What Every Personal Representative Must Know

Naming a personal representative (executor) to administer your estate is a serious decision. So is deciding if you want to serve as one. A personal representative is a fiduciary, required to always act in the best interest of beneficiaries. Moreover, he/she may be personally liable for any damages to beneficiaries. A recent case out of New York State illustrates the point. 


Marjorie Kenney died June 21, 2007 in New York State. Her will left all her assets to a not-for-profit organization established in her daughter’s memory. Kenney’s will named Michael Brockbank as executor. As her longtime attorney, trustee of the foundation, and agent under Kenney's power of attorney, Brockbank was familiar with Kenney's  situation and finances. 
 

Brockbank did not administer her estate expeditiously, however. In fact, he did not even submit an accounting until years later, when the New York Attorney General’s Charities Bureau took him to court in 2014 to get the estate closed. At that time it also came to light that the vast majority of Kenney's estate was tied up in General Electric stock, valued at about $4.6 million. For years after her death, Brockbank let the GE stock sit, untouched - despite the prudent investor rule requiring, among other things, that a fiduciary diversify investments. Brockbank cited several reasons for his inaction: First, the stock paid a 3.3% dividend. Second, he believed Kenney had a sentimental attachment to the stock. It had been in her family for years, and when he once suggested selling it, she had refused.

Notwithstanding his reasons, the court found Brockbank's failure to diversify to be a violation of his fiduciary duty. To calculate damages, the court compared the performance of GE stock with the S+P index from Kenney's date of death to 2017, when Brockbank finally sold the stock. GE's annualized return was -.53%. The S+P's was +5.9%. Failure to diversify the decedent's portfolio had cost the estate $3.5 million. Brockbank was ordered to pay it back.

He was also cited for several other violations of his executor duties. Among them was his handling of Kenney's home. Her 1500-square-foot house was in serious disrepair when she died. Brockbank estimated the property to be worth between $50,000 and $60,000, but made that determination without obtaining any professional appraisals. Concluding the property was worth fixing up, he hired his longtime personal contractor to do the work, without soliciting any other bids. Nor did he obtain from his contractor a written, itemized statement of work to be done. The contractor merely estimated renovations would cost between $100,000 and $200,000. When all was said and done, renovations came to $233,614.93. When Brockbank ultimately sold the refurbished property, the estate netted $233,972.09 - effectively nothing.

Whether selecting someone to serve as your personal representative, or deciding if you want to serve as one, you must be aware of the fiduciary standard to be upheld. Although business acumen is certainly a plus in a personal representative, integrity and common sense are paramount. Professionals can always be retained to provide any expertise a personal representative may lack, be it in investing, tax matters, real estate, etc. An experienced probate attorney is the place to begin: He/she can perform many of the personal representative's tasks, and/or guide the personal representative to appropriate resources. This will enable the estate to be administered as efficiently and quickly as possible.

Teen hearthrob David Cassidy cuts out daughter, leaves everything to son

Another legend gone too soon. The Partridge Family heartthrob and Fort Lauderdale resident David Cassidy died on November 21, 2017 as a result of liver and kidney failure. He was 67. As noted in a 2017 post, Cassidy was diagnosed in 2015 with dementia. Both his father and mother, actors Jack Cassidy and Evelyn Ward, suffered from dementia. He had ceased performing a few years earlier, no longer able to remember the lyrics to his songs.

Cassidy's will cuts out his oldest child, Katie. He and her mother never married. Cassidy did not participate in her upbringing, although they reportedly had somewhat more contact in recent years. His will bequeaths his music memorabilia to his three half brothers, Patrick, Ryan and Shaun. The rest of his estate - estimated at a surprisingly modest $150,000 considering his earlier fame – goes to his son, Beau, 26.

Cassidy had financial difficulties, along with longtime drug and alcohol problems. He had declared bankruptcy in 2015 and was forced to sell his waterfront Ft. Lauderdale home for $1.85 million. At the time of his death, he still owed about $103,000 to his lawyers. Therefore, it's doubtful that Beau will see much of anything from his father's estate. Estate creditors must be paid before anything is distributed to beneficiaries. 

A sad end for someone who delivered so much happiness to others during his career.

Roger Ailes' Florida homestead protected from lawsuit liabilities

Roger Ailes, the media mastermind behind Fox News, died May 17 after falling at his Palm Beach home. The medical examiner attributed his death to bleeding on the brain, exacerbated by the fact that Ailes suffered from hemophilia. He leaves behind his wife, Elizabeth and a son, Zachary. Ailes was 77.


Ailes launched Fox in 1996, leaving the network last year amid a widening web of sexual harassment accusations. Two lawsuits naming him personally were ongoing at the time of his death. An individual's debts and liabilities do not disappear when the person passes away. Instead, the estate substitutes for the decedent. Attorney Gloria Allred has said she expects the lawsuits against Ailes to continue, with his estate now the target of the proceedings. 


Newsweek estimates Ailes' fortune at $100 million. He earned $20 million annually while at Fox, and took a $40 million severance package upon leaving the network. He also owned several homes, including the $36 million Palm Beach residence he purchased just after leaving Fox. That was a shrewd legal move: Ailes had recently declared himself a Florida resident, qualifying his Florida residence as homestead property. Under Florida law, homestead property is beyond the reach of creditors. Thus, unless his wife Elizabeth has waived her homestead rights, the home will pass to her, safe from any legal judgments.


In addition to availing himself of Florida homestead law, Ailes' relocation here offers other tax advantages. Since Florida has no estate tax, his estate will owe none. In terms of the federal estate tax, what is owed will depend upon the nature of the estate planning Ailes did. (Federal estate tax kicks in for all taxable assets over $5,490,000.)


The evidence fueling the two pending lawsuits against Ailes is based on private conversations he allegedly had with the plaintiffs, Andrea Tantaros and Julie Roginsky. Ailes always denied their allegations. Without him here to defend himself, the defense may be weakened. On the other hand, the plaintiffs may need to buttress their case with evidence beyond those private conversations. It is possible that Ailes' estate may now be eager to settle out of court, in order to sew up his affairs as quickly as possible.

When the trustee and beneficiaries are siblings, everyone needs to know the ground rules to stay on good terms!

Consider this scenario: A parent passes away and one of the decedent's children, a beneficiary of the trust, takes over because he was named trustee of the parent's trust. His siblings are also beneficiaries. Since no one in the family is familiar with the legal and financial technicalities of trust administration, this is uncharted territory for everyone. And buried in that new territory? Land mines that can imperil the bonds between siblings, even those who have gotten along well until now.

Beneficiaries may begin to wonder just what the trustee is doing, what to expect, and of course, when they'll see their money. And because the trustee is "just" a sister or brother, beneficiaries may be inclined to inquire excessively or make outsize demands. On the other side, the trustee/beneficiary may be caught up in the nuts and bolts of handling the trust, and consider his siblings' requests as intrusive or an insinuation that he is not trustworthy. Resentment can build on both sides. In the worst-case scenario, one or more beneficiaries may even resort to a lawsuit in order to have the trustee removed. Most families never recover from this kind of rift. I have seen it happen.

Fortunately, an incendiary situation like this can usually be avoided if all family members understand, in advance, the legal rights and obligations of beneficiaries and trustees. It can help a great deal when the trustee retains an attorney experienced with trust administration. But even if the trustee feels he can handle it and goes it alone, families that want to remain on good terms are well-advised to become familiar with the fundamental ground rules of trust administration.

What are the ground rules?    

• First, the trustee is legally obligated to keep beneficiaries informed. Timely and effective communication goes a long way to neutralizing doubts and misunderstandings. Good communication begins with the trustee alerting beneficiaries that trust administration has commenced. The trustee must also provide all beneficiaries with a copy of the trust and any amendments, as well as a complete list of trust assets. I strongly recommend that all beneficiaries carefully read each of these items. 

• Beneficiaries are entitled to a full accounting of the trust's transactions on an annual basis, although a trustee may do so more often if he/she wishes. The annual accounting must show all trust transactions: expenses of the trust, and all income and growth of trust assets. Note that a federal tax return is not a substitute for the annual accounting, since the return does not provide all the information to which beneficiaries are entitled.  

• The trustee must never co-mingle trust assets with his own assets. Even if a trustee has no intent to defraud, it gives the appearance of impropriety. A trustee can be no less vigilant about this just because the decedent was a parent and co-beneficiaries are siblings. Trust assets require their own checking accounts, brokerage accounts, even their own safety deposit boxes. Keep a clean paper trail. 

• Beneficiaries should respect the fact that the trustee is legally bound to carry out the terms and provisions of the trust, which are the wishes of the deceased parent. The trustee cannot and should not make exceptions simply because his co-beneficiaries are siblings. If you are a beneficiary with financial problems asking your trustee sibling for a loan from trust funds, expect to be refused (unless the terms of the trust provide for it). Chances are you have put your trustee sibling in a very uncomfortable position. In refusing, your sibling has made the right decision. Don't resent a sibling trustee for honoring his/her legal obligations.
  

• A trustee must not sell assets to the trust or buy assets from the trust. Conflicts of interest must be avoided. For example, we had a case recently where a beneficiary complained that her sister, the trustee of their late father's estate, had sold the father's car to her own daughter for less than fair market value. (This conceivably could be done, but only if all the beneficiaries agreed to it, in advance.) 

• A trustee must never "borrow" funds from the trust for his/her own use, even with the intention of paying back the money. A trustee who is a beneficiary may not favor himself/herself over the other beneficiaries.

• Beneficiaries must realize that the trustee can, at his/her own discretion, use trust funds to hire professionals to help with administering the trust. Professionals may include bookkeepers, accountants, attorneys, etc. Depending on the provisions of the trust, the trustee may be entitled to reasonable compensation. Most family members serve gratis, but there can be exceptions.

The above are by no means all of a trustee's duties, but just an overview of the most important ones related to trustee-beneficiary communications. Again, I urge all beneficiaries, not just the trustee, to read and understand the trust instrument. Knowing everyone's rights and obligations will help preserve family harmony.  Also, while trust administration does not require the services of an attorney as probate does, it is often prudent for the trustee to use the services of a trust administration lawyer. This lets the beneficiaries know that the trustee is getting solid legal advice, and diminishes the chances of a sibling  accusing the trustee of being unfair, arbitrary, etc.

The scoop on U.S. government savings bonds

Do you have old paper U.S. savings bonds sitting around? Introduced in 1935, paper bonds were once the go-to gift for weddings, birthdays and other occasions. There are three things you need to know about those old bonds to determine what they are worth and whether you should redeem them: the type of bond, the maturity date, and whether they have matured or are still gathering interest.

There are three basic types of bonds:  

• E bonds, and EE bonds issued more than 30 years ago, have matured and are no longer paying interest.

• I Bonds: Those issued more than 30 years ago have matured.

• H/HH: All H bonds, and HH bonds issued more than 30 years ago, have matured and are no longer paying interest.

To determine if your bond is still paying interest, go to the Treasury Department's  Savings Bond Wizard.  If it is still earning interest, you can keep the bond until it matures, or, if you think you could get a better return elsewhere, cash it in and put the money into a different and presumably better investment. If you decide to cash in the bond, whether mature or not, the interest is subject to federal income tax. However, if you are going to college or graduate school, you may be able to avoid the tax consequences and use the interest from EE and I bonds to pay for your educational expenses. Read more about that here.

Not every bank will cash savings bonds, so call around first to find one that will. The Treasury Department website does not maintain a list, unfortunately.  

Today, paper bonds are no longer issued. They can be purchased electronically only. If you don't plan to redeem your paper bonds, it's a good idea to convert them to electronic format using the Smart Exchange program. 


What about bonds that are inherited from a decedent, such as Series E bonds, which grow tax-deferred and therefore no income tax has been paid on the appreciation? (Unlike H bonds, which pay interest semi-annually). Since E Bonds are income tax-deferred, not tax-exempt, income tax must ultimately be paid. And unlike stocks with capital appreciation, there is no step-up in basis, which would provide income tax-free passage of the appreciation. The income tax can be paid as income with respect to the decedent (on the the decedent's final income tax return), or may be paid by the beneficiary of the bond. 

There are a numerous other rules that apply to purchasing, passing on and redeeming bonds. I suggest you check out TreasuryDirect.gov if you have additional questions: click here. (This link takes you to the section on EE bonds, but there are also clickable links for other types of bonds.)
  

Don't be insulted, mom and dad: The kids may not want your "stuff"

Our firm's attorneys are always encouraging clients to get organized and clear the clutter from their homes. Clutter is perilous for seniors. As we age, a fall is more likely to be life-threatening or cause permanent disability. (See my prior blog post about actress Ann Davis.) Why put more things in your way?

Getting organized and getting rid of excess belongings are also a great kindness to your family. Eventually someone is going to have to go through your paperwork and your belongings. If it's not easy for you to deal with your own stuff now, why would someone else find it any easier in the future?

A recent article in the Washington Post reminded me of another reason not to over-save. It's a reason I've heard increasingly from my clients' families over the years, and even seen playing out in my own family: If you think your kids want your stuff, think again: They probably don't! 

I know, it hurts, but think about it: Baby Boomers and the Greatest Generation were raised with stuff you can feel, touch, put in a closet. They had scrapbooks, shoeboxes of photos, books, heavy furniture. They needed mugs and dishes because they made coffee and prepared dinner at home. They didn't stop at Starbucks or McDonald's in the morning or pick up dinner on the way home. 

On the other hand, the Millennials, born between 1980 and 2000, have grown up in the digital age. They have lots of stuff, too - but it's virtual stuff, stored on computers and phones, not in shoeboxes or closets. The younger generation also tends to live in smaller spaces than their parents and grandparents. Even if they wanted to inherit certain items, where in the world would they put it? The Washington Post article quotes Stephanie Kenyan, a Maryland appraiser, who sums it up nicely: “Hardly a day goes by that we don’t get calls from people who want to sell a big dining room set or bedroom suite because nobody in the family wants it. Millennials don’t want brown furniture, rocking chairs or silver-plated tea sets. Millennials don’t polish silver.”

I confess, it's a struggle to live up to my own advice. As you might imagine, my paperwork is superbly well organized. As to everything else, well, the results are mixed. During a recent remodel, my wife and I gave away boxes and boxes of things - it has been a liberating experience. But we're holding on to a lot, too, while trying to be very selective. It's a challenge!

You can read the Washington Post article here.

Inheritances, from the priceless to the peculiar, featured on TV reality show

Bug collections. Baseball cards. From the practically priceless to the plain old peculiar, people inherit all kinds of things. A new television show, Strange Inheritance, will delve into these stories, featuring families who have inherited an array of interesting objects. The show debuts January 26. Here's how the show bills itself:

"Love, loss, and a legacy left behind. "Strange Inheritance" is a ground-breaking new reality program from the Fox Business Network. From multi-million dollar treasures, to truly bizarre collections and one-of-a- kind artifacts, this series tells the stories of how families decide what to do with their newly acquired possessions. Shocking secrets are discovered, gut-wrenching decisions are made about priceless heirlooms and fascinating histories are uncovered along the way."

Should be interesting! Learn more here.

What happens to the money of a Florida resident who dies without a will?

Dying intestate - without a will - rarely creates headlines. Generally it creates only confusion and  unnecessary expense for those left behind.

Unless you're Roman Blum. The Staten Island, New York resident's death is making headlines because he left behind $40 million - and absolutely no clue as to how he wanted it distributed.

A Holocaust survivor and real estate developer, Blum was not married at the time of his death, nor did he have children. The public administrator in the Richmond Surrogate Court is searching for any living distant relatives. If none can be found, the money will pass to New York State. The case would be handled in the same fashion by Florida if Blum had been a Florida resident.

Speaking to The New York Times, Blum's accountant Mason Corn said, “I spoke to Roman many times before he passed away, and he knew what to do, how to name beneficiaries. Two weeks before he died, I had finally gotten him to sit down. He saw the end was coming. He was becoming mentally feeble. We agreed. I had to go away, and so he told me, ‘O.K., when you come back I will do it.’ But by then it was too late. We came this close, but we missed the boat.”

Many mysteries follow Blum to the grave. Did he have a will that can't be located? If so, it's as good as not having one. Did he not do one because he did not wish to face his own mortality? Or did his miraculous escape from the Nazis make him think his luck would never run out?

If a Florida resident dies without a will or other instrument directing the distribution of assets, the estate is distributed to the decedent's heirs according to Florida intestacy law.  If there are no blood relatives, as in the case of Roman Blum, the estate goes to the State of Florida. Few people would choose to leave what they've managed to accumulate to the government (one exception is my late client Maria Woods, who mindfully chose to do just that). Even if someone doesn't have relatives, there may be a particular charity that is meaningful to the person that could greatly benefit from the gift. 

Consult a Florida estate planning attorney to discuss who you want to get your heard-earned assets when you pass away.

Read more about Roman Blum here.
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Can you disinherit an adult child?.

Not all parents enjoy a warm relationship with all their children. I've met with many parents - some pained, some resigned, others angry - who have been estranged from their children for years. They may have tried reaching out and been spurned by kids who want nothing to do with them. Or the parents may find the child's behavior so egregious or heartbreaking that they have just given up.

In these situations, parents often ask if they are obligated to leave anything to the estranged child. The answer is no. Under Florida law, you may disinherit an adult child entirely, or leave him as little as you desire, unless there is a court order in a divorce requiring the parent to do so. This could be part of a child support order for minor children; or a property settlement agreement where the parties have agreed and contractually obligated themselves to make provisions for their children, whether the children are minors or adults.  

If you plan to disinherit an adult child, or leave him less than what would probably satisfy him, it is crucial to create an ironclad estate plan. If you die without a valid Florida estate plan, Florida intestacy laws govern who gets your assets. And guess what: Florida law 732.103 states that if there is no surviving spouse, your estate passes to your lineal descendants.

The law requires that you recognize "the natural objects of your bounty" which of course includes your children. Therefore, if you wish to disinherit a child, I recommend that you acknowledge his existence in your Will and/or Trust by stating in the document that "For reasons known to me, I make no provision for (child's name) and/or the child's lineal descendants." Refrain from spelling out the actual reason you are making no provision. If you state a reason, you may provide a jumping-off point for the child to mount an estate challenge. Not revealing your reasons reduces the likelihood that your disgruntled heir can successfully challenge your dispositions.

People frequently ask if, as a way of acknowledging the child, they should leave him $1. This is a bad idea, for several reasons. First, leaving the child any amount automatically gives him the legal right to obtain information about your estate, without having to file a lawsuit. Second, even that paltry $1 gift must be delivered to the child and a receipt obtained. If a receipt cannot be obtained, the $1 gift will have to be filed with the registry of the court to be held for the beneficiary. All of these administrative steps incur additional costs, create delays, and cause unnecessary headaches for your Personal Representative or Trustee. Moreover, as you might expect, costing your estate money, creating delays and annoying your Personal Representative or Trustee is exactly what many disinherited children have in mind. I have seen cases where the child refused to take delivery of his "gift," ignored certified mail, refused to sign receipts, and threw up every possible obstacle to bog down the smooth administration of the estate. He need not launch a formal lawsuit to create problems, delay the Florida probate or trust administration process, and create hassles for your beneficiaries.

Occasionally a client wants to leave an estranged child a modest amount. I usually recommend that they  exclude that child as a beneficiary under the Florida Will or Trust, and instead, name him/her as the designated beneficiary of a specific asset, such as a bank account that is payable on death by the bank to the beneficiary, keeping your estate and its Personal Representative and/or Trustee out of the process. Because the asset has a designated beneficiary, it will pass outside the Will or Trust. The Personal Representative or Trustee should know about this account, and when the time comes, should request that the attorney contact the child or the bank with the information about the account, and a copy of the parent's death certificate. The child can then claim his/her inheritance on his own, and will have no opportunity as a beneficiary of the will or trust to create problems for the Personal Representative or Trustee.

Another question I'm asked with regularity is whether a "no contest clause" is of value. A no contest clause states that a beneficiary who challenges the estate will receive nothing. Clients hope this will discourage a child from making trouble when he/she finds out they are getting nothing, or a sum that is sure to disappoint. Although that may be viable in other states, under Florida law a no-contest clause, either in a will or a trust, is unenforceable. 

As a parent, I feel the pain of clients whose relationship with an adult child has been fractured. If this is your situation, I wish you and your family a speedy and happy reconciliation. But if that is not to be, you are entitled to do whatever you want with your hard-earned assets. Contact our estate planning lawyers for a consultation to discuss your needs.

Learn more about Florida Wills and Trusts and Florida estate administration..

To read the Florida Probate statutes online (an excellent cure for insomnia!), click here. 

Supreme Court to rule on DOMA: estate planning implications

On December 7 the Supreme Court decided it would hear two cases related to same-sex marriage. 

One of those cases, U.S. v. Windsor, challenges Section 3 of the federal Defense of Marriage Act (DOMA). Passed in 1996, DOMA defines marriage as being solely between a man and a woman for the purposes of federal programs and laws, including estate and gift taxes, preventing the federal government from extending to same-sex couples who are married in states in which it is legal, the same benefits it extends to opposite-sex married couples. 

The Supreme Court's ruling will have significant estate tax implications for same-sex married couples. Consider the background of the case of U.S. vs. Windsor:

Edith Windsor and Thea Spayer were were married in Toronto, Canada in 2007.  They were New York residents. When Spayer passed away in 2009, they had been together 40 years. Spayer left her entire estate to Windsor. Under the federal tax code, opposite-sex spouses may pass an unlimited amount to one another without incurring estate tax. Windsor, however, was required to pay estate tax of $363,000. When the IRS refused her request for a refund, stating that she was not a "spouse" as defined by Section 3 of DOMA, Windsor filed suit in the U.S. District Court for the Southern District of New York, challenging the  constitutionality of Section 3. The court sided with Spayer, and that decision is now being challenged by the Bipartisan Legal Advisory Group, which is defending the case.

At the moment, the keenest legal minds cannot agree on how this case might be resolved. However it plays out, the result will have significant repercussions for same-sex married couples. We'll report back to you when we get a decision.

Could an estate mess like Michael Jackson's happen in YOUR family?

The ugly dispute raging over Michael Jackson's estate is juicy tabloid fodder. After all, the King of Pop was an enigmatic mega-celebrity, with three young children, no spouse, eight siblings, an estranged father, a beloved but elderly mother and a tangle of business relationships. And oh yes - an estate worth millions. Now, several of Jackson's siblings are battling to have the estate's executors removed, claiming his estate planning document is a forgery.

This very public drama seems far removed from the lives of the average person. Or is it? Could what is happening in the Jacksons' world happen in yours? As a Florida estate planning attorney who has counseled thousands of middle class families, I think the answer is yes. Whenever family dynamics, death and money intersect, there is the potential for a legal minefield. My job is helping my clients devise a plan that gets their families across with the least stress possible.

My clients are usually well aware of the flashpoints among their loved ones. They know which children do and don't get along, which child and grandchild is struggling financially and who is economically successful, whose marriage is stable or not, who has health problems, whose spouses are domineering, who is likely to make trouble going forward, etc. Try as you might, you cannot create a situation where all your loved ones get along perfectly all the time. But what you can do is create a perfectly sound estate plan that expresses your wishes unambiguously, crossing and dotting every legally required "t" and "i" and keep it updated. A good estate plan is the best method there is to minimize family disputes when you're gone.

In fact, questions about the validity of the Jackson will is the primary fuel that keeps that estate contest simmering. His will, signed in July 2002, is effectively a pourover will, and refers to the Michael Jackson revocable trust originally signed in 1995 and revised in March 2002.  Jackson left everything to his children and mother, and nothing to any other family member. He appointed music industry executives John Branca and John McClain to manage the estate assets for his beneficiaries. Although the will was found valid by the California probate court shortly after his death in 2009, Jackson's siblings claim that their brother's signature is a forgery; they say their brother was in New York the day he supposedly signed the document in Los Angeles. They also allege that Jackson had told them he neither liked nor trusted the men he appointed to manage the estate. Some legal observers note that the will and the family trust are rather simplistic, given Jackson's enormous wealth, and also question why the revised trust and will were signed on different dates.  

So many unanswered questions. One thing we know the answer to: Creating an unassailable, bullet-proof estate plan is the best way to keep your family from falling into this kind of legal morass. Contact our experienced Florida estate planning lawyers for assistance in creating your own plan. 

Click here to read Jackson's will.

Click here to read Jackson's trust.

Click here to see the letter Jackson's siblings sent to the executors of their brother's estate.  

Astor estate finally settles

Socialite and philanthropist Brooke Astor died at age 105 in 2007, leaving behind a $200 million estate, a Will executed in 2002, a raft of later codicils, and a pitched legal battle over who should get her fortune. On March 28, 2012, the Westchester County, NY Surrogate Court brought the saga to an end.

The Court threw out Astor's several post-2002 codicils. These were codicils that Astor signed while already mentally incompetent, at the behest of her son and agent under her Power of Attorney, Anthony Marshall, giving Marshall a bigger cut of her fortune. In 2009, at age 85, Marshall was convicted of  stealing from his elderly mother, abusing his authority as her Power of Attorney, and persuading his mother to make changes to her Will that greatly benefited him. Marshall, now 87, is still appealing the conviction.

The March 28 ruling leaves most of the estate to the New York charities and institutions Astor loved and supported during her lifetime, among them the Metropolitan Museum of Art and Carnegie Hall. The ruling leaves Marshall with $14.5 million, but with what he owes in legal fees and the cost of his still-pending criminal appeal, he walks away with "just" $3 million. I say "just" not because it isn't a lot of money - it surely is for most of us - but because it's a pittance compared to the $70 million he would have inherited if he had not tried to exploit his elderly mother for more. 

Read more about the settlement.

New Florida Durable Power of Attorney Law Effective Oct. 1, 2011

Let me start off by assuring Florida residents who have a currently valid Durable Power of Attorney signed before October 1: Your Power of Attorney will be valid even after Oct. 1. You do not need to do anything, You do not need to change your current document. Your Power of Attorney will continue to be honored after October 1.

However, new rules apply to any Florida Durable Power of Attorney signed on or after October 1.

The Durable Power of Attorney (DPOA) gives someone (an agent) the authority to manage the financial affairs of the signer of the  DPOA (the principal). Some of the new regulations that apply to a Florida Durable Power of Attorney signed on or after Oct. 1, 2011:

Certain sweeping powers granted to an agent - so-called "superpowers" - require special treatment. One example of a superpower is the ability to make gifts from the principal's funds. To grant an agent the ability to exercise a superpower, that superpower must be specifically mentioned in the DPOA, and that section of the document physically initialed by the principal.

Any Durable Power of Attorney signed on and after Oct. 1, 2011 will be immediate, not springing. In other words, the agent's authority to act will not be contingent upon the principal's incapacity. The agent will have the authority to act as soon as the instrument is signed. 

The new law officially recognizes that backup agents may be included in the Durable Power of Attorney (even though most people routinely included back-ups in their DPOA even before the change in the statute). Moreover, if  the principal desires that co-agents act only with the knowledge and consent of the others, the DPOA must specifically say so. If this provision is not included in the DPOA, it is assumed that each co-agent may act independently, without the knowledge or consent of the others.

The new law also states that for a Durable Power of Attorney signed on or after Oct. 1, a photocopy or electronic copy  - not only the original document -- will be honored by financial institutions. This added convenience for principal and agent comes with some risk, though, particularly with regard to revocation. Even if the principal destroys the original documents, an agent can present a copy to a financial institutions and exercise powers the principal no longer wants him to have. To revoke a DPOA, it's advisable for the principal to take additional steps in addition to destroying the original, such as recording the revocation with the Clerk of the Court in Public Records; sending copies of the revocation to  all financial institutions; and notifying all agents named in the revoked DPOA of the revocation.

Our Florida Elder Law and Estate Planning Lawyers have revised our Florida Durable Power of Attorney to comply with the new laws effective Oct. 1.  Do not try to adapt off-the-shelf or off-the-internet forms! The DPOA is a powerful  legal instrument and must be built around your individual goals and family circumstances. Mistakes can be costly. Consult with The Karp Law Firm.

Better file that 709

Making gifts can be a useful tool in your estate planning toolbox. I often talk with clients about how gifting can fit into probate avoidance strategies, minimize estate taxes, or even hasten eligibility for Medicaid benefits. Under current federal law, any gift you make over $13,000 in any given year to any one individual is deducted from your $5M lifetime unified gift and estate tax exemption. You must file a Form 709 for any such gift.

Well, the IRS has figured out that lots of Americans are giving away real estate or land to their children, gratis or well below market value, but not filing the required 709. The IRS, of course, is not happy. Whether failure to report the gift is an innocent mistake or something more nefarious, the feds are determined to track down  offenders. And according to a recent report in Kiplingers, the list of offenders is extensive:  The IRS has concluded that 60% to 90% of taxpayers who transfer real property to family members for little or no consideration do not file the required Form 709. The IRS is examining land transfer records to track down these gifts, and auditing taxpayers who have not complied with the 709 requirement.

If you don't report such gifts, it could be a big tax headache for your heirs after you're gone. Consult your estate planning attorney about gifting and how it fits into your estate plan. And if you have already made a gift over $13,000 to any one individual within any year and failed to declare it, contact your estate planning attorney or your accountant.

Unprecedented gifting opportunities...

People with significant assets are currently enjoying an  extraordinary opportunity to transfer more wealth to loved ones, estate tax and gift tax-free. But you know what they say: The IRS giveth and the IRS taketh away. December 31, 2012 is a taketh-away day, so don't drag your feet if you want to capitalize on this opportunity.

The estate tax, gift tax and generation-skipping tax were unified under the Tax Relief, Unemployment Compensation Reauthorization, and Job Creation Act of 2010. The law set the exemption at $5 million, with a 35% tax rate. Thus you may now give away $5 million - in life and/or death - without incurring any estate or gift taxes. If you have a spouse, together you may give away twice that amount tax-free.  If like so many people you have loved ones who ahave been hurt by this recession - the biggest economic downturn since the Depression - spreading your wealth around could do a lot of good. 

There are a variety of ways to pass your funds to others, both during your lifetime and after. Check out these wealth transfer and tax planning strategies.  Feel free to contact our lawyers to determine the best way to structure your bequests and gifts.

Note that you can still makes gifts up to $13,000 per year to as many individuals as you wish without impacting your lifetime exemption. Moreover, a gift to someone in any amount may be made if the gift goes directly to a medical or educational institution.

Remember, this unprecedented tax climate will last only so long. On January 1, 2013, unless Congress takes action, the tax code will revert back to its 2001 levels: A $1,000,000 lifetime gift tax exemption, and $1,000,000 estate tax exemption, with a top tax rate of 55%. Consider acting now, before the window of opportunity slams shut on you... and on your loved ones.

Am I responsible for my deceased parent's debts?

It is not uncommon for a decedent's creditors to contact the person's adult children. The caller will request that the child pay the parent's outstanding debts. Often the debts are medical bills. These calls are understandably unnerving for a child who is coping emotionally with the death of a parent.

So is a child responsible for his deceased parent's unpaid bills? Unless you have signed as a guarantor, the answer is generally no. It is the decedent's estate that is responsible for paying debts. If you are contacted by a creditor or collection agency regarding your late parent's debts, refer them to the personal representative or trustee for the estate, whose job it is to pay valid debts from the funds of the estate. If there are insufficient funds to pay debts, it generally goes unpaid. The children are not on the hook.

I warn the children of my deceased clients to not give callers of this nature any personal information. Many scam artists check the death notices and then contact the decedent's children, hoping to gain access to personal information which is then used fraudulently.

If you continue to be bothered by your late parent's creditors, write a letter to them requesting that they refrain from contacting you in the future. If you continue to have problems, contact your state's attorney general. To access the online complaint form of the Florida Attorney General's Office, click here.