LEGAL ZEN

The New Florida Power of Attorney Act

2011-08-15T22:40:00.000-04:00

The Power of Attorney Committee was charged with the task of evaluating the recently announced Uniform Power of Attorney Act for possible enactment in Florida. The committee was created by the Real Probate and Trust Law Section of the Bar (RPTL). The Committee is comprised of attorneys from various legal backgrounds including estate planning, estate and trust litigation, family law, elder law, as well as others who work for financial institutions, those who represent the Florida Bankers Association, and others whose practice relates to real estate title insurance.

As a result, on May 14^th, 2011 the Florida Legislature voted to pass Senate Bill 670, which significantly revises Florida Statutes Chapter 709 in an attempt to achieve greater consistency among the states by conforming Florida’s power of attorney law to the Uniform Power of Attorney Act, with certain modifications. The Legislature has recognized that it is desirable to make a system available to the citizens of Florida that provides persons who are incapacitated with the least restrictive alternative to guarantee their rights are protected, their financial resources are properly managed, as well as ensuring their physical health and safety. Comprehensive legislation will ensure that durable powers of attorney will continue to be an effective alternative to guardianship. It will provide protection to the principal (the person who creates the power of attorney) and it will also give clear guidance to the agent (the person who is granted authority to act for a principal) of the power of attorney as to their respective rights and responsibilities as well as remedies for abuses. The new, detailed Florida Power of Attorney Act will take effect on October 1, 2011.

Surviving Spouse’s "New" Intestate Share? Really?

2011-08-01T22:50:00.001-04:00

While the change in law certainly makes sense to me (as this is what most of my clients request anyway, “Everything to my spouse but if he/she has predeceased, then to my children”), my clients would be surprised that this is new law. Most people believe that if they die intestate, everything goes to their spouse, Well, they’ve been wrong all these years, but that’ll change come October 1^st (assuming that all descendants are children of the surviving spouse).

So why do any planning if your intention is for your spouse to receive everything anyway? A few possibilities to ponder:

a) Surviving spouse receives everything upon your passing. You assumed he/she would then leave everything to your children. Surviving spouse remarries and what you thought would be left for the children, is enjoyed with the new spouse. (Not the kind of thing you want to imagine, but unfortunately, a very realistic possibility.)

b) Surviving spouse receives everything upon your passing. Surviving spouse has creditor problems and creditors are successful in getting a judgment against surviving spouse. Bank of Poor Planning will be the ones enjoying assets from your estate, rather than your spouse and children.

c) Surviving spouse receives everything upon your passing. Surviving spouse is involved in a car accident (more probable than not in South Florida), a lawsuit is filed against him/her, and the plaintiff prevails. Need I say more?

Be proactive, not reactive. Don’t wait until it’s too late to secure the future of your family.

Change in Surviving Spouse's Intestate Share effective October 1, 2011

2011-07-15T06:42:00.001-04:00

Effective October 1, 2011, a surviving spouse's intestate share of an estate will go up from 50% to 100% of the estate if the decedent's descendants are also descendants of the surviving spouse.

Here's how the new intestacy distribution for surviving spouses is explained in Florida House of Representative's Staff Analysis of CS/HB 325:

Intestate Estate

When a) an individual dies (the decedent) without a will, b) a person's will is declared invalid, or c) assets are not distributed by a valid will, then the individual is considered "intestate." Since there is no will to direct the distribution of assets, Florida law provides how the distribution of assets will be made after paying debts and the expense of conducting the probate proceedings.

Florida law on intestate succession provides the following:

· If there are no surviving descendants of the decedent, then the spouse receives the entire intestate estate.

· If there are surviving descendants of the decedent, who are all also lineal descendants of the surviving spouse, then the surviving spouse receives the first $60,000 in property of the estate, plus one-half of the remaining balance of the estate subject to distribution. [THIS IS WHERE THE LAW IS CHANGING. EFFECTIVE OCTOBER 1, 2011, THIS SURVIVING SPOUSE NOW GETS 100% OF THE ESTATE.]

· If there are surviving descendants of the decedent, one or more of whom are not lineal descendants of the surviving spouse, then the surviving spouse receives one half of the estate and the lineal descendants receive the other half.

· There are additional provisions for distribution in situations beyond these, which distribute assets to other family members, but those are not relevant to the changes made in this bill. See § 732.103 .

The bill also creates s. 732.102(4), F.S., to provide that if the surviving spouse has descendants that are also descendants of the decedent, but the surviving spouse also has a descendant not related to the decedent, then the surviving spouse's intestate share is half of the estate. The lineal descendants of the decedent would inherit the remaining half of the estate under s. 732.103, F.S.

Clarification of Creditor Rights Concerning LLC Members

2011-06-04T11:19:00.003-04:00

The Florida Legislature recently passed CS/HB 253 (the “Bill”) to address the uncertainty that the Florida Supreme Court created with its’ decision in Olmstead v. Federal Trade Commission, 44 So. 3d 76 (Fla. 2010). In Olmstead, the Court held that a charging order is not the exclusive remedy of a judgment creditor when attempting to satisfy the judgment against a judgment debtor’s membership interest in a Florida single-member limited liability company (LLC). Consequently, the Court ordered the judgment debtor to surrender all of his rights, title, and interest in the single-member LLC to the creditor in satisfaction of the judgment.

The Bill specifically addresses the Olmstead decision’s ambiguities and amends Florida Statutes Section 608.433. The amendment now makes clear distinctions between single and multiple-member LLCs. It provides that a charging order is the sole and exclusive remedy by which a judgment creditor of an LLC member (in a single or multiple-member LLC) may satisfy a judgment using the member’s membership interest. However, in the case of a single-member LLC, a court may order a foreclosure sale of the membership interest only where a creditor shows that distributions under the charging order will not satisfy the judgment within a reasonable time. The membership interest foreclosure remedy is not available in the case of a multiple-member LLC.

2010 Tax Repeal Creates Capital Gains Pitfall

2010-01-17T07:17:00.000-05:00

On June 7, 2001, President George W. Bush fulfilled his promise to reduce taxes by signing a $1.35 trillion tax cut package known as the Economic Growth and Tax Relief Reconciliation Act of 2001. The tax package included a repeal of the estate tax, that kicked in this year. In the past, the estate tax exemption increased from $675,000 in 2001 to $1 million in 2002 and 2003, $1.5 million in 2004 and 2005, $2 million for 2006 through 2008 and $3.5 million in 2009. Then 2010 rolls in, and the estate tax is gone.

What does this mean, you ask? First, remember that in 2009, the estate tax only applied to a person who died owning assets in excess of $3.5 million. So for most people, it means absolutely nothing. But wait, there's more.

Did you know that the having no estate tax in 2010 creates a capital gains "pitfall"? If you die in 2010, there will be no federal estate taxes; however, your heirs will have to pay capital gains taxes.

What? you say. I thought death was tax free in 2010. It is estate tax free; there won't be a federal estate tax. However, there will be federal and state capital gains taxes for deaths in 2010. There is a section of the Internal Revenue Code (1014) that says, essentially - when an estate is subject to estate taxes, the cost basis of inherited assets is the date of death value. For example, dad bought stock for $10, when he dies it is worth $100. Son inherits stock and sells for $100. His capital gains is $0 ($100 of value - $100 of basis =0). In tax parlance this is called a "step-up in basis".

Unfortunately, the law that eliminated the estate tax effective January 1, 2010, also eliminated the step-up in basis rules, for all but a few people. This “stepped-up” basis will only apply to $4.3 million in assets passing to a spouse and to $1.3 million in assets inherited by non-spouses. Heirs will be stuck using your original cost on all assets over those limits. As you can imagine, this will be a very expensive tax bill. In addition, the time you, or the executors of your parent's estate, will spend trying to ascertain the original price your parent paid for everything will be outrageous, and practically impossible in many cases. Somehow tax simplification got lost in this part of Bush's tax cut.

Then, if you make it to 2011, the entire tax is scheduled to be back with just a $1 million exemption and a 55% tax rate. In order to meet budgetary restrictions The Econcomic Growth and Tax Relief Reconciliation Act of 2001 contains a so-called “sunset” provision that brings the estate tax rules back in force in 2011.

Of course Congress could change the fiasco occurring in 2010. Most people agree that they can retroactively change the law to reinstate the estate tax. So, what's going to happen, you ask? Everyone has their own prediction, but nobody really knows the answer. Unfortunately, we will simply have to wait and see. Stay tuned.

Long Term Care Funding Through Medicaid

2009-10-18T12:06:00.000-04:00

Medicaid is a federal-state program of medical assistance for individuals who are aged, blind or disabled. There are a number of different Medicaid programs. Medicaid’s Institutional Care Program (ICP) covers most of the costs of long term care (LTC) in a nursing home. In addition, it may pay for some home care or assisted living.

For many middle class senior citizens, Medicaid is used to pay the costs of LTC without spending down all their assets. The following information is helpful general information about Medicaid program requirements, however it should not be a substitute for legal advice:

MEDICAID REQUIREMENTS

Asset Requirements:

An applicant can have no more than $2,000 in countable resources. It is necessary for all resources to be disclosed to Medicaid. However, it is important to note that not all assets are countable and it is possible to convert some countable resources into non-countable resources.

Exempt assets: Home up to $500,000 equity, $2,500 burial account, $2,500 life insurance, prepaid burial and funeral, furnishings, car.

Community Spouse Resource Allowance: The community spouse is entitled to keep some of the couple’s pooled countable resources. For 2009, there is a maximum of $109,560.

Transfer of assets: Gifts or transfers of assets within 3 to 5 years may be considered in determining eligibility and create a penalty period for eligibility. Failing to report transfers or asset information is considered Medicaid fraud.

Income Requirements:

The individual must meet the income test for SSI eligibility to be entitled to Medicaid. In 2009 the income cap is $2022 per month for the applicant. However, too much income is almost never a barrier for Medicaid qualification. It is possible to draft a trust which would resolve the excess income obstacle.

Medicaid planning usually consists of converting countable resources into non-countable resources. This planning should be done with an elder law attorney as there are significant consequences to these planning methods if not done properly.

How to Get a Quick Estimate of Your Social Security Retirement Benefits

2009-10-17T17:25:00.000-04:00

Good news for baby boomers! When planning for retirement, the Social Security Administration (SSA) provides you with a very helpful resource. SSA has a website that allows you to estimate your retirement benefits. Go to www.socialsecurity.gov/estimator.

This website uses your actual Social Security taxes paid over your lifetime to calculate the exact benefit you are entitled to. It also provides you the opportunity to ask for benefit information given different scenarios, such as what if I retire at age 63, or 65, instead of my full retirement age of 66. The website is also user-friendly. All you have to provide is some basic information and you will immediately know the amount of your Social Security check.

When Should You "Service" Your Estate Plan?

2009-09-28T18:02:00.000-04:00

If you own a car, then you know that periodically it needs to be serviced. After a certain number of miles or time period you know you need to get an oil change, rotate the tires, check the fluids, etc. in order for your car to function properly. If you own a new car, it probably came with a recommended service schedule and the car has an irritating light that turns on as a reminder that service is due (or maybe even overdue). You are aware that if you keep driving your car without servicing it, chances are it’s going to have problems and will not work properly.

Like your car, your estate plan needs “servicing” in order for it to function properly when you need it. Your estate plan is a snap shot of you, your family, your assets, and laws that were in effect at the time you created your estate plan. The only constant in this life is change. Everything changes over time and so should your estate plan. It’s unreasonable to think that the estate plan you created when you were newlyweds or new parents, will be effective now that your children are adults, or you are retired surrounded by grandchildren. Over the years, your estate plan will need servicing; it will need periodic check-ups, tweaking, and possibly even a replacement.

So how do you know when your estate plan needs servicing? Just like your car has certain mileage checkpoints, your estate plan should have event checkpoints. Any change can prompt a check-up on your estate plan; for instance changes in your health, marriage status, financial security, employment, retirement, changes in laws, etc. It is wise to review your estate plan on a yearly basis. A good reminder might be to review your estate plan around annual events, i.e. the New Year, birthdays, anniversaries, holidays, etc. If any changes have taken place in your life, you should contact your estate planning attorney for a check-up. Some changes to your estate plan may simply require adding an amendment to your will, known as a codicil or an amendment to your trust. Adding yearly checkpoints to review your estate plan, will assure you that it will run smoothly when you need it most.

How You Qualify for VA Benefits May Have a Negative Impact on Your Qualification for Medicaid Benefits

2009-09-26T21:07:00.000-04:00

My clients hear it time & time again from VA Agencies: "you don't need an attorney to qualify for VA Aid & Attendance benefits; someone from our office can help you complete the application." My response is yes, they will help you complete the application, however they will not provide you with any guidance on what action you need to take in order to qualify for these benefits. On the other hand, an elder law attorney not only advocates to qualify you for VA Benefits; most attorneys will be vigilant that the planning used to qualify you for VA Benefits does not disqualify you from Medicaid, if you should need it in the future.

It's common for third parties to suggest gifting your money to adult children in order to meet VA asset limitations. Unfortunately, if within the next five years the veteran should require additional services in the assisted living facility or long-term custodial care in a nursing home, he or she discovers that THE RULES FOR OBTAINING MEDICAID BENEFITS ARE VERY DIFFERENT FROM THE RULES FOR OBTAINING VA BENEFITS. It is wise to consult with an elder law attorney to avoid making decisions that may be detrimental to you and your family.

Veteran's Aid and Attendance

2009-09-19T17:40:00.000-04:00

Did you know that there are benefits available for long term care for veterans? The program is called "Aid and Attendance" and it is available to a veteran or surviving spouse of a veteran who requires asssistance in their daily living. The veteran or surviving spouse must be disabled but the disability does not have to related to service in the war. There are some income and asset limits, but unlike Medicaid planning, there is no penalty for transferring assets. For more information contact Law Offices of Minerva Vazquez Bailey at (954) 342-4077.