Trust Law

What Is An Irrevocable Life Insurance Trust (ILIT)?

Published on: August 4, 2012 | by Rarick & Bowden Gold

Answer by Miami Trust Attorney Phillip B. Rarick, Esq.

The most common purpose of the Irrevocable Life Insurance Trust (“ILIT”) is to help preserve the full value of the policy by protecting the insurance proceeds from the U.S. federal estate tax – currently at a 40% rate.

The ILIT is the owner and beneficiary of life insurance policies, usually on the lives of the donor and the donor’s spouse. Since the trust, and not the donor, owns the policy, the insurance proceeds will not be included in the donor’s federal gross estate. ILITs allow clients to replace the value of estate assets given to charitable entities. They are also beneficial for clients who wish to increase the value of assets left for their heirs at reduced tax costs. Life Insurance Trusts are generally structured so that the initial gift and subsequent gifts to the trust qualify for the annual gift tax deduction.

What Is A Special Needs Trust – And Why It Is So Important

Published on: August 4, 2012 | by Rarick & Bowden Gold

By Miami Trust Attorney Phillip B. Rarick, Eq.

Is there someone in your family who has or may have special needs? Does someone in your family currently receive, or potentially in the future will be receiving, government benefits for their medical or other needs? If so, it is important that you know the benefits of a Special Needs Trust.

The Special Needs Trust allows an individual to continue to receive governmental assistance when they either inherit assets or when they receive assets through litigation or other unexpected sources. Basically, a special needs trust is a discretionary trust designed to preserve governmental benefits for a disabled or aged beneficiary. Distributions from the special needs trust are designed to supplement the beneficiary’s public benefits, not supplant them. There are a two different types of special needs trusts: (1) a third party special needs trust, and (2) a self-settled special needs trust.

What is the Current Estate Tax or “Death Tax”?

Published on: August 4, 2012 | by Rarick & Bowden Gold

Answer by Miami Trust Attorney Phillip B. Rarick, Esq.

The estate tax exemption for 2012 is $5.12 million; estates above $5.12 million are taxed at the rate of 35%. Unfortunately, absent congressional action, the estate tax exemption will fall back to $1 million per person with a top rate at 55% on January 1, 2013. While many commentator’s do not think this will occur, this is the current law and will remain so if Congress continues to be mired in a deadlock (and many commentators believe this deadlock will continue for years). The good news is that 2012 is an excellent year to make gifts in a tax efficient way as the lifetime exemption for gifts is also $5 million.

Important Planning Note: Estate tax law is fluid and difficult to predict. The estate tax is a moving target. These realities make it essential that you establish and maintain a relationship with an estate planning attorney who will keep you advised of the latest changes in the law.

How To Avoid Probate?

Published on: August 4, 2012 | by Rarick & Bowden Gold

Answer by Miami Trust Attorney Phillip B. Rarick, Esq.

The best way to avoid probate is to have a basic estate plan that includes a living revocable trust as your master set of instructions to make sure you give what you have, the way you want, and when you want.

When you set up a Living Trust, you transfer assets from your individual name to the name of your Trust, which you control. Technically, you no longer own anything, so there is nothing for the courts to administer when you die or if you become incapacitated. The concept is very simple, but this is what keeps you and your family out of the courts — even if you own assets in other states.

New Florida Durable Power of Attorney Law Makes Sweeping Changes

Published on: September 21, 2011 | by Rarick & Bowden Gold

Introduction

The Florida legislature recently enacted the “Florida Power of Attorney Act” (“FPOA”, Fla. Stat. §§709.2101-.2402), fundamentally overhauling existing law, and making sweeping new changes. Even though the new law recognizes durable power of attorneys (“DPA’s) executed under the prior law, we are advising clients to update their DPA, if more than a year old, because the changes are so comprehensive. For Florida licensed attorneys who receive our Alert, we are making available at cost our new “Super DPA’s” drafted to take advantage of the new law.

Effective Date: The effective date of the FPOA is October 1, 2011. “Legacy” POA’s, or those signed before October 1, 2011, are not invalid, but the action of the agents or attorneys-in-fact under Legacy POA’s must be interpreted under the new law.

FAST TRACK FLORIDA PROBATE

Published on: June 25, 2011 | by Rarick & Bowden Gold

By Phillip B. Rarick, Miami Probate Attorney

Introduction

Most states have streamlined probate procedures for smaller estates. Florida’s procedure is called Summary Administration and can be used to expedite administration of estates not exceeding $75,000 or when the decedent has been dead for more than two years. F.S. 735.201(2). It avoids the appointment of a Personal Representative (or “Executor” in other states). Summary Administration should always be considered for small estates; however, as discussed below, it may not always be the most practical option.

MOVING TO FLORIDA: MANY ADVANTAGES – BUT BEWARE OF THREE TRAPS

Published on: December 2, 2010 | by Rarick & Bowden Gold

By Phillip B. Rarick, Miami Trust Attorney

Executive Summary

In addition to our sunshine, Florida has one of the best tax and asset protection climates of any state in the country. Florida has no state income tax, no fiduciary tax, no intangible tax, no estate tax, and arguably the most generous homestead laws anywhere in the U.S.A: you can have a multi-million dollar home and this residence will be virtually untouchable by creditors. However, moving to Florida without proper planning does have risks. This Report discusses the risks and explains how to clearly establish Florida domicile.

A Life Estate the Spouse Can’t Afford: Florida Homestead Trap Cured by New Law

Published on: October 18, 2010 | by Rarick & Bowden Gold

By Phillip B. Rarick, Miami Trust Attorney

Who is Impacted by This Legislation, F.S. § 732.401?

The surviving spouse of a decedent when the decedent owned homestead property which was not properly devised or cannot be devised is impacted by this legislation. However, all Florida probate attorneys need to know the implications of the legislation as the new law requires an analysis of whether the surviving spouse should file an “Election of Surviving Spouse to Take a One-Half Interest of Decedent’s Interest in Homestead Property.” F.S. §732.401(2)(e). Such an election must be filed within 6 months of the decedent’s death. All Florida estate planning attorneys are impacted as such homestead election powers should be standard language in most durable powers of attorney and inter vivos trusts.