I have recently noticed a trend among younger individuals – it’s just not the elderly that are beginning to think about protecting their assets. Whether the reason is education, economy or the overall increased high net worth in my geographic area, my estate planning client base seems to be trending younger in age. I love to see this increased awareness in financial responsibility. Another result of this trend is increased inquisitions about the laws regarding guardianships. My “50 something” clients have parents that are at the age where guardianships become most relevant.

When I meet with clients who are concerned about a parent who is ill, elderly or just losing mental capacity, most often they ask informational questions about how to become a guardian, the responsibilities of the guardian and how someone is actually appointed guardian. Here’s the skinny….

Establishing a guardianship is a means to protect financial and legal interests of an adult, an elderly person or a minor who cannot manage their affairs themselves. In order to be appointed guardian, you will have to go to court. A judge will decide if guardianship is necessary based on the opinion of a panel of medical personnel. If indeed guardianship is deemed necessary, the judge will decide who is the appropriate guardian based on a best interest standard. The court will take its time on this decision as taking away someone’s rights is obviously not taken lightly by the judicial system. Finally, responsibilities will be delegated to the appointed guardian. Responsibilities are separated into two groups: financial affairs (paying the bills, investment decisions, etc.) and personal affairs (health care, living arrangements, etc.).

Although it is not mandatory, I highly recommend contacting an experienced guardianship/elderly care attorney to guide you through this process. Legal counsel can be especially helpful when proving to a medical panel and judge that you are the proper guardian and when trying to fend off others who may object to your request.

When most of my clients think of Estate Planning, they think of dividing up traditional type assets such as cash, stocks, bonds, jewelry, cars, family heirlooms, etc. Although this has been the norm for the most part, in today’s never ending pursuit of advancing technology, estate planning attorneys and their clients have a another very important classification of assets to consider: digital assets.

Since reading an article last year about the rightful ownership of songs on an iTunes account, I have done some research on this growing estate planning issue of digital assets. There are seemingly endless amounts of digital assets that need to be accounted for, and it is a great idea to keep a current list to include in a well thought out estate plan.

What are digital assets that need to be considered in planning for your estate? What about family photo albums that may have been converted to digital media, what about an extensive digital music collection, what about novel ideas with respect to inventions/writings/music that you have created. These are just a few items that you should consider while making an estate plan.

Although it is important that the aforementioned assets are accounted for in your plan, it is perhaps more important that the access to these items is apparent. If trustees and personal representatives do not have access these types of media, i.e. passwords to computers, the assets cannot be distributed. The passwords are also important for executors of estates to gain timely access to bank accounts, brokerage accounts, email accounts and social media accounts. Without passwords, access to these types of accounts may result in long court battles.

The creation and implementation of federal and state laws with respect to digital assets are relatively new and can be quite confusing. If you have not accounted for your ownership of digital assets in your estate plan or need help organizing those assets for the future, reach out to an expert estate planning attorney. A digital asset protection trust may be an option for you.

Living in South Florida sure has its perks. Enjoying the coastal regions and participating in the activities that accompany our wonderful year-round weather make our area so desirable to live in. Whether we like it or not, this attractiveness has made South Florida a favorite place for famous entertainers, athletes, executives and political figures to vacation and retire. Of course, when one of these “special people” passes away, the heirs of their fortune become the front page news. Some recent, highly publicized estate battles concerning deceased celebrities have cast a bright spotlight on the importance of having the proper estate plan.

I have recently read the book “Trial and Heirs, Famous Fortune Fights.” I recommend it to anyone starting to establish their estate plan or just reviewing an existing one. Regardless of the size of your estate, this book can help you understand some of the most common errors made in estate planning. The book will also aid in avoiding the nightmares that can occur and cause financial heartache and strain to your heirs. It is an easy reading book that uses examples of estate planning blunders that plagued famous people over the years. Some of the highlighted cases include Anna Nicole Smith, Marlon Brando, Gary Coleman, Michael Jackson and many others.

One would assume that celebrity, fame and the money that accompanies it would put these folks in a position to get their post-death asset distribution done properly. This is not necessarily the case. Learn from their mistakes, and if you attempt to create an estate plan on your own, have an estate planning attorney look it over before you finalize.

The first step in planning for the distribution of your estate is to contact an estate planning attorney and create a revocable living trust. Your friends and colleagues have all told you that it is a sound idea if you want your assets to avoid probate and want proper disposition of assets upon death assured. However, the creation of the trust is only half the battle. Now, you must embark on the second half of the process, funding that trust.
Funding the trust is the process of transferring the title of your assets to the trust and changing beneficiary designations to ensure they will be paid to the trust upon the death of the asset owner. Some examples of funding the trust are:
1. Designating the trust the “Pay on Death” beneficiary of a bank account
2. Designating the trust as beneficiary of life insurance contracts
3. Designating the trust as the “Transfer on Death” beneficiary of a brokerage account
4. Transferring title of a piece of real property to the name of the trust
Contrary to many beliefs, setting up a revocable trust does not entitle the grantor to the benefits of a revocable trust. If an asset has not had its title changed so that it is owned by the trust, that asset will not avoid probate. Also, be aware that a “pour over will” does not fund the trust. Those assets left to the trust in the will, still pass through probate administration before they land in the trust.
A revocable trust can fail for a number of reasons. However, the most frequent cause of trust failure is incomplete or lack of funding of the trust. Generally, the full benefit of the revocable trust can only be realized by transferring the majority of the settler’s assets into the trust prior to death. Beware of the legal advisor that suggests not fully funding your trust. Following that advice will almost assuredly land your estate in probate.

You have worked hard throughout your professional career building your estate. Perhaps you worked two or three jobs all your life or maybe you inherited your fortune. Nevertheless, you should be very careful when proceeding to design an estate plan in case of your death. Two major considerations that need to be addressed in unison are estate taxes and providing for your children. The primary question is, “How will you disburse your assets to your children and what is the best way to save on estate taxes so your children can inherit more of your assets.”
There are various vehicles that can get you where you want to go with respect to saving estate taxes and distributing an estate to your preferred beneficiaries. Establishing an irrevocable trust for your estate is one of the more popular choices.
Assets transferred and titled to the irrevocable trust for the benefit of children are generally exempt from probate proceedings. There are a number of benefits to establishing an irrevocable trust. A trust, unlike a will, is a private document that will keep your distribution plans confidential. Your family will not have to incur unnecessary costs that arise during probate proceedings when a trust is administered. A trust can save you money on estate taxes when designed properly by an experienced Estate Planning attorney. The property that is in the trust will pass automatically to beneficiaries instead of suffering through a long probate proceeding. In essence, a properly designed trust is an effective way to protect your estate from creditors, keep your intentions private and achieve your desired results of tax planning and post-death estate disbursements.

All trust attorneys and financial advisers aggressively forewarned clients of the possibilities of major tax increases in 2013, but it seems Congress averted going over the fiscal cliff with a last minute resolution.

The Senate on New Year’s Eve and then the House of Representatives the following day passed a bill that was a significant compromise by both Democrats and Republicans. The bill has three major components that should be noted. First, it makes tax cuts for individuals earning less than $400,000 per year and couples earning less than $450,000 from the Bush administration permanent. Second, it makes income that exceeds that threshold taxed at a rate of 39.6%. Third, with respect to estate taxes, the bill will maintain the $5 million lifetime gift and estate tax exemption, but the rate on income that exceeds the exemption has increased from 35% to 40%.

However, just because legislators acted in time to help citizens avoid some financial planning issues in 2012, it doesn’t mean we should sit back and postpone taking care of some major estate planning goals early in 2013. Life changes and estate planning is an ongoing process that should not be cut off by a date on a calendar.

Here are some situations to ponder while preparing an estate throughout 2013:
1. Life events such as birth, death, marriage, divorce, remarriage, etc. are all possibilities
that require estate planning modifications.
2. Effective planning of tax-free gifts.
3. Taking advantage of the $5 million lifetime gift, estate & generation-skipping transfer tax
exemption.
4. Consider creating a trust because it can prevent the court from controlling your assets
after death.
5. Review guardianships if you have children.
6. Review beneficiary and trustee designations in wills, trusts and insurance policies.

Don’t let the bill passed by Congress early this year stop you from thinking about the future of your estate. As they say, failing to prepare is preparing to fail.

Written by Joseph Zebrowski, JD

Two years ago seems so short in retrospect. But when the US Congress finally passed what we affectionately called The Bush Tax Cuts, otherwise known more formally as TRA 2010 extending EGTRRA it seemed like two years was a sufficient time to cut down on our tax revenue. Well here we are, two years later and TRA 2010 is set to die on January 1, 2013 at one second past midnight. When you are watching the ball drop in Times Square, you may also hear the stomachs of many of our estate planning clients dropping with it!

The present gift and estate tax exclusions is a hefty $5.12 million. Next year, it will lower to what Dr. Evil thought was a solid number, but we in the modern estate planning world know is a meager $1 million. You can still take advantage of the $5.12 million exclusion this year, but not everyone wants to give away that kind of money just to stop Uncle Sam from collecting a portion of next year’s tax revenue.

Another creative idea is to fund a trust for a living spouse. You can make the spouse the trustee and allow the spouse to make distributions to him/herself. That is such a convenient legal fiction. Setting up the fictitious person trust and allowing a real person to take out money, all the time limiting the money withdrawals to some standard, like using the money for education, housing, health, or basic support. The trust money will be there to help the spouse but isn’t included in the spouses gross estate so their isn’t the same tax analysis. By the way, a spouse isn’t a limiting factor. You can set up the trust to help your children or any other person you care about. Many people refer to this set up as a “Family Trust” or a “Spouse Gift or Gifting Trust.” We are using these types of vehicles to utilize the current law in a way that maximizes the law as it stands today.

If you are really up for the tax avoidance, you can actually complete two separate trusts and shelter for $10.24 million by having each spouse complete an trust for the other spouse’s behalf. There is some complexity in setting up these trusts as we must make sure we don’t violate the “reciprocal trust doctrine.” But there are pretty easy fixes to make that happen and those “fixes” go right into the trust documents.

Again, I speak in terms of “spouses” but in truth, these trusts can be set up by anyone for any other person because the strategy does not rely on the marital deduction. Any two people in a relationship can choose to set up this tax avoidance system. Marriage is optional. So, all my gay friends can quit complaining how unfair the laws are for unmarried couples and just come in and fund your new trust. Then use the money to lobby for a future same sex marriage amendment!

Now, without getting ahead of myself on this trust position, we must also forewarn, that although not likely, in fact we will call it highly unlikely, but certainly within the possibility horizon in the future, the IRS could try and consider the trust transfers to be “gifts” creating a tax burden upon the death of the donor if the donor dies after TRA 2010 is finished. That is a remote possibility and one we are not advising our clients to worry about since the trust still holds up.

But the time it act is NOW. If you are going to move money into a trust you need to have the trust drafted and ready to be in effect and funded prior to December 31st. So, don’t’ wait. Call now to set up your Family Trust.

Nobody I know likes to be ripped off. I am sure that you would not enjoy it as well. It is unfortunate that this occurs, but is a reality that we all must face. In an effort to inoculate the public against being ripped off, each year the Internal Revenue Service provides a list of the twelve biggest tax frauds for that year. Many of these scams are simple in design and implementation, and well known methods of taking advantage of vulnerable people. These acts occur at all times of the year, but most of them come to fruition during tax season.

So as the tax deadline of April 15 quickly approaches, we want you to be aware of what is lurking out there. Most of the scams are easy to spot. Just remember a few cliches and you will stay safe.

First cliche – There are no free lunches!

Second cliche - If it sounds “too good to be true”, it is!

IRS List of Top Tax Ripoffs for 2012

1. Identity Theft
2. Phishing
3. Tax Preparer Fraud
4. Hiding Income Offshore
5. Free Money from the IRS
6. False or Inflated Income or Expenses
7. False Form 1099 Refund Claims]
8. Frivolous Arguments
9. Zero Wage Claims
10. Abusing Charitable Deductions
11. Disguised Corporate Ownership
12. Misusing Trusts

Let’s explore in more detail the top three:

Topping the list again is IDENTITY THEFT

Identity theft is the biggest problem in the electronic age. The internet and its electronic community have rushed forward, ahead of all methods of control, and create a “Wild West” atmosphere. The thing about the United States that makes us great is our respect for the rule of law. However, that is not true for the Internet. The controls, privacy protections, and rule of law are just not moving as fast as the Internet community is moving forward. False tax returns are one common way thieves take advantage of both the government and the victims. The IRS has stepped up efforts to control Identity Theft tax rip offs but because ID thieves use real social security numbers and easy to find personal information (see Face Book, Google +, and Twitter) it is a hard job. If you get a notice that more than one tax return was filed in your name, make sure you report it immediately. The IRS has create a significant system to catch ID theft on tax returns and last year they saved over $1,400,000,000 in taxpayer refunds, but the thieves are smart and the schemes are getting more and more complex. If you are suspect that your ID was stolen you need to contact the IRS ID Protection Unit at www.IRS.gov/identitytheft.

Fishing! No, wrong, sorry: Phishing!

Phishing is when ID thieves lure victims into giving valuable identity information to the ID thief. This is typically carried out using email requests or setting up websites that look and feel like a legitimate site. Because there is really no difference between a “Real Website” and a “Fraudulent Website” it is easy to mistake them. Once the ID thief has your information, you are likely to get ripped off.

Here is a KEY POINT with respect to the IRS. The IRS does not use email to collect, or even request personal information from taxpayers. They certainly do not use FaceBook, Twitter or any other social media to contact or collect information. Do not trust an email, FaceBook contact, or any electronic contact from the IRS. If you do get an email from the IRS, or even the EFTPS – which is the Electronic Federal Tax Payment System, that looks legitimate but was unsolicited, you need to report that to the IRS through their specially designed Phishing unit at phishing@irs.gov.

Preparer Fraud

Almost nobody understands the tax code. Certainly those simple to fill in return forms are a nightmare to get right. So, many of us use accountants, CPA's, or tax attorneys to help us at the end of the tax year. But the expense of paying for a professional is quite burdensome for most people, so they either do it themselves, or look for a more economical option. The “Economical” route has created a space in the market for fraudulent tax preparers. These thieves will take money out of their clients’ refund, or charge unfair fees to prepare the return. They promote their service with unrealistic promises of guaranteed, overinflated refunds. Further, these thieves then have access to your personal information and can steal from you twice!

Here are some good standards to look for when choosing a Tax Preparer:

• Every paid “tax preparer” must get a “Preparer Tax Identification Number” (PTIN) from the IRS. This number must be placed on every prepared tax return. If your tax preparer does not have a PTIN then you should not sign the return.
• Every Preparer should give you a free copy of the return. If you are not given a copy of your tax return there may be a problem. If your Preparer is promising to get you an incredible or unusual amount on your return, I would be very wary.
• Tax preparers should be working on a set fee. They should not be on a contingency or commission basis and you should never have to pay the preparer from your refund.
• Finally, never allow a preparer to convince you to put false information on a tax return. That means you can never put in false income or false credits. If you do you are subjecting yourself to double jeopardy, because the preparer will have you and the IRS will also not be happy with your false information.

As a firm that concentrates on IRS Tax Fraud including Qui Tam and Whistleblower Issues we want you to beware of tax season scams! If you believe you are the victim of a scam, you need to report it as soon as possible. The IRS Criminal Division and the Dept. of Justice take online, telephone and in person scams seriously. If you have questions or have information about a tax fraud where more than $2,000,000 is at stake, call our office to report the fraud. Remember, when reporting tax fraud you must be first in line, you must have convincing information, and you must secure your claim to get paid the “Relator’s Share”. Call our office for a free consultation: LaBovick Law Group at 561-625-8400, or email info@labovick.com.

The late reclusive heiress, Huguette M. Clark's will is causing quite a stir after recently being filed in New York City's Surrogate's Court. The will essentially cut all of Ms. Clark's relatives out of the loop and left $1 million to her financial advisers, $30 million to her nurse, and the vast majority to charity. The court battle over this enormous estate has only just begun.

Ms. Clark was the daughter of mining tycoon, and former, US Senator, William Andrews Clark. She was the only child of her father's second marriage. Ms. Clark was married once in the 1920's for a brief period and did not have any children. She lived with her mother until she died in 1963.

According to published reports, she had very limited contact with family since 2005. On May 24, she passed away at age 104, having lived in a Manhattan Hospital room for the past two decades under an assumed name. It is very sad when someone with so much passes away in this manner without the comfort of family and friends. Her advisers claim that it was Ms, Clark's wishes to remain reclusive after the 9/11 attacks.

The Manhattan District Attorney's Elder Abuse Unit has a criminal investigation in progress looking into Clark's financial affairs and her advisers, attorney Wallace Bock and accountant, Irving H. Kamsler.

There is also a undertone of elder abuse in this case. Three Clark family members tried to petition the court in New York to assign a guardian to protect Ms. Clark, back in September 2010. The relatives were allegedly blocked from visiting Ms. Clark over the years, asserting that the attorney and accountant were to blame. Unfortunately for the relatives, the judge rejected the petition and ruled against them, citing lack of evidence.

Since the will, has so many glaring issues, it seems likely that it will be contested. The beneficiary of the estate, which happens to be the attorney, is under criminal investigation by the Manhattan District Attorney.

The Huguette Clark story will yield Trusts and Estates case studies for years to come. Questions such as what is the recourse for family members when a wealthy elderly relative changes the will later in life, cuts family ties, and names a questionable administrator of the estate? What are the proper steps to secure guardianship of an elderly or disabled relative? What should they do if they suspect the administrator of the estate is misusing estate funds? and many more.

As a Florida Probate, Trusts and Estates law firm, we will this case and share developments on the Law Planet Blog. We encourage families to openly discuss their estates, trusts, and wills. If they have questions or concerns that need to be addressed regarding Florida Estate laws, they should to seek the counsel of an experienced and qualified Florida Probate, Trusts and Estates Lawyer.

The time that many wealthy individuals have been dreading is almost here: the estate tax is coming back. Due to the unique laws and specifications of the new estate tax, only a fraction of a percentage of those who pass away in 2011 will be subjected to it. Back in 1977, approximately 10.5% of people had to pay the estate tax. According to estimates, less than half of one percent of those who die in 2011 will do so. When combined with savvy accounting practices, many people will escape from the tax altogether and will be able to pass their sizable fortunes on to their heirs.

When the estate tax expired in 2009, many people assumed that it would be reinstated quickly; it wasn't. Instead, it was out of effect throughout 2010, which made many rich people very happy. It was assumed that when it came back, it would do so with a vengeance. Instead, the 2011 estate tax is a lot gentler than the 2009 one. In 2009, there was a $3.5 million exemption and a tax rate of 45%; in 2011, the exemption rises to $5 million and the rate drops to 35%.

The new estate tax is the result of intense back-and-forth sessions between Republicans, Democrats and President Obama. It was included on the recently passed tax bill that also extends unemployment benefits in the United States. It's important to keep in mind, however, that the new estate tax isn't going to be around forever; it is due to expire in two years. At that time, there is no telling what will happen. There could be another moratorium on the estate tax, or it could be increased to become less favorable to the country's wealthiest people. For now, however, people can begin planning for the tax that goes into effect in 2011.

Importance of Proper Estate Planning
Proper Estate Planning can help you control your assets and help you minimize taxes. It is wise to work with a trusted advisor and Estate Planning Lawyer to assist you in proper Estate allocations.

Click on the following link to read more from the New York Times: Estate Tax Will Return Next Year, but Few Will Pay It