much to so-and-so and how come you’re making a bequest to so-and-so?”
In other words, we have it all on tape, and when the person dies and if there is litigation, the judge and the jury and everyone else can see the person who prepared the will while they were alive, and can make a determination of whether they feel that person was competent, and they also hear right out of the person’s own mouth why they are or are not doing a certain thing with regard to the disposition of their assets. We have found that that videotaping can be very persuasive in a court of law.

August 8, 2009
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