Jul 14, 2019

Is Probate Really A Problem?

Floridians are continuously warned about probate. Make sure your family never has to deal with probate court! It's expensive!  It's inconvenient! Is all this just hype? Or is probate really a problem? Should you build probate avoidance into your estate plan? 

As with most things, there is no one right answer for everyone. Determining whether to build probate avoidance into your estate plan will rest on your specific family and financial circumstances.That said, there are real downsides to probate. But before discussing them, let's step back and define probate, which is often misunderstood. Put most simply, probate is the court-supervised process by which your assets are transferred to beneficiaries and your creditors paid after you pass away. Many people think probate is only for estates that are large enough to be taxable, but that's no so. Taxation and probate are separate issues. Another myth is that having a will keeps an estate out of probate. That too is false. 

Now to those downsides:

  • Time: Some estates sail through probate in months. Others do not because of complications related to selling real estate, taxes, creditor claims, etc. We have handled probate cases that could not be closed for well over a year because of these circumstances, leaving beneficiaries waiting on their inheritances. When the subject comes up during the public seminars our firm conducts, attendees occasionally share their own experiences with long, nightmarish probates.

  • Lack of privacy: Probate is a public process. You may be uncomfortable knowing that anyone who is so inclined can examine your will and dispositions to your beneficiaries. Also, the public nature of the process makes it easier for any disgruntled heir to gather ammunition to launch a lawsuit against your estate. Lastly, the lack of privacy can provide a rich source of information for scam artists. 

  • Expense: Most probate proceedings require hiring a lawyer, so probate will incur legal fees. (This undercuts the cynics who claim lawyers promote living trusts as an alternative to wills because they are a “moneymaker.” The initial fees to set up a living trust are indeed greater than setting up a will, but the truth is, many lawyers make more money probating an estate than planning for probate avoidance with a living trust.) Your estate will also incur court filing and other administrative costs - all money that won't go to your loved ones. And while administering a trust post-mortem usually involves legal fees, too, they are usually significantly less because probate court requirements are not a factor. 

Despite these downsides, there may be good reasons to want your estate to go through probate. For example, a client may not want to do the work of switching assets into a living trust. If a client lacks complete confidence in the individual(s) who will be administering the estate, the client may actually prefer court supervision. Or the nature and extent of the client's assets may simply not justify the the initial expense of establishing a trust.  

Bottom line, probate avoidance makes good sense for most people – but it's not a hard and fast rule. There can be mitigating issues. Talk to your estate planning attorney to select the estate plan that’s right for you and your family. What is best for you and your loved ones is the only set rule to follow.

Jun 18, 2019

FREE FLORIDA MEDICAID AND ESTATE PLANNING SEMINAR - CHOOSE ONE OF THREE LOCATIONS


FREE SEMINAR!

Hear about how you or a loved one may qualify for Florida Medicaid and veterans "aid and attendance" benefits before losing everything to long-term care costs - even if your loved one is already in a nursing home.  

Find out how good estate planning can protect you, your family and your assets from the many other threats we face as we age.

Attendees are eligible to receive a free, one-hour consultation from one of our attorneys (assuming we can assist you).
No reservations necessary. Light refreshments.


PORT ST. LUCIE
Tuesday, June 25
1:30 pm to 4:00 pm 
Port St. Lucie Holiday Inn,10120 S. Federal Highway
  
BOYNTON BEACH
Wednesday, June 26
1:30 pm to 4:00 pm
Courtyard by Marriott, 1600 N. Congress Ave.

PALM BEACH GARDENS
Thursday, June 27
1:30 pm to 4:00 pm
Palm Beach Gardens Marriott, 4000 RCA Blvd.


  More information at The Karp Law Firm website, or call us at  (561) 625-1100

Jun 11, 2019

Medicare Beneficiaries, Do You Know The Difference Between A Wellness Visit And A Physical?

Stories have recently appeared in the press about Medicare beneficiaries blindsided by fees for physical exams they expected to be free of charge. The cause: patients failed to understand the difference between a physical exam and Medicare’s Free Annual Wellness Visit. Here’s what you need to know to avoid similar surprises: 

Twelve months or more after enrolling in Plan B, you are entitled to a Free Annual Wellness Visit. There is no co-pay and no deductible. However, this is NOT a traditional head-to-toe physical exam. Basically, the Annual Wellness Visit is a screening. Its purpose is to create a baseline of your health status, document your health history, catch serious health issues early on, and formulate a healthy lifestyle plan for you going forward. 

What happens during your visit will depend on your age and other factors, but generally includes:
  • Screening for blood pressure, height and weight
  • Eyesight and hearing check
  • Listening to heart and lungs
  • Cognitive check
  • Discussion of health concerns, lifestyle, and appropriate schedule for normal additional screenings, vaccinations, etc.
  • Reviewing family health history
  • Documenting current prescriptions
Tip: When you call your doctor's office to make an appointment for your wellness visit, be sure to refer to it as that: the annual wellness visit. Do not use the term "physical" unless you want a head-to-toe exam and are prepared to pay for it. Also, if discussions with your doctor during the wellness visit lead to his/her recommending additional tests or appointments, or you request them, there will be additional charges.

For more information on this topic, check out this March 2019 Kaiser Health News articleHere’s to your good health!

Jun 6, 2019

Social Media Becomes Evidence in Battle Over French Rocker's Estate


The family feud over the estate of rocker Johnny Hallyday - at least, the first battle in what figures to be a continuing war - has come to a close. And in a sign of the times, Hallyday's social media account has played a pivotal role. The situation makes clear an emerging reality: what we put online can catch up with us – even when we are gone!

Many Americans aren't familiar with Hallyday, although he's been a superstar in France for decades. Intrigued with American rock 'n roll from a young age, he rose to fame as the "French Elvis," selling over 100 million records during his career.

In December 2017 the 74-year-old Hallyday died of lung cancer. At his death he had lived in Los Angeles for approximately ten years with his fourth wife, Laeticia, and their two adopted daughters, Jade and Joy. As an expatriate, Hallyday had a long history of locking horns with French taxing authorities, stating in one interview that he might eventually consider returning to France – but only if it changed its tax laws.

The singer obtained his green card in 2014. That same year, he had a California lawyer draft his will. The will left everything to his widow Laeticia. It cut out his biological adult children from four prior marriages, none of whom reside in the U.S. You can do this in America, of course, where there is no legal obligation to leave anything to adult children. Not so in France. There, surviving children are automatically entitled to a piece of their parent's estate. 

Obviously, Hallyday's adult children were none too pleased that under American law, they were being disinherited. Their father's estate has been estimated at about $112 million, and consists of rights to his extensive music catalog, several homes, many luxury cars, and even the proceeds from a posthumously issued album that has already sold over a million copies.

Hallyday was mourned in France with all the pomp and circumstance befitting a national hero, including a funeral procession along the Champs-Elysees. Shortly thereafter, his adult children took their grievances to a French court. Laura Smet, 35, and David Hallyday, 52, argued that their father was not a bona fide resident of the U.S. They claimed his will was invalid and French law should prevail - which would make them automatic beneficiaries of his estate. Although wealthy in their own right, the adult children seem motivated beyond money. Smet had sorrowfully noted that under the U.S. will, she would not even inherit the signed sleeve of the album “Laura” that her father had recorded to celebrate her birth.

Hallyday’s and Laeticia's lawyers countered that because Hallyday had lived in the U.S. for over a decade and enrolled his children in school here, he was effectively a U.S. resident, and that U.S. law should prevail.

However, the lawyers for the French adult children had an ace up their sleeve – an online ace. With access to photos and dates from the Hallydays' public Instagram accounts, they were able to demonstrate to the court that from 2012 to 2017, Hallyday had spent more time on French soil than on American soil. This included time spent on St. Bart’s, a French island in the Caribbean, as well as the eight months he had been in France for medical treatment just prior to his death.

On May 28 a court in Nanterre handed the adult siblings a victory, ruling that their father's domicile was France, and French law prevailed. The court stated: "Up to the end he lived a bohemian and nomadic life, but above all a very French life that led him to live... usually in France." If the ruling stands, there are now five beneficiaries: the two adult children; Laeticia; and the couple’s two young children. Of course France will also benefit, as the ruling allows it to get its hands on the inheritance taxes the estate generates. Hallyday’s lawyers intend to appeal, citing evidence that he and his wife were already planning to apply for U.S. citizenship when he died. 

Seul le temps dira: only time will tell.

The Hallyday case has implications for how your social media may figure in your estate planning, will contests, and conceivably, a number of other legal issues. For example, if a disgruntled heir argues that you lacked capacity when you signed a will cutting him out, what will your Facebook posts say? Will you have posted any comments, even in jest, referring to your poor memory or "losing it"? Or suppose you relocate from New York and claim that Florida is your domicile, relieving you of paying New York State estate taxes. Will your Instagram account back you up, or betray you as they did Hallyday?

Be careful what you post. This is a whole new world and this is uncharted territory!

May 26, 2019

Turmoil in Aretha Franklin Estate: She Did Have A Will, After All - Three of Them


aretha franklin
Our prior post of August 2018 is titled, Aretha Franklin, Queen of Soul, Dies Intestate. Now it turns out that the "intestate" part may not be true. Three handwritten wills were found in Franklin's suburban Detroit home recently. This development may well complicate matters, not clarify them.

The wills were discovered by the estate executor, Sabina Owens. Two were found in a locked cabinet. One dated March 2010 is 11 pages long. In it Franklin mentions the mass on her pancreas (she ultimately died of pancreatic cancer). The second will is dated June 2010. The third will, found scribbled in a spiral notebook and hidden under a couch cushion in the living room, is the most recent, dated March 2014. It is four pages long and particularly difficult to decipher, with multiple crossouts, additions, and notes in the margins. The provisions in the three wills have some similarities as well as differences.


Michigan recognizes handwritten (holographic) wills. The three documents have been turned over to the court, which will determine if any of the wills is valid and can be admitted to probate. According to Franklin's longtime entertainment attorney, David Wilson, all the wills appear to be in his client's handwriting. But that alone is not sufficient to prove a will's authenticity and validity; it must meet additional legal requirements. A hearing on the matter is set for June 12.


If none of the wills is deemed valid, Franklin’s estate will remain as it was - intestate - and her assets will be divided equally among her four sons. Some sons will be winners and other losers, depending on how this all plays out. The situation is likely to fuel the family division that is simmering. Six days after discovering the wills, Owens provided copies to Franklin’s children. Already, two sons have challenged their validity. One son, Kecalf, has said that because the 2014 will names him executor, he should replace Owens. He also objects to the sale of a piece of land that that document leaves to him.

 

Although all the wills specify that the sons are to share equally in their mother's music royalties and the proceeds from her memorabilia, she gives special attention to Clarence, her eldest son with special needs. She prohibits his father, who did not participate in his upbringing, from handling money or property for him. She also leaves one of her residences to each of her three other sons: her main residence in Bloomfield Hills goes to Kecalf; another home in that town to Edward; and her Detroit home to Teddy. 


At the time of her passing, Franklin’s estate was estimated to be about $80 million, but that is just a rough figure. In December 2018 the IRS filed a claim against the estate for $6 million in back taxes, and over $1 million in penalties. The agency continues to audit past years' returns. Also, Franklin had a stake in a yet-to-be-released film about her life; advance ticket sales have already generated over $3 million.

 
You may wonder why Franklin, with more than enough money to get expert legal help, would handle her final affairs in this manner. It is possible the answer can be found in her well-known passion for guarding her privacy. Ironically, her lack of sound planning has led to the very opposite outcome she would have wanted, with her finances and family circumstances open to public scrutiny.


Attorney David Wilson has stated that he often advised his client to create a will, and also a trust in order to keep her financial and family situation private. He says he had no idea she was writing  do-it-yourself, multiple wills. “If she had mentioned that to me,” he notes, “I would have said, ‘Aretha, what you really need to do is go see a lawyer and make sure it’s done in accordance with the law." Sounds like good advice for everyone.

May 6, 2019

Rocker Tom Petty's Estate Plan Is Free-Fallin'

It is always wise to seek experienced legal guidance when you are setting up your estate plan. Wording you may think is obvious may not be as clear to others as it is to you. Any ambiguity in your plan can create chaos for family members. For the family of late musician/songwriter Tom Petty, an ambiguous phrase has created a legal quagmire that can be described by the title of one of his hits: it's Free-Fallin'.


A Rock n' Roll Hall of Fame inductee, Petty died from an accidental drug overdose in 2017. He left behind a wife, Dana, and two daughters from his prior marriage, Adria and Kim. He also left behind a music catalog worth millions. In his trust, Petty instructs Dana to create a limited liability corporation to hold his musical properties. However, the wording is unclear as to how and to what extent he wished his wife and daughters to manage it. The trust states:  


"With respect to the creation of the Artistic Property Entity, the Trustee is directed to create the governing documents of the Artistic Property Entity such that those of the Spouse, ADRIA and KIM who are living at the time of creation of the Artistic Property Entity shall be entitled to participate equally in the management of the Artistic Property Entity, even though their respective economic interests in the Artistic Property Entity are not equal."


At issue is the phrase, "participate equally in the management..." Precisely what does it mean? Petty's widow and children are interpreting it differently, to their own respective advantage. For Adria and Kim, equal participation means they get 2 of the 3 LLC's management votes, thus giving them control over the LLC and the ability to outvote their stepmother. In a lawsuit they allege that their stepmother is resisting their rightful attempts to manage the posthumous release of their father's work. According to an article in Billboard, the sisters want to be actively involved in "marketing, promotional and artistic considerations." Their lawsuit claims that their stepmother has failed to transfer their father's musical property into the LLC, and demands that she do so immediately. 


Petty's widow does not see it that way. She has filed her own lawsuit. She alleges that a more accurate reading of the trust suggests that her late husband wanted her and his daughters to make decisions unanimously. Obviously that interpretation is favorable to Dana, because it would prevent her decisions from being overruled by her stepdaughters. In her lawsuit she states that her stepdaughters, particularly Kim, have "demonstrated their resentment over their father's love of Petitioner and her role in his life." Dana has requested that a manager be appointed to oversee "significant decisions" on the estate, and notes that Adria's erratic behavior, which includes sending threatening emails to the members of Petty's band and blocking the release of recordings, has jeopardized her business dealings.


A hearing has been set for both motions on June 11. The ruling could mark the end of this dispute, but that is unlikely. The situation is a volatile mix involving a vitally important but ambiguous phrase in Petty's estate plan; a stepmother; children from a prior marriage; and lots of money. Chances are the parties won't be playing in harmony anytime soon.

Apr 28, 2019

Sign Up For and Check Your Social Security Digital Account

If you have not signed up for an online Social Security account, you really should. If you have signed up but are not checking the information at least annually, you really should do that, too. 

As a cost-cutting measure, in recent years the Social Security Administration has reduced the number of paper statements it mails. It has encouraged people to create online accounts. Today, 42 million have a digital Social Security account.

However, creating an account and actually using it are different. A recent study by the agency revealed that less than half of those with digital accounts logged on to review their accounts in the preceding 12 months. If you are in that group, you are missing an opportunity to check the accuracy of your statements. You're also missing out on information about future benefits that can help you plot your financial future. 

Even if you are still receiving paper statements, it’s a good idea to establish an online Social Security account. Scammers are a nonstop threat, using every trick in the book to pry personal information from individuals and from businesses. Remember the Equifax breach? It exposed the personal data of 143 million people. Social Security numbers are the grand prize for fraudsters. If someone gains access to your number, he/she could then register for your account online - before you get around to it - and direct payments for direct deposits to their own financial institutions. By claiming your own account, you put an extra layer of protection between yourself and identity thieves.

Another advantage of setting up an online account is that it allows you to conveniently accomplish a number of common tasks, such as requesting a replacement card, changing your bank for direct deposits, etc. This is more convenient than a  trip to the Social Security office or hours spent on hold.

To set up your personal Social Security digital account, use this link: https://www.ssa.gov/myaccount/

Apr 25, 2019

Free Seminar: Medicaid & VA Benefits For Nursing Home Costs, Florida Estate Planning


FREE SEMINAR

Tuesday, April 30
1:30 pm to 4:00 pm
Palm Beach Gardens
Marriott Hotel, 4000 RCA Blvd.

Wednesday, May 1
1:30 pm to 4:00 pm
Boynton Beach
Courtyard by Marriott, 1600 N. Congress Ave.

***
  •  Hear about how you or a loved one may qualify for Florida Medicaid and veterans "aid and attendance" benefits before losing everything to long-term care costs - even if your loved one is already in a nursing home. 
  • Find out how good estate planning can protect you, your family and your assets from the many other threats we face as we age.

***

No reservations are necessary
 
Attendees are eligible to receive a free, one-hour consultation from one of our attorneys (assuming we can assist you)

Light refreshments

No obligation

  More information at The Karp Law Firm website, or call us at  (561) 625-1100

Apr 16, 2019

Boomers More Prepared For Dying Than Living

The values of the Baby Boom generation seem to have have changed over the years. Once it was all about flower power. Now the focus includes financial power - specifically, leaving a financial legacy. 


A March 25, 2019  Financial Advisor Magazine article entitled "Baby Boomers More Prepared For Dying Than Living" reports on a recent survey from the Bankers Life Center for a Secure Retirement. The survey found that Boomers are eager to leave a financial legacy for their loved ones. But at the same time, they are giving short shrift to the challenges of bankrolling their own long-term care. In other words, they are focused on death planning, less so on life planning. 


It's a puzzling finding, because the majority of respondents admit they know someone who needs long term care, and 45% have been caregivers themselves! Moreover, the data shows Boomers face a significant chance of needing long-term care: The U.S. Department of Health and Human Services estimates that there is a 70% chance that someone who is 65 years of age today will need some type of long-term care in the future. Since long-term care costs can easily impoverish a middle class family, neglecting life planning jeopardizes the chances of anything being left over for the children.


Of course, in today's America, there are constraints on what a middle class person can do to prepare for long-term care costs. The "Medicare for All" mantra with long-term care included, remains just a dream at this point. Notwithstanding, there are steps Baby Boomers can and should take to protect their nest eggs:


First, there is long-term care insurance. In the past decades there have been many changes in the industry, giving consumers more flexible insurance opportunities. For more information on these policies, click here.


There is also Medicaid. Like many people, Boomers tend to assume that they need to be impoverished to get long-term care benefits in Florida. But with professional legal guidance, that's not necessarily the case. And the sooner you start planning, the better.


Baby Boomers are well-advised to get a grip on not only what they want to leave behind, but how they are going to cope during their lifetimes if incapacity strikes. To get the ball rolling, meet with our Florida elder law our attorneys to  discuss your options. Don't procrastinate! 


Apr 13, 2019

How To Divide Your Assets Among Children: What's Really "Fair"?

“That’s not fair!” What parent of youngsters hasn't heard that countless times? It's a complaint that doesn't necessarily vanish when children are adults. In fact, depending on how they feel they've been treated in your estate plan, your kids may be complaining about unfairness even after you are gone, to the detriment of their relationship with one another.

 

Is equal always fair? How can you avoid playing favorites in your estate plan? The most obvious approach is to split everything equally. But suppose your children's circumstances are vastly different? In those cases, treating your children "equally" in your estate plan may not necessarily be the same as treating them "fairly." Here are just a few situations when dividing everything equally may not be the best solution:
  • Scenario 1: One child is far more successful financially. Example: Child A is making a killing on Wall Street as an investment banker. Child B, just as hardworking, has made teaching high school English his life’s work. If you split your assets “equally,” B may feel slighted, and miss out on money he could legitimately put to good use. If you give the financier less, he may feel rejected and punished for being successful, despite the fact that he does not need the money.
  • Scenario 2: Child A is fiscally responsible. Child B makes bad financial decisions and seems always to be in dire financial straits. B may be immature, or may have a drug of mental health issue. You know that if A gets his inheritance as a lump sum up front, he'll manage it wisely. But you hesitate to give B his inheritance all at once, and would prefer to put it in trust so that the trustee has oversight over how it is used. Will B understand why he is being treated differently? Maybe. Will he resent his sibling who is getting his inheritance up front? Quite possibly.
  • Scenario 3: Child A is healthy, but Child B has a disability or lifelong medical issues. Depending on B’s circumstances, you may want to leave him more than you leave A. If you expect B will need federal benefits in the future, you may want to put B’s funds in a special needs trust. Despite the unequal treatment, the need for this arrangement is likely to be understood by both children. But that does not eliminate the issue of who gets to manage child B's trust. Will your healthy child want to be his brother's or sister's keeper, or consider it a burden?
  • Scenario 4: Child A has worked since the teenage years, put himself through school and never asked you for a penny. On the other hand, you gave Child B $200,000 for college tuition and room and board, and you recently gave him $50,000 as a down payment for a home. Splitting your assets equally at death between the two of them might be great for B, but is it really "fair"? Instead of equal distributions, you may want to consider the gifts you’ve made to B over the years as a kind of early inheritance, and deduct that amount from what you are leaving B when you pass away. 
  • Scenario 5: Over the years Child A has been caring for you, taking you to your doctors' appointments, checking up on you by phone and in person, helping you with your paperwork and with other everyday matters. Child B is no busier than A and lives just as close, but rarely lifts a finger to help. You don't know if A resents B, but you wouldn't be surprised if he does. Is an equal division of your assets between the two really fair, you wonder? How will this play out between the two if you reward A for his efforts by giving him more? 

What are your alternatives? When they were little, all you had to do was split the cookie equally, and problem solved. It's not that easy now. 


How to distribute assets to children with different needs and histories while trying to be even-handed can be a vexing problem. Some parents, unable to find a “perfect” solution, will continuously delay making a plan or never create one, letting the State of Florida's intestacy laws determine who gets what. That will result in each child getting an equal share - but doesn't solve the potential problem of one child feeling resentful in relation to siblings.


Our job as your Florida estate planning lawyers is to help you formulate a reasonable plan that you can live with (and die in peace with), and that your kids are likely to find "fair." Obviously, there is no one solution suitable for every family. We will sit down with you to explore in detail your finances, family dynamics, family history, and your goals. 

 
If you decide not to split everything equally, it is usually a good idea to tell your children about the decision in advance and explain the reasoning behind your decision, so they are not blindsided later on. You should also make brief mention of your reasons in your estate plan. This can go a long way towards fostering a good relationship among your children after your passing - and could potentially even prevent a lawsuit against your estate from an angry child who feels "That's not fair!"
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