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Miami Estate Planning Law Blog

Can you use life insurance in more than one way?

You have spent considerable time putting together a life insurance policy that will provide added security for you, as well as benefit your family when you pass away. Now, you are wondering if your investment can do more than provide cash after your death. Fortunately, there are a variety of things that your life insurance policy in Florida can be used for. Being aware of what these things are can give you something to discuss with your family members so you can be confident that they use the funds the way you desire for them to be used. 

There is never a wrong time to begin investing in a life insurance policy. In fact, the earlier you begin contributing to a life insurance policy, the more rewarding the outcome will be in the long-term. If you are doubting whether or not you are too young or if you feel that your life is plenty secure, just remember that now is as good as any time as any to begin investing in your future. According to Allstate, some of the ways that your life insurance policy may be used include the following:

  • To pay off outstanding debts after your death.
  • To supplement your income after your death on behalf of people who were dependent on it for survival.
  • To donate to a charitable cause that you are passionate about.
  • To use in preparing your funeral, burial and post-death formalities.

Can you keep your children from blowing their inheritance?

Your children are grown and make adult decisions, but you might worry that you can't trust their decisions to always be wise, especially when it comes to money. It can be difficult to handle a sudden inheritance when adult children are still young and inexperienced with managing money, or one or more of your children might have made devastating spending decisions in the past. For whatever reasons, you and other Florida residents with significant assets to pass on may worry about your children spending it too quickly.

You may hope the inheritance you leave your children can support them throughout their lives, put them or their children through college or help them purchase a home. However, people who suddenly find themselves with a lot of funds might not think that far ahead, instead choosing to spend it all on frivolous purchases, lavish vacations and other things that can drain an inheritance in weeks.

What do you need to know about the Kiddie Tax?

Not every child in Florida and elsewhere in the United States makes a significant amount of money outside of a job. However, some are fortunate enough to receive a decent amount of spending money from their loved ones. Is this money taxable, you may wonder? If your minor children get an allowance, received monetary gifts from Grandma and Grandpa or have other means of enjoying a full piggy bank - without having a job - you may be interested in learning about the Kiddie Tax.

What is the Kiddie Tax? According to Intuit, the Internal Revenue Service created this tax to discourage parents from placing investments and assets under their children's names, thus reducing their own tax responsibilities. Originally, the Kiddie Tax applied to kids under the age of 14. Now, it applies to all children who were under 18 by the end of the year, or those under 18 with jobs who made equal to or less than half of the amount of their parental support. Your children between the ages of 19 and 23 may also be subject to the Kiddie Tax if their income was less than half or equal to your monetary support and they were full-time students.

Is my will valid in a different country?

When you own property in a different country, you may wonder if your will is valid in both Florida and the other country. It is important to understand how you may need to change your will to make sure it will be valid after your death.

The validity of your will usually depends on the legal system of the country in which you own property. AmericansAbroad.org says that some countries use a system called forced heirship. If you live in one of these countries, a certain amount of your estate is typically saved for your family. You may sometimes face restrictions if you want someone who is not your spouse or child to inherit assets. Each country with forced heirship inheritance laws generally has different requirements, so it is a good idea to look over the laws of the country where your property is located. Countries with this kind of inheritance law include Japan, Germany and France.

Who should have a trust?

Setting up a trust in Florida could potentially safeguard your assets. The idea is that someone responsible uses the money in the specific way you intend. If there is a purpose you have in mind for your wealth, then there is likely a trust to fit that specific purpose.

In short, you could consider using a trust if you care about who receives your money and how they use it. If you want more control over your resources and you are willing to commit time and money to achieve that goal, then read on.

Do my debts go to my children after I die?

Like many Florida residents, you have done your estate planning carefully, so your loved ones will have an inheritance to enjoy after you are gone. Also like many others, you may have a moderate to significant amount of debt. Naturally, you would not want your children to inherit your debt in addition to their inheritance. Will your family members be on the hook for your outstanding debt after your death?

There are a few different answers to this question, as NerdWallet points out. The important thing is to distinguish who the original owner of the debt was. If, for example, you had credit card debt before you were married, the debt should not pass on to your spouse or your children. On the other hand, your spouse would still be responsible for making the payments on a joint credit card. The person who inherits a property with an outstanding balance will be responsible for the payments or for liquidating the property to satisfy the debt. For example, if you leave your home to your eldest child, your child would need to continue paying the mortgage or sell the home.

Remarriages and asset protections

Whether you have been divorced or widowed, if you now find yourself happily connected with a new partner, you may well be considering getting remarried. While certainly remarriages are no longer uncommon in Florida and they can definitely be extremely happy and fulfilling, they can also come with some unique issues to address. Among these issues is proper estate planning, especially if one or both partners has children and possibly even grandchildren already.

As explained by CNBC, barring any estate plans in place, when a married person dies it is that person's spouse who generally inherits any assets or estate that is left. In the case of a remarried couple with kids from prior relationships, each spouse may want to ensure that all or at least select assets will go directly to their children or grandchildren. Instead of leaving these items up to chance and the goodwill of those who outlive a person, documenting these wishes is wise.

Assuming guardianship after parental rights are terminated

In many cases, a family member is named a legal guardian of a child if the child's parents pass away before the child turns 18. The preferred guardian is usually named in the parents' will. however, as our team at the Law Offices of Frye & Vazquez, P.L., understands, some circumstances may warrant an adult taking on the legal responsibility to raise a child even if the parents are still living. You and other Florida residents may be interested in learning how this can occur, as well as the challenges you might face if you become the guardian of a child whose parents lost their rights.

There are many reasons parents could have their rights to raise their children terminated, explains FindLaw. One or both parents may be physically, emotionally or sexually abusive. The parents could have a problem with alcohol or substance abuse. An accident or illness may have rendered a parent mentally or physically incompetent to care for a child. A parent may even voluntarily sign over his or her rights. If you are a close family member, such as a grandparent, sibling of one of the parents or adult cousin, the court may request that you assume guardianship.

Will your child need to pay taxes on a trust?

When you set up a revocable trust for your child in Miami, you may not always consider the tax implications. It is important to consider how this trust will be taxed, though, especially if you want this trust to be your child's inheritance.

If you establish a revocable trust, there are several different things that can happen after your death. Zacks Investment Research says that you may choose to have your child receive all the assets. This means that the trust would close. Sometimes, though, you may want your child to receive the assets over a number of years instead of all at once. In this situation, you may want to arrange for the trust to continue after your death. The trust can usually become either a complex or simple trust and these kinds are taxed differently.

Understanding ademption

Most Florida residents have never heard of the word "ademption" and have no idea what it means. Ademption, however, is a very important legal word that Floridians should be aware of because it impacts the specific bequests they make in their wills.

As explained by BankRate.com, ademption applies to any property that the person making the will, i.e., the testator, bequeaths to someone in his or her will, but which property is no longer part of his or her estate when (s)he dies. For example, the testator may have sold the property or given it away prior to his or her death, or the property could have been lost, destroyed or even condemned prior to his or her death.

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