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Miami Estate Planning Law Blog

The benefits of a spendthrift trust

Say you have assets that you want to leave to your loved ones in Miami, yet you are concerned that their already observed tendencies to be reckless with their spending could potentially get them into trouble. This scenario is the same that has faced many of the clients that we here at The Law Offices of Frye & Vazquez, P.L. have assisted in the past. Even placing your assets in a trust may not completely protect them from your irresponsible beneficiaries (or the creditors that may eventually come after them). That is, of course, only if you do not include the right provisions. 

Florida's Trust Code does indeed allow you to include a spendthrift provision in a trust that you create. Such a provision allows your chosen trustee to have complete authority over how the trust's assets are used to benefit your beneficiaries. With such a trust, the trustee could retain its assets to ensure that your beneficiary has funds to help pay for his or her schooling or buy a home, rather than giving him control to draw from trust assets to buy a brand new Ferrari. The Trust Code does limit spendthrift provisions, however, stating that they must restrain the voluntary and involuntary transfer of a beneficiary's interest. 

Voiding a trustee's transactions

Placing assets into a trust is a terrific way to both avoid the costs of probate and to protect property from potential misuse by beneficiaries. However, many of those in Miami that come to us here at The Law Offices of Frye & Vazquez, P.L. wanting to set up such trusts fail to realize the extent of the power they are giving to a trustee. If you are a beneficiary to a trust, you may feel as though your interests are completely subject to the will of the trustee. This may leave you believing you have little control over what he or she does with the trust's assets. 

Fortunately, that is not the case. The trustee has duty of loyalty to act only in your best interests (as specified by the trust's settlor). Often, it may seem as though those interests (which should also be his or her fiduciary interests) are at odds with those of the trustee. If you believe that has been represented in the from a transaction involving trust assets, Section 736.0802(2) of the Florida Trust Code states that you are able to void such an action. Examples of where a trustee's fiduciary interests may conflict with his or her personal one's include transactions between his or her: 

  • Spouse
  • Descendants, parents, siblings or their spouses
  • Attorney, agent or employee
  • Corporations with which he or she may have a vested interest

What if you forget to file an estate tax return?

Every spring (or perhaps more often, depending on your employment in Miami) you go through the annual ritual of paying your taxes. Given all of the confusion that is often involved in paying your own taxes, imagine how much more there may be if you have to file a return for the estate of a deceased loved one. The stress associated with it may make you want to forget about the task altogether. Yet what happens if you do? 

The penalties for not filing a tax return (even an estate return) in a timely manner can be found in Section 6651(a)(1) of the U.S. Tax Code. Here, it states that unless you are able to demonstrate a reasonable cause as to why you were not able to file, you will be assessed a penalty of 5 percent of the total tax owed for every month the return goes unfiled (up to 25 percent). Furthermore, if it is believed your failure to file was fraudulent, the 5 percent penalty increases to 15 and the 25 percent maximum to 75. Even if you do remember to file yet fail to pay the amount owed by the specified date, you could be assessed an additional penalty of 0.5 percent of the tax owed until the payment is made. 

What is a probate curator?

As the probate process begins for the estate of your loved one in Miami, you will likely immediately learn of the importance of a personal representative. A personal representative is the one appointed (either by your loved one in his or her will, the court, or your own nomination) to oversee the administration of the estate. Yet a personal representative's authority is not automatic; it must first be granted by the court through the issuance of letters of administration. As that process is taking place, you may question who is managing your loved one's estate. 

Oftentimes, that is done by a curator. The Florida Probate Code defines a curator as one who takes charge of an estate while letters of administration are being issued. Typically, this a neutral party chosen by the court rather than through nomination. Section 733.501 of the Probate Code empowers a curator with the same authorities as a personal representative. Like a personal representative, a curator may be compensated for his or her time and services. And again, just as is the case with a personal representative, the court may remove one from the office of curator for a breach of duty. 

Family matters in relation to your will

Estate planning experts in Miami encourage you to begin considering the matters of your estate early on in life. The first step in that process may be to create a will. Many of those that we here at The Law Offices of Frye and Vazquez, P.L. have worked with over the years, however, have had to find out the hard way that estate planning is a process, not a singular event. As changes occur in your life that affect your income, savings and property holdings, as well as your marriage and family, you will want to revisit your will to see if changes need to be made to reflect your current situation. Yet what if you fail to do so? 

Say you create a will with your spouse, naming her as a beneficiary to your estate. You later divorce, yet fail to ever go in and amend your will. Will she still receive her designated portion of your estate upon your death? According to Section 732.507(2) of the Florida Probate Code, the answer to that question is no. If fact, it states that any provision of your will concerning your spouse that you made while married becomes void upon the dissolution of your marriage (regardless of whether your divorced or had your marriage annulled). 

The difference between guardianship and conservatorship

Florida residents who are dealing with matters of legal guardianship or conservatorship may wish to know the differences between the two categories. Though they cover similar purposes, they do apply to different situations.

The Legal Dictionary refers to conservatorship as the status of a conservator. A conservator is a person who is given legal rights by a judge to manage someone's personal financial affairs due to either their age, or any physical or mental disabilities they might have. In some cases, they may only be responsible for financial decisions alone. In others, it goes much deeper as the conservator is meant to help the person in question live a normal life by managing their daily schedule.

Woman and former attorney at odds over interpretation of trust

Trusts are tools that many in Miami are encouraged to involve in their estate planning due to the control that they offer over a person's assets. Not only do they allow an estate to avoid having to go to probate upon one's death, but they also permit one to stipulate who will handle their financial affairs and medical decision-making should they lose the ability to do so. Granting a trustee or another party such authority empowers that individual to assume control of one's property in predetermined circumstances. Knowing this, one should think carefully about what stipulations he or she chooses to include in a trust instrument

A Hawaiian women could be contemplating that exact point right now as she works to gain back control of her estate. Her former attorney assumed the role of trustee after a neurologist confirmed the conclusion of her personal physician that she was no longer fit to manage her financial affairs. In response to her claims of him trying to wrest control of her fortune away from her, the attorney cited her own instructions in a trust that stipulated that action be taken to prevent her money from being misused. The woman, who is descended from Hawaiian royalty and holds assets believed to be in excess of $200 million, has retained the services of a former state attorney general to help reclaim her assets. 

The process for establishing a guardian

Appointing a guardian is a great way to ensure that you and your family are taken care of if you ever become incapable of making decisions on your own. If you are preparing to take this important step and assign a guardian in Florida, there are a few things to keep in mind. We at the Law Offices of Frye and Vazquez can help you ensure that you follow all rules and regulations as you plan for the future of your family.

First, it is important to assure that your chosen guardian qualifies for the position. According to FindLaw.com, state laws claim that this person must be a legal adult, meaning over 18 years old. Most applicants need to be residents of the state, but this requirement can be overridden if the person is a close relation to the proposed ward, such as an aunt, uncle, sister, brother, nephew, niece, adoptive parent or a spouse of any of these people. The person cannot have been convicted of a felony at any point.

Can you ask the court to monitor a guardian’s actions?

It is always difficult to see your loved one assigned to be the ward of a professional guardian in Miami. Yours and your loved one’s lack of a personal relationship with the guardian is likely the main source of your reservations. Stories of professional guardians abusing the authority entrusted to them are out there, which may be perceived as an implication that they can operate with impunity. Yet are there ways for you to monitor a guardian’s actions?

The answer to that question can be found in Section 744.107 of the Florida Guardianship Law. Here, it details the appointment of court monitors. The law specifically states that you can petition the court to have a monitor assigned to investigate your loved one’s guardianship case. Be aware, however, that if it is determined that you filed your petition in bad faith, the court can require you to cover the entire cost of the proceedings, as well as any associated attorney’s fees.

Estate tax implications for small businesses

Your entrepreneurial pursuits in Miami have hopefully yielded a significant windfall for you and your family, and provided people in the local community with jobs. Yet what happens to your business after you are gone? If you have earned significant personal assets, your estate could be subject to the federal estate tax. Many small business owners in your same position come to us here at The Law Offices of Frye and Vazquez, P.L. concerned that their having to pay the estate tax will force the sale of their companies. Should you be sharing this same concern?

According to the Center on Budget and Policy Priorities, the answer that question is no. It recently shared information that showed that of the 5,200 estates that owe taxes in 2017, only 50 of those are small businesses or farms. That is because the total taxable estates of their owners does not exceed the estate tax threshold ($5.49 million for 2017). If this is the case with your company, you can simply transfer ownership to your beneficiaries without having to worry about a stiff tax penalty.

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