By Phil Rarick, Weston Trust Attorney, and Jasmine Benitez, Legal Assistant

Estate planning is essential for ensuring your wishes are carried out after you are gone. Today, the preferred choice for estate planning is a living revocable trust. But what happens if a qualified beneficiary disagrees with the terms of the trust? Can a Florida trust be contested? The short answer is yes. However, contesting a trust in Florida is not easy; there are specific legal grounds and procedures to follow.

Why Would a Florida Trust Be Contested?

The five most common reasons for challenging a Florida trust are as follows:

1. Lack of Mental Capacity The person who created the trust (the settlor or grantor) must have been of sound mind when executing it. If the settlor was mentally incapacitated due to illness, age, or other factors, the trust could be contested.
2. Undue Influence If someone can prove that the settlor was pressured or manipulated into creating or altering the trust, it may be invalidated. This could include family members or caregivers influencing the settlor’s decisions.
3. Fraud If the trust was created under fraudulent circumstances, such as misrepresentation or deceit, it can be contested in court.
4. Improper Execution Trusts must follow Florida’s legal requirements to be valid. If the trust wasn’t executed properly—such as failing to sign, witness, or notarize the document correctly—it may be challenged. A Florida trust must be signed with the same formalities as a Florida will – the settlor must sign first in the presence of two witnesses.
5. Changes to the Trust Amendments or revocations to the trust can be contested, especially if there are concerns that these changes were made under suspicious circumstances and contrary to the grantor’s intent. Changes made within a few months of a grantor’s death are often suspicious, as are changes made by a grantor who has been isolated from his or her family by a caregiver or family member.

How Can a Florida Trust Be Contested?

Contesting a Florida trust involves a legal process that requires specific steps:

1. Filing a Petition

The person contesting the trust must file a timely petition with the probate court where the trust is being administered.

Note: Challenges to a trust must typically be done within 3 months of receiving notice of the trust or the trust’s offering for probate.

2. Gathering Evidence

Contesting a trust requires solid evidence to back up the claim. This might include medical records showing that the grantor lacked mental capacity or testimonies indicating undue influence or fraud.

3. Proving Grounds for Contesting

The person challenging the trust must prove that it is invalid due to one of the legal grounds—such as incapacity, undue influence, or improper execution. Without adequate evidence, the court will likely uphold the trust.

4. Mediation, Arbitration or Trial Today, most trust disputes are resolved through mediation or arbitration, but if the case goes to trial, the court will ultimately decide the outcome. Many trusts now require a process called mediation-arbitration: first, the contesting party must try to resolve the dispute through mediation; failing mediation, the dispute is submitted to binding arbitration. A judge or arbitrator will review all the evidence and determine if the trust stands or if it should be modified or invalidated.

Protecting Your Trust from Being Contested

Although trusts can be contested, there are steps you can take to minimize the chances of a challenge:

• Proper Execution: Work with an experienced estate planning attorney to ensure the trust is executed correctly and follows all legal requirements.
• Clear Intentions: Be clear about your wishes and discuss them openly with your beneficiaries to avoid confusion or misunderstandings.
• No-Contest Clause: A no-contest clause is not valid in Florida; however, as a practical matter, it may be advisable to include it in your trust for psychological purposes and as an expression of the grantor’s intent.

Conclusion

While Florida trusts can be contested, doing so requires strong legal grounds and a formal process. This is one reason why you do not want to try to save money doing it yourself or using an attorney who does not concentrate on trusts. You have heard this before, but you certainly would not want a general surgeon doing brain surgery. The same common sense applies to trust drafting.

If you’re considering creating a trust or have concerns about a trust being contested, consulting with an experienced estate planning attorney can help protect your interests and give you peace of mind.

For more information, contact Phil Rarick, Weston Trust Attorney, at info@raricklaw.com.

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Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on the information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney who is experienced in Florida trust law. Your receipt of information from this website, blog, or Miami trust attorney does not create an attorney-client relationship and the legal privileges inherent therein.

By Phil Rarick, Weston Trust Attorney, and Jasmine Benitez, Legal Assistant

Many real estate investors wrongly believe that a Florida Land Trust can offer asset protection. While this type of trust is known for providing privacy and simplifying estate planning, they do not provide comprehensive protection from creditors or legal claims. A better option is often a multi-member Florida limited liability company with a strong operating agreement that takes advantage of Florida’s anti-Olmstead law.

What Is a Florida Land Trust?

A Florida Land Trust is a legal structure where a trustee holds the title to a piece of property, but the beneficiary (property owner) maintains control. The beneficiary has all rights to use, manage, and profit from the property, while the trustee’s role is to handle administrative tasks. One of the most notable benefits of a Land Trust is that the beneficiary’s identity remains private, as the trustee’s name appears on public records instead.

Note: This means that if you wish to protect your privacy, then you cannot be the Trustee; you need to find a third party whom you trust to serve as Trustee.

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Can a Florida Land Trust Protect Your Assets?

While a Land Trust offers privacy, it is important to clarify that it does not provide true asset protection in the way that many people assume.

1. Limited Protection Against Creditors

A Florida Land Trust does not protect property from creditors or legal judgments because it is typically a self-settled Trust. If you face a lawsuit or have outstanding debts, creditors can still pursue the property held in the trust. Even with a Florida Land Trust, a creditor who obtains a judgment against you can still gain access to the property. The trust does not block creditors from identifying the beneficiary or forcing the sale of the property.

2. Lack of Lawsuit Protection

While the Land Trust keeps your name off public records, it does not prevent lawsuits or other legal actions from impacting on the property. If you are sued personally, your real estate holdings may still be at risk, as the trust doesn’t offer the same protection as forming an LLC or other business entities that legally separate assets.

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How Can a Florida Land Trust Be Used in Your Estate Plan?

While this trust itself does not fully protect assets, it can still be part of a broader asset protection strategy.

• Simplified Estate Planning: A Land Trust facilitates the easy transfer of property to heirs without probate. However, this advantage does not extend to asset protection against creditors.
• Combined with an LLC: For stronger asset protection, pairing a Florida Land Trust with a Limited Liability Company (LLC) can help separate your personal assets from your real estate holdings. An LLC offers protection from creditors by shielding your assets from liability tied to the property.

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Conclusion

Get it right the first time. To explore your best legal options to protect your real estate investments, contact an experienced Weston estate planning attorney who also concentrates on asset protection.

For more information, contact Phil Rarick, Weston Trust Attorney, at info@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on the information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney who is experienced in Florida trust law. Your receipt of information from this website, blog, or Miami trust attorney does not create an attorney-client relationship and the legal privileges inherent therein.

By Phil Rarick, Weston Trust Attorney

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Every family needs instructions in the event of disability or death. A Family Trust, also known as a Living Trust, is your detailed, legally binding instructions to care for you and your family in the event of mental incapacity or death. A trust can accomplish all the goals of a will and in addition avoid probate and guardianship when properly funded. A will must go through a bureaucratic, expensive and time-consuming legal process called probate where the court may intervene in your personal or business affairs. This is why the Revocable Family Trust has become the preferred plan of choice over a will for most people; it is almost certainly the best plan if you have children.

Understanding a Family Trust – a/k/a Living Trust

There are three primary roles in a Family Trust: the grantor, trustee, and beneficiary.

The grantor is the person who makes the trust; the Trustee is the person who is legally found to follow the trust instructions exactly as stated in the Trust. And the beneficiary? Every dime of the trust must go to the beneficiaries. Initially, you can be the Grantor, Trustee, and, along with your spouse or children, the Beneficiaries.

Most Family Trusts are revocable because the grantor wants to retain 100% control over the trust instructions and change them whenever he or she wants at any time during their lifetime.   Control and flexibility are two key goals in Trusts.  The Trust has a major advantage over the mortal person: it does not become incapacitated, and it does not end at death.  It continues to provide for your family as long as needed to help protect the lifestyle of your family.   If you have children, it can help ensure they get a high-quality education and that the funds cannot be claimed by a spouse or creditor of the child.

Key Benefits of a Revocable Family Trust

1. Avoiding Guardianship. Guardianship is a bureaucratic legal process where the court supervises the person and/or property of a person.  The court selects the Guardian.    In my 30 years of practice as a Miami Trust attorney, I cannot recall anyone who wanted to allow a court to intervene in their personal or business affairs; almost all persons want a family member to take charge if they have a temporary or permanent incapacity.  A trust can help you keep legal control in the family.

2. Avoiding Probate. One of the biggest advantages of a family trust is that it allows assets to bypass the probate process provided the Trust is properly funded. Probate is the court-supervised process of distributing a deceased person’s estate, which can be time-consuming, costly, and public. By transferring assets to a family trust, those assets can be distributed directly to the beneficiaries without the need for probate, saving time and money.

3. Protection for Minor Children and Young Adults. The Trust can help ensure that funds going to minor or adult children are used in a smart way.    For minor children, a trust can help ensure that the minor child does not waste the funds by getting a big lump sum payment or that the funds could be claimed by creditors of the child after age 18.  Rather, the trust can help ensure the child receives a first-rate college and graduate education. For adult children who may marry or are already married, the trust can provide protections so the adult child’s spouse cannot claim funds designated for the child.

Conclusion Whether you have $100,000 or over $1 million you should first consider a Family Trust or a Living Trust over a Will for your estate plan as a Trust that is properly funded will help avoid the bureaucratic legal processes known as guardianship and probate. Plus, the trust can provide strong protections for minor and adult children to make sure your hard-earned money is used in a smart way for your children’s future.

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For more information about the Family Trust or Living Trust see our short guide, Understanding Living Trusts by Miami Trust attorney Phil Rarick or contact our office at (305) 709-2858 for a consultation.

Notice: This article is intended for informational purposes only. It is important you consult with an experienced Miami Trust attorney. For more information contact attorney Phil Rarick at  (305) 709-2858 or by email prarick@raricklaw.com.

If you have never checked Florida’s website for lost accounts and abandoned property you should do so – immediately. You may be pleasantly surprised!

You may think that it is not possible that you have any “unclaimed” property held by the State of Florida – and you could be wrong.

The dirty secret is that many banks and life insurance companies will make little effort to find you if you do not notify them of your change of address. They will do the easy thing: transfer your account to the Florida Division of Accounting and Auditing, Bureau of Unclaimed Property. Thousands of such accounts end up in the Florida Unclaimed Property fund each year.

In the past we have had clients find more than $100,000 in old bank accounts that they had forgotten or failed to notify the bank of a change of address.

Special Note: Beware of scammers. There are a number of so called “private investigators” that may call you and tell you they can find lost money owed to you, but first you have to agree to pay them a percentage of the funds. Do not sign anything! They are simply doing what you can do for free by checking the website below.

The holidays are coming. Now may be a good time to see if Florida has any unclaimed property for you or a family member. The search is easy. Click Here: Florida Treasure Hunt.

Good luck!

Phil Rarick

Rarick Trusts & Wills Law, P.A.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami asset protection attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

Last year the Federal annual gift tax exclusion was $15,000 and the amount remains the same for 2019. This means you can walk down the street and give out $15,000 to every person you meet and not have to file a gift tax return. If you are married, husband and wife can combine their annual exclusions and give $30,000 to each child or grandchild. As long as your gifts are below the annual exclusion amount, they are not counted against the lifetime gift exemption which is currently $11.4 million per person (Note: Be careful this is temporary and expected to drop to $5.6 million in 2026).

Note: Be very careful about making outright gifts to children. It is far safer to use a “Gifting Trust” so that the money is wisely used for the child’s college education or other needs – and so that the child does not blow it when he turns 18 or his creditors grab it when he is in his 20’s.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

Florida’s 30% elective share law was completely rewritten in 2001 because the old law could be easily circumvented by placing assets in a revocable trust or using non-probate transfers (e.g. life insurance, IRAs etc.) In an effort to curtail such tactics, the legislature overhauled the statute and broadened the share. The result is an expansive elective share that sweeps into the decedent’s “elective estate” many non-probate assets. See F.S. §732.201 —§732.2155.

What Is Included? Florida’s elective share statute retains the 30% share under prior law, but introduces the concept of the “elective estate” (sometimes referred to as “augmented estate”) that consists of the following property interests under F.S. §732.2035:

• Decedent’s probate estate;
• Decedent’s fractional interest in property held by the decedent in joint tenancy with rights of survivorship or tenancy by the entireties;
• Property in a revocable trust or a discretionary trust for the decedent’s benefit;
• Cash surrender value of insurance policies on the decedent’s life;
• Death benefits payable under retirement plans;
• Certain transfers within a year of the decedent’s death;
• Transfers in satisfaction of the elective share;
• “Pay on Death” or “POD”; “Transfer on Death” or “TOD”; and “In Trust For” or “I/T/F”; and co-ownership with rights of survivorship accounts. The decedent’s interest is that portion that the decedent could withdraw immediately before death without an obligation to any person. If Tenancy by the Entireties, one-half is included.

This is not a complete list; see F.S. §732.2035. What is Excluded?

Not much. Here are some of the major exclusions:

• Real property that constitutes the decedent’s homestead;
• Insurance in excess of the cash surrender value is generally excluded;
• Gifts that qualify for the gift tax annual exclusion; and
• Transfers with the written consent of the spouse. (Spousal consent to gift split is not written consent.)

Again, this is not a complete list; see F.S. §732.2045.

Deadline for Making Elective Share Election

The general rule is that the election must be made within the earlier of six months of the date of service of the Notice of Administration or two years from the date of death. F.S. 732.2135.

Rarick Trusts & Wills Law has been trusted by numerous law firms and many families during the past 20 years for probate, estate planning, trust and asset protection cases. To schedule an appointment with Phil Rarick, a Miami probate attorney, call (305) 709-2858 or email info@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced in Miami probate attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

Hard to believe we are in mid-Fall and 2016 is coming to a close. Now may be a good time to sit down with a Miami trust attorney and review your estate plan. One of the biggest problems we see with individual estate plans is failure to keep the plan updated to ensure that it continues to meet the changing needs of your dynamic family. Here is a short checklist:

1. Marriage/Divorce.Has there been a marriage, divorce, or separation of anyone named in your will or trust – such as your adult children or grandchildren? Most persons want to ensure that their hard earned money goes to their children – or grandchildren – not to any spouses.

2. New Births Of Children/Grandchildren. Has there been a birth or adoption of a child or grandchild? First, if so, congratulations! Second, this child may need to be added as a beneficiary of your will or trust with detailed instructions to make sure all funds are wisely spent first for education or health needs.

3. Discord in Family. Unfortunately, we have seen too many cases where family warfare breaks out among the children where the father, mother, or both are no longer around to maintain peace. To avoid such disharmony, it is important to have clear instructions in your living trust and a strong, independent successor trustee with good peace making skills. If this is a concern, have you addressed it in your trust prepared by a Miami trust attorney?

4. Disability of beneficiary. Have any of the persons you have named as a beneficiary suffered any type of mental or physical disability? If so, it may be necessary to modify your instructions to make sure any funds designated for this beneficiary are used in the most effective way possible. For example, if a beneficiary may be entitled to receive SSI or other government benefits, this beneficiary may need a Special Needs Trust.

5. Poor Money Managers in the Family. Are any children not good money managers?Do you need to amend your trust instructions to make sure these funds are protected and cannot be grabbed by their creditors?

6. Successor Trustee.This is the person you have appointed to step into your legal shoes if you become incapacitated – in other words, one of the most important decisions you can make. Who have you appointed to take charge if you are incapacitated? What is the order of succession of trustees?

7. Year End Gifts. This year, any person can give $14,000 to any person – child, grandchild, or friend – tax free. This gift must be made prior to December 31. Such gifts require no reporting to the IRS, but gifts in excess of $14,000 do. Remember: you never want to make such a gift outright to a minor child because they may blow it when they turn 18. Better to make the gift to an Educational Trust for the benefit of the minor child.

As Miami trust attorneys, we endeavor to help keep your estate plans up to date with the changing needs of your family. We are available to meet through December 16. Please call Christy at (305) 709-2858 or email to cmedina@raricklaw.com to schedule an appointment. Have an enjoyable November!

Note: Your revocable living trust is designed to be as dynamic as your family. It serves as the master set of instructions to care for you and your family. Therefore, when there are big changes in your family, you may need an experienced Miami trust attorney to amend your revocable trust.

______#1. Marriage/Divorce. Has there been a marriage, divorce, or separation of anyone named in your will or trust? If there has been a marriage of an adult child (without a prenuptial agreement) you may need to amend your revocable trust to make sure monies designated for this adult child are protected.

______#2. New Births Of Children/Grandchildren. Has there been a birth or adoption of a child or grandchild? This child or grandchild may need to be added as a beneficiary.

______#3. Discord in Family. Is there a potential for disharmony to break out in the family if you are disabled or no longer around to maintain peace? In such a case you need to amend your revocable trust to ensure you have a strong, independent successor trustee with good peace making skills.

______#4. Disability of beneficiary. Have any of the persons you have named as a beneficiary suffered any type of mental or physical disability? If so it may be necessary to modify your instructions to make sure any funds designated for this beneficiary are used in the most effective and prudent way possible. For example, if a beneficiary may be entitled to receive SSI or other government benefits, this beneficiary may need a Special Needs Trust.

______#5. Poor Money Managers in the Family. Are any children not good money managers, or if married, have marital issues with their spouses? Do you need to amend your trust instructions to make sure these funds are protected and cannot be grabbed by their creditors – or an unhappy spouse? As Miami trust attorneys, Let us know if we can help amend your trust.

______#6. Successor Trustee. This is the person you have appointed to step into your legal shoes if you become incapacitated – in other words, one of the most important estate planning decisions you can make. Who have you appointed to take charge if you are incapacitated? What is the order of succession of trustees? If you have any question whatsoever about your order of succession, please call the office at (305) 709-2858.

______#7. 2013 Estate Tax Planning Check. The American Taxpayer Relief Act (ATRA) fundamentally changed estate tax planning beginning in 2013. For 2016 the new law increases the estate tax exemption to $5.45 million per person. If you have a credit shelter trust prepared prior to 2013, it should be reviewed now. If you are not sure of the type of trust you have, call the firm at (305) 709-2858.

______#8. Trust Funding. Funding is simply the transfer of your assets into your trust. If our firm drafted your trust, immediately after you signed your trust, we reviewed how your assets are titled and gave you detailed Funding Notes. Have you followed up on these instructions? It is a good idea to annually review the funding of your trust. It is also advisable to annually sign a new assignment of assets into your trust that will help sweep into the trust assets owned on the date of the transfer.

______#9. Life Insurance. When is the last time you checked (a) the owner of your life insurance policies; and (b) the beneficiary designations for those policies? Typically, you want your living trust to be the beneficiary of your life insurance policy because the trust provides the detailed instructions to help ensure the money is prudently used.

Big Note: Some life insurance should be owned by an irrevocable life insurance trust to avoid the estate tax.

______#10. Estate Plan Review. Has it been more than three years since we sat down and reviewed your estate plan? If so, we recommend that you schedule a meeting as soon as convenient to assess whether your plan continues to meet all the needs of your family. This list contains some of the frequent life changes and should not be a substitute to a consultation.

APPOINTMENT:

To schedule an appointment to review or amend your revocable trust or the funding of your trust, call Rarick Trusts & Wills Law, experienced Miami trust attorneys, at (305) 709-2858 or email Christy at cmedina@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

You are named the successor trustee and the trustmaker has just died. No doubt these are difficult times, but thankfully there are many resources to help. The following is a checklist of initial important tasks to help guide you after the funeral or memorial service.

Note: You are not required to accept the trustee duties. However, if you begin to act as successor trustee you will likely be held responsible for all acts as the trustee to the beneficiaries and the IRS. Therefore, do not begin to take any actions as Trustee before you know what your duties are. Consult a Miami trust attorney and see our 12 Point Summary of Florida Successor Trustee Duties.

First Priority Action Items

____ 1. Take possession of all legal records including:

__ Original trust

__ Original will (usually called a pour-over will if decedent had trust)

____ 2. Take possession of all financial records such as:

__ Inventory of assets Note: This may be on paper or on decedent’s computer.

__ Passwords to computer, internet media, or social media

__ Checkbooks

__ Credit cards

__ Statements from all banks or financial companies

____ 3. Take possession of all keys or codes to:

__ All vehicles or boats

__ Safe or bank safe deposit box Note: Do not allow entry to Safe Deposit Box without a witness and prior discussion of arrangements with a Miami trust attorney.

__ House and other real estate or rental properties

__ Storage room

____ 4. Lock and secure all real estate and household contents Click here for the complete checklist: Florida Successor Trustee Checklist.

This is a short list of initial tasks for a person who accepts the duties as Successor Trustee. It is not a complete list of tasks. The trustee will only be able to determine all tasks after carefully reviewing all trust instructions with a Miami trust attorney. Attorneys at Rarick Trusts & Wills Law have helped many family members navigate these tasks as the Trustee or Co-Trustee. We are available to help you. Contact us at (305) 709-2858 or email to info@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in Florida probate law. Your receipt of information from this website, blog, or Miami trust attorney does not create an attorney-client relationship and the legal privileges inherent therein.

Most divorce judgments call for one of the parties to obtain a life insurance policy for securing the payment of child support, alimony or some other financial obligation. Let’s assume the obligation is solely child support: a potential mistake is failure to secure payment of the policy premiums by use of an irrevocable Children’s Safe Harbor Trust structured as a spendthrift trust.

For securing the payment of child support, the settlement agreement should have specific language that may read as follows:

Larry shall establish an Irrevocable Children’s Safe Harbor Trust (“Trust”) to secure the payment of his child support and other financial obligations set forth herein. Within 10 days of execution of this Agreement, Larry shall transfer sufficient funds to the trustee of the Trust to purchase a term life insurance policy with a face value of $750,000 for a term of 10 years. The Trust shall be the owner and sole beneficiary of the insurance policy. The initial trustee of the Trust shall be [CPA, attorney, or independent third party]. The sole beneficiaries of the Trust shall be the children named herein. Said Trust shall be structured to (a) provide for the education, health, maintenance, support, and best interests of the children; (b) to protect the proceeds from creditor claims of Larry, the wife, or the children; and (c) comply with all of Larry’s financial obligations to the children as set forth in this Agreement. [Said Trust is attached hereto and fully incorporated herein.]

The Safe Harbor Children’s Trust could help insure that the policy does not lapse if Larry does not have sufficient funds to purchase the policy outright, but rather needs to pay on a monthly schedule. If a premium payment schedule is needed, it would be wise to have Larry prepay at least 3 months of premium in advance to the Trustee. The trustee would be required to notify the wife if funds for payment of the premium fall below a required minimum balance.

Such monies would be held by the Trustee to ver non-payment and give the wife time to compel the Husband to make payments. An alternative would be to purchase a life policy with the premiums guaranteed.

Note: Larry would want the trust structured to maximize his annual gift tax exclusion of $18000 per beneficiary in 2024. This is accomplished in the trust terms by use of what is known as “Crummey Powers”. Using such powers and assuming Larry has three children, he could annually transfer tax free $42,000 and not be required to file a Form 709 gift tax return.

How We Can Help

The primary focus of Rarick Trusts & Wills Law is trusts of all kinds and estate tax planning. As Miami trust attorneys, we have many years of experience in working with family law attorneys. We are available to consult with you and welcome any questions or comments. For more information, contact Phil Rarick at (305) 709-2858 or info@raricklaw.com. Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

1. Show Loyalty To All Trust Beneficiaries. Even if the successor trustee is himself a beneficiary, as trustee he has the duty of loyalty to all the other beneficiaries, including the remaindermen. Remaindermen are beneficiaries who do not have a current interest in the trust income or principal, but have a future interest in the trust.
2. Deal Impartially With Beneficiaries. The successor trustee cannot favor the income beneficiaries over the interests of the remainder beneficiaries unless the trust specifically directs otherwise. Typically, the trustee must walk a fine line that balances the interests of the income beneficiaries against the interests of the remaindermen.
3. Make Trust Property Productive Of Income. The trust portfolio of assets is expected to achieve conservative growth. Therefore, this duty may be violated if the successor trustee keeps large amounts in a checking account that does not pay interest and does not grow in value. This duty can also be violated if the trustee keeps trust assets in land that does not produce income, such as vacant land or commercial land that does not produce rental income in excess of maintenance costs.

Remember: The sole reason for the trust to exist is to serve the beneficiaries. It is not an employment program for the trustee. If you are administering a trust that has or acquires unproductive assets, consult with us and we can advise you as to your options.

4. Follow the Prudent Investor Rule, F.S. §518.11. This rule generally means that the trust portfolio should be broadly diversified and invested in conservative investments designed to stay ahead of inflation but not in aggressive growth. As a Trustee, you are not expected to be Warren Buffet, but you better not lose money or you will need to account to the beneficiaries. Often, it is best to retain the services of a Certified Financial Planner (CFP) experienced in helping manage conservative portfolios. Note: The successor trustee is obligated to exercise reasonable care, judgment and caution in selecting an investment agent.
5. Account To Beneficiaries And Keep Beneficiaries Informed. Upon commencement of the trust administration, the successor trustee must inform all income and remainder beneficiaries of his or her acceptance of the trustee duties. If a beneficiary requests it, the successor trustee is required to provide that beneficiary with a complete copy of the trust document, including any amendments as well as relevant information about the assets of the trust and the particulars relating to administration. In addition, even without request, all beneficiaries must be provided with an annual statement of the accounts of the trust pursuant to F.S. 736.0813.
6. Keep Trust Assets Separate. The successor trustee must keep the assets of each trust separate and keep his personal assets separate from the trust assets. This requires separate bank accounts, brokerage accounts, and safe deposit boxes for trust assets. It is particularly important that you keep the assets of the Credit Shelter Trust (also known as the AB Trust, Marital and Family Trust, or Bypass Trust) separate from all other assets, since these assets will pass tax-free at the death of the income beneficiary. If the successor trustee comingles any other assets in with these assets (or even simply takes the assets out of the trust and mixes them with her personal assets), in addition to breaching fiduciary obligations, the successor trustee will have subjected these assets to taxation when she dies, whereas they would not have been subjected to tax otherwise.
7. Avoid Conflicts Of Interest And Self-Dealing. The successor trustee cannot buy assets from the trust or sell his personal assets to the trust. He cannot favor himself as a beneficiary at the expense of any other remainder or potential remainder beneficiary. He cannot make any distribution to anyone or any withdrawals from the trust unless specifically authorized by the trust to do so. The trustee is entitled to a reasonable compensation for trust services or compensation as otherwise set forth in the trust. However, the successor trustee cannot otherwise profit or benefit from the trust unless also a beneficiary. Conflicts of interest and self-dealing is a broad area with many traps. If you are a trustee and have any concern as to any specific action or situation, consult with a Miami trust attorney.
8. Preserve The Trust Assets And Uphold The Trust. The successor trustee is liable if trust assets are lost, misplaced or destroyed because of inattention or negligence. If the trust assets are equities, the trustee needs to monitor their performance. If the trust assets are commercial real estate, the trustee must monitor that the properties maintain a high occupancy level, rents are collected in a timely fashion, and of course deposited in a trust account. This may require hiring a property manager. The successor trustee should be certain that all trust assets are appropriately insured. For example, if the trust owns a house in south Florida, it is imperative that the home be insured for property and wind damage that may be caused by hurricanes, heavy rains, and the weather related events we experience here. If the house is vacant, there should be a security system for obvious reasons.
9. File Tax Returns And Pay Any Tax Due. Each trust has a tax year, which like the personal tax year, ends annually on December 31. The trust must have a taxpayer identification number and file a tax return no later than April 15 of the year following. The income tax return for the trust is Form 1041, the Fiduciary Income Tax Return. The best advice here is to use a professional CPA who routinely prepares 1041’s. As mentioned above, such an expense is a typical cost paid by the trust.
10. Minimize Income Taxes. Income generally includes interest earned on bank accounts, CDs, bonds or mortgages, and dividends on stocks and mutual funds as well as all rental income. The trust has a high tax environment: income not distributed may be taxed at 39.6%. Therefore to minimize income taxes, the trustee may need to distribute income out to the income beneficiaries if the trust terms so allow.
11. Pay Trust Expenses. The administration of the trust necessarily requires certain expenditures. Example of expenses include insurance, real estate taxes, CPA fees, and legal services.
12. Good Record Keeping. The trustee needs to keep accurate records of every dime that comes into the trust and every dime that goes out. For small trusts, we recommend using Quickbooks or Quicken. If the successor trustee does not know these programs, it is highly advisable to hire a professional bookkeeper. If the successor trustee becomes disabled or dies, another person must be able to seamlessly step into her shoes and understand the current status of trust matters.

Note: Before the trust is terminated or before the trustee can be released, the trustee will need to provide a detailed accounting to all beneficiaries for all expenses, income and distributions during the time the trustee served.

EXPERIENCE MATTERS

Miami trust attorneys at Rarick Trusts & Wills Law, P.A., have assisted families and business persons for over 20 years. Our firm has worked with over 400 similar law firms located in states outside of Florida to represent their clients in legal matters concerning trust administration and probate. To schedule a meeting with a Miami trust attorney call (305) 709-2858, or e-mail info@raricklaw.com. We look forward to meeting you!

A Living Will is not a will and it is not a living trust. It is simply detailed, legally binding instructions to your physician that you do not want to be maintained in a persistent vegetative state if there is zero possibility of recovery.

The term “living will” is confusing because it is not a will. A better name is Declaration Regarding Life Prolong Procedures. Such a Declaration is important to most persons because, at the end of life, they do not want to maintained in a vegetative state if there is absolutely no possibility of recovery.

A living will is not a living trust. Although sounding similar, these critical legal instruments are completely different. A living trust is a fundamental estate planning legal tool. It provides a plan to care for you in the event of mental incapacity, and it can be a complete substitute for a will by detailing your instructions upon death for giving your hard earned property to whom you want and when you want.

A good living will is a crystal clear statement and instructions to your physician that life prolonging procedures are to be discontinued if the person is in a terminal condition, or end state condition, or persistent vegetative state, and if the attending or treating physician and another consulting physician have determined that there is no reasonable medical probability of recovery from such condition.

Note: No one person can make the decision to discontinue life prolonging procedures. Florida law requires at least two physicians and most Declarations require the concurrence of your health care surrogate. You may appoint more than one health surrogate.

A good Declaration (or Living Will) has a strong statement instructing that everything is to be done to minimize pain. The Declaration should contain a statement that administration of pain-relieving drugs, and surgical and medical procedures, as well as unconventional pain-relief therapies are to be used. This means that your health care surrogate is not constrained by a bureaucratic decision of the Food and Drug Administration when it comes to administering pain relief therapies. Rather, you are placing your trust in the judgment of your spouse, family member or friend whom you have appointed to be your health care surrogate.

Conclusion

Although not a will or a living trust, a “living will” is a Declaration Regarding Life Prolonging Procedures. It is a critical legal instrument that should clearly reflect your wishes in the event you are in a persistent vegetative state and there is not possibility of recovery. Some persons are concerned that even with such a signed Declaration the physician may not respect your wishes. This is why it is important to have the Declaration drafted by an experienced Miami estate planning attorney. Properly drafted and executed, the physician has no choice but to follow your wishes. For more information, contact Phil Rarick, Miami trust attorney, at (305) 709-2858 or info@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

A living trust is simply detailed, legally binding instructions to care for you and your family. There are three key players in a trust. First, the Trustmaker or grantor; this is the person who makes the trust. Second, the Trustee, whose job is to follow the instructions of the trust exactly and to the spirit of the trust. The third role are the Beneficiaries. The Trustee’s fiduciary duties run like a laser beam to the beneficiaries: every penny of the Trust must be used in the best interests of the beneficiaries.

Initially, you can act in all three roles in your living trust: You can be the trustmaker, trustee and beneficiary. Your spouse, children, or other loved ones can also be beneficiaries.

Your living trust is revocable – you can change your trust instructions anytime you wish. There is only one person in the world who can change your instructions: you. In the event of your temporary or permanent mental incapacity, or upon death, the trust locks in and becomes irrevocable so that no one else can change it.

Note: To achieve the objectives noted here, your trust must be properly drafted by an experienced Miami trust attorney and funded by transferring your assets to the trust. Funding of the trust is essential to achieving the trust purpose. Your key assets must be titled in the name of the trust or flow into the trust because the trust is the beneficiary of your account. If you have a living trust, and you have not reviewed the trust funding within the past several years with your attorney, it is likely time to do so.

For more detailed information see our paper: Understanding Living Trusts For Florida Residents. Take-Away Points

1. Every person, whether you have $100,000 or $1 million, should likely have a living trust rather than a will. A will must usually go through the costly, bureaucratic court system known as probate. A trust, properly funded, can avoid probate.

2. A living trust is important to keep legal control in the family – and avoid court intervention in the form of guardianship or probate.

3. A living trust provides detailed instructions to help insure that your hard earned money goes to your children or other loved ones – and not to their spouses, or creditors. Just as important, your trust instructions can help insure that your children receive a first-rate college education to help them compete in our new global economy.

You have a valuable tax benefit from the IRS, but the deadline for taking advantage of this benefit is December 31. The IRS allows you to gift $14,000 per recipient each year tax free; if married, you can gift $28,000 per person.

Example: If you are married and have two children, you can gift $56,000 without incurring any gift taxes or using part of your lifetime gift tax exemption. (This exemption is $5.34 million; next year it will be $5.43 million.)

Annual gifting is a “use it or lose it” benefit. After December 31, you lose all rights to make a gift in 2014.

Note: The gift must be delivered to the recipient by the end of the year. Putting the check in the mail on December 31 is not considered a completed gift.

For gifts between spouses, there is an unlimited amount. So, husband, if your wife is asking for a $50,000 ring for Christmas, no problem. (I think I speak for husbands everywhere when I say that most likely our wives already knew this part of tax law.)

The Perils of Gifting. Before you get out your check book for the kids, consider first the perils of gifting outright. If you want to make sure that your gift goes to your child (not their spouse) or grandchild (and is used for their education, not on some foolish expense) then you need to consider a Gifting Trust. A Gifting Trust can help insure that your hard earned money goes to your children for the purpose that your intend and is not wasted.

Gifting Trust. Here is an example of the power of a Gifting Trust. Let’s say you and your wife have one adult son who is married with two children, both under the age of 18. Using a gifting trust, you can gift $84,000 tax free. Just as important, the Gifting Trust will have protective provisions so that the money for your son cannot be claimed by his spouse, and the money for the grandchildren is used for their college education when they turn 18 – and not a new, bright yellow Mustang.

For more information, contact Phil Rarick, Miami Trust attorney, at (305) 709-2858 or email to info@raricklaw.com.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.

Note: This is a partial list of key items. Invariably there are other considerations. Consult your estate planning attorney.

1. Revise living revocable trust or will:

• Remove partner as beneficiary
• Remove partner as trustee or successor trustee and name new trustee
• Remove partner as personal representative under will
• Remove partner’s children as beneficiaries

2. Sign new Durable Power of Attorney (“DPA”):

• Revoke all prior DPA’s naming partner as agent or attorney-in-fact
• Name new agent to hold your DPA

3. Sign new Health Care Surrogate and Living Will:

• Revoke all prior Health Care Surrogates naming partner as agent or health care surrogate and name new health surrogate

4. Life Insurance Policies beneficiary designations: Is partner a beneficiary?

5. Beneficiary designations for retirement plans (such as 401k) or IRA’s: Is partner a beneficiary?

6. Beneficiary designations for annuities: Is partner a beneficiary?

7. Irrevocable Trusts: Such trusts are often complex and should likely be reviewed by a trust attorney to determine if (1) the trust includes language for termination of the partner’s interest in event of divorce; (2) partner is a beneficiary, trustee or protector; and (3) partner’s children have any beneficial interest in the trust.

For more information, contact Phil Rarick at (305) 709-2858 with Rarick Trusts & Wills Law, a Miami attorney with over 20 years of experience in asset protection.

Special Note

The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami asset protection attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.