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Miami Estate Planning Law Blog

Tom Petty's heirs file lawsuits over estate

Some Florida fans of the late musician Tom Petty may have heard that his family is in a dispute over his estate. In Petty's will, he created an LLC, Petty Unlimited. He also set up a trust and made his widow the directing trustee. She was supposed to fund the LLC with assets from the trust. She and Petty's two daughters were then supposed to each get one-third of the assets.

On May 15, a lawsuit was filed on behalf of Petty Unlimited. The lawsuit does not specifically name Petty's daughters individually as plaintiffs. However, it alleges that his widow is attempting to keep the assets out of Petty Unlimited and has set up her own LLC, Tom Petty Legacy. The suit named several defendants plus dozens of co-defendants it says are working with her. The attorney for Petty Unlimited claims that Petty's intentions were for each of his daughters and his wife to have an equal share in his estate. He says that Petty's wife is preventing this.

Right and wrong ways to avoid probate

We at the Law Offices of Frye & Vazquez understand why it is desirable to avoid probate if possible. The probate process in Florida can be complicated, expensive and much more public than most families would prefer. There are a number of available options to help you and your heirs avoid probate, but some are more efficient than others. 

According to FindLaw, two methods of probate avoidance include naming a beneficiary on an account and owning assets jointly. A number of different accounts, including a pay-on-death account, can have a beneficiary named, and in a joint ownership situation, the right of survivorship ensures that upon the death of one co-owner, the other automatically inherits the property. However, these methods can have unanticipated pitfalls related to exposure to creditors, inflexible distribution and tax inefficiencies. 

Commonly overlooked estate planning matters

Estate planning in Florida is a personal process. The specifics of an estate plan will vary based on the creator's situation. While there are a few things most people can count on needing (such as a will), there are also a few things nearly everyone should avoid. People who are considering their Florida estate plans should avoid naming minors as beneficiaries, drafting their own wills and carelessly adding joint owners to bank accounts.

Beneficiary designations are strong tools in estate planning; they can allow assets to pass outside of probate directly to the chosen beneficiary on the person's death. Retirement accounts and life insurance policies are commonly conveyed via beneficiary designations. There can be problems, though, if the designated beneficiary is a minor. People under the age of 18 may not legally be able to own the asset.

What responsibilities does a guardian of an adult have?

In Florida, the court may appoint a guardian for an adult who has a mental disability or becomes incapacitated due to age-related dementia, a head injury or a number of other possible causes. If you become the guardian of a disabled or incapacitated adult, your responsibilities may be different from what you might expect. 

According to FindLaw, your role as a guardian is not necessarily to provide care for your ward's daily needs, although it may be possible for you to take on a caretaking role in addition to that of a guardian. Essentially, your function is to manage your wards affairs in matters that he or she is unable to handle alone. These may include the following: 

  • Decisions regarding medical care
  • Decisions regarding finances
  • Assurance of maintenance and availability of the ward's care

Common misconceptions about estate planning

Some Florida residents may delay estate planning because they do not want to think about death. Others may do so because they think they have too few assets to make a will worthwhile. However, even people whose only holdings are a small bank account and a home probably have a preference about who they want those assets to go to. For those who genuinely have no assets, a will can still serve other purposes. It can appoint a guardian for any minor children. A will can also be used to specify funeral plans.

Another common error people make is thinking they do not need to update the estate plan because there have been no major changes in their family. However, this does not mean that applicable laws have stayed the same. For example, the estate tax exemption in 1999 was $650,000. In 2019, it is over $11 million. Strategies to shield an estate from taxes may no longer be necessary. An executor might also need to be replaced with someone younger who is likely to live longer.

Choosing the best trustee to manage a trust

Florida residents should proceed with caution when it comes to naming an estate trustee. Many people naturally assume that a close relative would make a good trustee because of their familiarity with the estate owner. However, this might not always be a good idea, particularly in families with a high net worth. In many instances, an impartial third party would be a better choice.

Although no one knows the estate owner better than their spouse, naming a husband or wife as trustee can lead to complications, especially in a blended family. If a spouse remarries, the financial well-being of the new spouse might take priority over that of the children or stepchildren. A spouse might also favor a child who lives nearby and visits often. There is also the concern that the health of an aging spouse might prohibit them from carrying out their trustee duties.

Possible drawbacks of a DIY estate plan

Some people in Florida may be among the 40 percent of American adults who, according to the AARP, lack a living trust or a will. People may avoid estate planning because they find it costly or time-consuming or because they are uncomfortable discussing estate planning issues with an attorney. Some of those people might assume that using a do-it-yourself estate planning package is a solution to those concerns, but there can be drawbacks.

Not all DIY sites offer the same level of support. For people who know exactly what they need and who have fairly simple estates, a DIY package may be sufficient or at least better than not having an estate plan at all, but one common problem is that people are unaware of what questions they should be asking. They may not be aware of what issues might arise or are specific to their state.

How does guardianship differ from adoption?

From time to time, parents in Florida are no longer able to care for their biological children. This can occur if you and/or the child's other parent become incapacitated or die. It can also occur if a court issues a decision against you declaring you to be unfit. In situations like this, the care of your child becomes the responsibility of another adult, one chosen either by the court or by you, depending on the circumstances. This can take place via one of two legal processes: adoption or guardianship. 

According to FindLaw, adoption irreversibly alters the legal relationship between a child and his or her biological parents. It becomes the sole responsibility of the adoptive parent(s) to provide for the child's needs, meaning that you as a biological parent do not have to pay child support. In addition, once the adoption takes place, you give up all your obligations in regard to your child, as well as your parental rights. It is still possible for an adopted child to inherit from his or her biological parents, but if you want this to happen, you must write a will naming the child as a beneficiary. Otherwise, he or she will not inherit automatically. 

How does the new tax law affect estate planning?

As of January 2019, the federal Tax Cuts and Jobs Act officially became law and introduced sweeping changes affecting taxpayers in Florida. Provisions of the law can affect your existing estate plan in many different ways, so much so that it may be necessary to update or revise the plan you have in place. The most obvious provision pertaining to your plan is the increased estate tax exemption, but, according to The CPA Journal, the new law also affects insurance, investment locations and other decisions related to financial planning.

The TCJA increases the amount of property exempt from estate taxes. For people whose estate exceeds the minimum value requiring the assessment of the tax, as well as their heirs, this is of significant importance. If you are in this group, however, you should be aware that the provision is temporary and set to expire in 2025. 

How blended families should approach estate planning

Florida parents who have biological children from a previous marriage may not want to leave everything directly to their current spouses when they pass on. This is because the surviving spouse may not give those children their fair share of those assets in spite of their claims to do so. Therefore, it may be a good idea to put assets in a trust that the children can benefit from.

Alternatively, it may be a good idea to leave assets directly to a biological child upon passing. Doing so means that he or she receives an asset in a timely manner instead of having to wait until the surviving spouse also passes on. Those who are seeking a compromise may want to create a trust that the surviving spouse can draw an income from while alive. When that person passes on, the children will receive whatever is left inside of it.

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