10 Point Checklist For Florida Corporate Entities
February 10, 2012
This Alert is for those persons who have one or more corporate entities, such as a corporation, LLC (limited liability company), FLP (Family Limited Partnership), or LLLP (limited liability limited partnership). Now, before the March 15 tax deadline, would be a good time to review your corporate records if you have not already done so. Here is a 10 Point Checklist for 2012 to help you:
1. Annual Fees. Are your annual fees for each entity paid for 2012? The deadline to pay these fees is May 1 without penalty. Remember: the state will no longer waive the $400 penalty for filing late. You can check the status of your entity by going to http://sunbiz.org/corinam.html.
2. Conversion to LLC or LP. The entities that now offer the best asset protection are not corporations; rather the higher quality of asset protection is usually offered by a properly structured LLC (limited liability company) or LLLP (limited liability limited partnership. If we have not met within the past year to review your corporate entities and discuss the pros and cons of converting to an LLC or LLLP, I advise that you schedule an appointment to do so.
3. Shareholder Agreement. Your business is your personal money making machine and it usually needs to be protected by a shareholder agreement if you have partners. This agreement is essentially a plan to make sure that if your partner becomes incapacitated, dies, or simply wants out of the business, you do not end up with a partner that you do not like working with – such as your partner’s spouse, children, or total stranger. It provides an exit strategy for you and your partner. If you do not have such an agreement, or it has not been recently reviewed, it is time to do so.
4. Funding of Shareholder Agreement. In order to properly protect you and your family, the Shareholder Agreement needs to be properly funded with life insurance or some other source. In reviewing many Shareholder Agreements, we have found many to be deficient in this area: either they are underfunded or not funded at all.
5. Certificates. The best way to prove your ownership in a corporate entity is to have stock or membership certificates that accurately reflect your ownership interest. This means you should have a corporate book for each entity and a current record showing every person or entity that has an ownership interest. This record should be crystal clear. If you have multiple corporate entities, we recommend preparing a Summary of Entities that shows your ownership interest in each entity.
6. By-Laws. This is usually a real sleeper that most persons overlook in their corporate records. By-Laws are important to protect you. For example the By-Laws should have a provision authorizing indemnification of the officers and directors by the corporation if such persons are sued.
7. Annual Meeting Minutes. All corporations need to maintain annual meeting minutes. Such minutes are not required for a LLC or LP, but are often recommended if you have multiple partners or if there have been significant transactions during the year.
8. Special Meeting Minutes. Special Meeting Minutes are advisable whenever there is any change in ownership, a major purchase or acquisition, change in officers or directors, or other similar transaction.
9. Employment Agreement. If you are employed by your corporate entity, there should be an up-to-date Employment Agreement that accurately reflects your compensation and benefits.
10. Lease. If your corporate entity is used to protect rental properties, then it is usually advisable that the leases are between the entity and the tenant, and payments are made directly to the corporate entity.
This Checklist is not a substitute for a review by an attorney, but rather is intended to help you flag issues that you may need to address now. We are available to answer any questions or concerns that you may have. To schedule an appointment with Rarick, Beskin & Garcia Vega, P.A. call (305) 556-5209 or email Phil Rarick at prarick@raricklaw.com or Jay Beskin at jbeskin@rbgvlaw.com.
Disclaimer
The information in this article is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in Florida corporate law.
Posted in Asset Protection, Corporate, Real Estate, Uncategorized | 
Tags: asset protection, Corporation, Family Limited Partnership, Limited Liability Company, LLC, LLLP | 
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Florida Probate Attorney Fees
January 29, 2012
I. Executive Summary
Florida probate attorney fees depend on whether the proceeding is Summary Administration – usually the quickest and least expensive – or Formal Administration. Many factors will enter into the fees, including whether the probate is contested, is subject to estate and other taxes, involves the sale of real estate, and requires advice regarding homestead.
It is now common for the decedent to have both a will and revocable living trust. Such cases may require probate of the will and administration of the trust.
Our office provides a complimentary probate/trust review. Call us at (305) 556-5209 or email attorney Tanya Garcia Vega at tvega@raricklaw.com and we will give you a Checklist of Documents we need for the review as well as a Checklist Of Tasks for the Personal Representative (known as executor in other states). Upon review, we can give you a good faith estimate of the attorney fees provided the estate is not contested and all beneficiaries cooperate.
II. Summary Administration
Summary administration may be used for either a resident or non-resident decedent’s estate if (a) the value of the decedent’s entire estate subject to administration in this state, exclusive of exempt property, does not exceed $75,000; or (b) the decedent has been dead for more than two years, regardless of the size of the estate. F.S. 735.201(2)
Note: The “value” is the gross as opposed to the net value of the estate. The decedent’s homestead is not considered part of the gross estate. Therefore, Summary Administration is available if the only asset in the estate is the homestead regardless of value.
Attorney’s Fees for Summary Administration: Summary Administrations are usually charged at the attorney’s hourly rate. After reviewing the will (if there is one), inventory, and death certificate, we can give you an estimate of our fees.
III. Formal Administration
This administration must be used if the decedent’s estate does not qualify for summary administration: the decedent’s estate exceeds $75,000, or the decedent has been dead for less than two years, or the will requires formal administration. Strategically, if the decedent had all assets in a trust, formal administration may be advisable to clearly cut off creditor claims.
Attorney’s Fees for Florida Probate Formal Administration: Florida law sets forth a presumptive statutory fee schedule for probate attorney fees as follows:
- $100,000-$1 million: 3%
- $1 million-$3 million: 2.5%
- $3 million-$5 million: 2%
Additional fees may be charged at an hourly rate for extraordinary services, such as will contest, sale of real estate, preparation of a Federal estate tax return, etc. See F.S. 733.6171.
Personal Representative’s Fees for Formal Administration: The Personal Representative (“PR”), the person legally in charge of the estate, is also entitled to fees for his or her services. The fee rates for the PR are similar to the attorney rates. See F.S. 733.617.
IV. Conclusion
Rarick, Beskin & Garcia Vega has been entrusted by over 400 law firms and many individuals during the past 18 years to probate small to complex estates and administer trusts. After the loss of a loved one, we endeavor to help you close the estate in the least stressful way. For a complimentary consultation, call attorney Tanya Garcia Vega at (305) 556-5209.
Moving to Florida: The Tax Traps – And How To Avoid Them
October 8, 2011
A common over-sight of persons moving to Florida is failing to take their trust. They may have packed their trust and taken it with them, but the trust situs remains in their original state. This is usually a mistake.
The fact that a client has moved to Florida will not generally mean that the law governing the trust has moved here as well even if the client is the settlor, beneficiary, or trustee of the original trust. Clients moving to Florida are well advised to have all their trusts reviewed by a Florida attorney regarding such issues as:
(1) transfer of governing law or place of administration;
(2) change of trust from non-grantor to grantor status;
(3) change of trustees or their successors;
(4) transfer of insurance policies;
(5) other desired revisions.
As an example, one common problem is if the trust names a non-Florida trust company or law firm as trustee or successor trustee. Under Florida law, a law firm or trust company not licensed in Florida cannot act as trustee or personal representative of a will unless it qualifies as a trust company in Florida. Also note: A non-Florida attorney cannot act as Personal Representative or Executor unless he or she is closely blood related to the testator.
Tax Traps
Failure to make proper revisions in the trust for a person moving to Florida may result in tax exposure in their former state. Florida is one of only seven states that do not impose a fiduciary income tax. Other states impose a tax at top rates from 3% to 10.3%. See Jeffrey A. Kern and H. Allan Shore, So You Left Your Trust at Home When You Moved to Florida, The Florida Bar Journal, May, 2009. Here is a sampling of how some states determine their jurisdiction to tax a trust.
Illinois & Pennsylvania: These states tax the fiduciary income of a trust if the sole connection to the trust is a resident testator settlor of a living trust or resident testator of a testamentary trust.
Michigan: Taxes a living trust on the basis of a resident settlor unless all beneficiaries, all trustee, and all administration of the trust takes place outside the state. Michigan taxes a testamentary trust solely on the basis of a resident testator.
Massachusetts. Tax jurisdiction based on residence of trustee. Can be avoided by assuring all Trustees reside in Florida.
Connecticut. Similar to Illinois; however in the case of a living trust, with a resident settlor, the trust must have a resident beneficiary for Connecticut to impose its tax.
New York. Taxes on sole basis of the resident settlor or testator with the exception for a resident trust where all of the following are satisfied: (1) all trustees are domiciled outside of New York; (2) all trust assets are located outside of New York; (3) there is no New York source income. Note: One dollar of New York source income can trigger New York jurisdiction.
How to Avoid the Tax Traps
With the exception of Massachusetts, where the tax can be avoided simply by securing a Florida trustee, avoiding the claims of the original states can best be avoided by the settlor or testator clearly establishing Florida residence. Therefore, if the client has moved to Florida, some – not necessarily all - of following steps should be taken to establish Florida residence:
Note: Factors marked *** are highly advisable.
- File a Declaration of Domicile
- File for the Florida homestead property tax exemption***
- Execute a new Florida will and restate or amend trust documents***
Note: The new trust should have specific language concerning:
(1) Florida law to control validity and construction; (2) principal place of administration; (3) determination of situs; (4) transferring situs; and (5) substituting trustee upon change of trust situs.
- Refer to Florida residence in all estate planning documents***
- Register to vote in Florida and in fact vote***
- File federal income tax return with the IRS in Atlanta, Georgia***
- Change address on passport***
- Obtain Florida auto driver’s license (and, if feasible, relinquish license
from other state)***
- Obtain Florida license plates (and relinquish plates from other state)
- Open a Florida Bank Account***
- Affiliate with Florida organizations
- Change credit cards to Florida address
- Transfer safe deposit box contents to Florida box
- Affiliate with a church, temple or mosque in Florida
If the client is unable or does not wish to establish Florida residence, the options are limited. One option is to restrict trust investments in assets producing tax-free income or growth, or distributing accumulated income and capital gains of the trust if possible.
Moving an Irrevocable Trust to Florida. Florida law allows for decanting, modification or reformation of the irrevocable Trust. Please stay tuned: this will be the subject a future blog.
Conclusion
Rarick & Associates, P.A. has been providing estate planning services for over 18 years. We have advised many families who have moved to Florida regarding the most cost-efficient way to update their estate plan now that they have decided to make Florida their home. For more information, contact attorney Phil Rarick at prarick@raricklaw.com.
Disclaimer
The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in Florida estate planning law. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.
New Florida Durable Power of Attorney Law Makes Sweeping Changes
September 21, 2011
Introduction
The Florida legislature recently enacted the “Florida Power of Attorney Act” (“FPOA”, Fla. Stat. §§709.2101-.2402), fundamentally overhauling existing law, and making sweeping new changes. Even though the new law recognizes durable power of attorneys (“DPA’s) executed under the prior law, we are advising clients to update their DPA, if more than a year old, because the changes are so comprehensive. For Florida licensed attorneys who receive our Alert, we are making available at cost our new “Super DPA’s” drafted to take advantage of the new law.
Effective Date: The effective date of the FPOA is October 1, 2011. “Legacy” POA’s, or those signed before October 1, 2011, are not invalid, but the action of the agents or attorneys-in-fact under Legacy POA’s must be interpreted under the new law.
Key Changes
1. Powers to Attorneys-In-Fact must be explicitly stated. A popular blanket provision that allows the agent to do “anything the principal could do if present” is not valid. The practical effect of this law is that a good POA must set forth in fine detail – let’s call it excruciating detail – all powers. A good POA is likely to be 10-20 pages; the redraft of the POA for a single person that I have recently prepared is 17 pages.
2. Principal Must Sign or Initial Certain Powers. These are special powers that would significantly alter the Principal’s estate plan, such as the power to make gifts, disclaim interests, change rights of survivorship accounts, change beneficiary designations, or create or modify an inter vivos trust. Such powers must be initialed or left blank for the purpose to give some assurance that the client is aware of his or her choices.
3. Springing POA’s Are Eliminated. However a Springing POA is still valid if signed prior to October 1. Note: I have never prepared a Florida Springing POA, and I have never seen one in 15 years of practice because of inherent problems in knowing or proving if the DPA has “Sprung”.
4. Copies. A default provision in the new law gives photocopies or electronic copies of the POA the same effect as the original.
5. Revocation. An existing POA cannot be amended, but must be revoked in its entirety.
6. Co-Agents. Reversing prior law, the new law allows that if more than one agent is named, each co-agent can act independently. See §709.2111.
7. Prohibited Powers. The Agent’s duties and powers can be described as Mandatory, Default and Prohibited. Such Prohibited powers include
• Perform duties under a contract requiring personal services;
• Make an affidavit as to personal knowledge;
• Vote in a public election;
• Execute or revoke a Will or Codicil; or
• Exercise powers or authority that the Principal holds in a fiduciary capacity (e.g., as a Trustee).
These prohibitions are consistent with current Florida Law.
Note: For an excellent summary of FPOA, see Professor David Powell’s Scrivener’s Summary. To read, click FPOA Summary.
Take Away Points
1. Who Should Update Their POA? Experienced estate planning attorneys know that banks and other financial institutions dislike POA’s and will look for any excuse not to honor one. In Florida, this means that a POA needs to be up-to-date, Florida specific, and compliant with Florida law. Given the sweeping changes of the new law, my advice to clients is to update your DPA if older than a year. The new law recognized those POA’s executed prior to October 1, 2011 (so called “Legacy POA”), but soon the practical reality will be that all banks will impose numerous obstacles for POA’s that are executed prior to October 1, 2011.
2. Prepare Affidavit for Attorney-In-Fact. The financial institution can demand an Affidavit from the Agent that the Principal is not deceased and
that the DPA has not been revoked among other facts. It will likely make sense to have this Affidavit prepared at the same time as the DPA in anticipation that most institutions will likely be requesting it.
3. Super DPA vs. Limited DPA with Security Provisions. The new law enables the estate planning attorney to truly create a “Super DPA”. Of course such a DPA in the wrong hands carries significant risk. My advice to clients is that you only give any DPA to those persons in whom you have a high degree of confidence in their judgment and honesty. If you do not have this confidence, the answer is usually not preparing a limited DPA with security provisions; the answer is find a person or persons you do trust.
It may be a good idea to give the Super DPA to two persons who can act as a check and balance if there is any lack of confidence.
Conclusion: Good Time to Update or at Least Review
Since the new statute so fundamentally changes the law on DPA’s, and even though the new law recognizes durable power of attorneys (“DPA’s) executed under the prior law, we are advising clients to update their DPA if more than a year old. The “one year advice” is purely arbitrary, however, I suggest it is good practice.
Final Note: We have available for Florida licensed attorneys Super DPA’s forms to take advantage of the new law; these DPA’s come in two types: Super DPA Form #1: married with children; Super DPA Form #2: single with children. Both forms include an Affidavit for the Attorney-In-Fact. The cost for all forms is $275. To purchase, contact info@raricklaw.com or call Rarick & Associates at (305) 556-5209.
Disclaimer
The information in this article is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult a Florida attorney.
Posted in Asset Protection, Corporate, Elder Law, Real Estate, Uncategorized | Tags: dpa, durable power of attorney | No Comments »
A Life Estate the Spouse Can’t Afford: Florida Homestead Trap Cured by New Law
October 18, 2010
Who is Impacted by This Legislation, F.S. § 732.401?
The surviving spouse of a decedent when the decedent owned homestead property which was not properly devised or cannot be devised is impacted by this legislation. However, all Florida probate attorneys need to know the implications of the legislation as the new law requires an analysis of whether the surviving spouse should file an “Election of Surviving Spouse to Take a One-Half Interest of Decedent’s Interest in Homestead Property.” F.S. §732.401(2)(e). Such an election must be filed within 6 months of the decedent’s death. All Florida estate planning attorneys are impacted as such homestead election powers should be standard language in most durable powers of attorney and inter vivos trusts.
Executive Summary
A surviving spouse in Florida takes a life estate in the decedent’s homestead with a remainder to the lineal descendants then living, per stripes, for property not properly devised or which cannot be devised. Homestead properties that can not be devised are ones where the decedent is survived by minor children. Homestead properties that are improperly devised are those where the decedent is survived by a spouse and the devise is not to the surviving spouse, or where the devise is to decedent’s lineal descendants when there is a surviving spouse, absent waivers or disclaimers of surviving spouse’s homestead right. In these instances, application of the previous statute would have the surviving spouse take a life estate in the homestead property with the remainder interest to the lineal descendants in being. This may create an economic burden when the surviving spouse cannot afford the property, because the spouse, as owner of the life estate, must pay property taxes, insurance, ordinary maintenance and mortgage interest on the property. The principal on any mortgage on the property would remain the responsibility of the remaindermen. Moreover, the surviving spouse cannot use a partition action to remedy this situation.
The new legislative changes to F.S. § 732.401 allow the surviving spouse to opt out of the life estate, and instead take a 50% tenancy-in-common interest in the property. The new legislation would also allow for a partition action in the event that the surviving spouse seeks to sell their interest in the property. Furthermore, as a tenant-in-common, the surviving spouse is responsible for 50% of the mortgage principal, interest, taxes, and maintenance, along with the remaindermen. If the surviving spouse is incapacitated, F.S. 744.444(9) has been amended to authorize the spouse’s guardian or attorney-in-fact to make the election for him or her. The election must be filed within 6 months of the decedent’s death.
Discussion
The old law created a homestead trap as first discussed by attorney Jeffrey A. Baskies in a 2007 Florida Bar Journal. See The New Homestead Trap: Surviving Spouses are Trapped by Life Estates They No Longer Want or Can Afford, 81 Fla. Bar J. 69 (June, 2007). Florida has had a 3% cap on property taxes for homesteads for many years. While many have benefited from this cap, persons who have purchased within the last few years may have property where the tax base is out of line with the fair market value of the property. If this has not been an issue for homestead owners then more than likely they are feeling the squeeze in the form of insurance premium increases. Insurance costs for everyone have increased as much as several hundred per cent. Here is where the surviving spouses are trapped. A surviving spouse who wants to move out of their current property to another within the state fear moving because to do so may result in significantly increased property taxes. On the flip side, remaining in their homestead property after decedent’s death, with only a life estate, may cause other financial burdens the surviving spouse also can’t afford.
As the life tenant, the spouse has a duty to the remaindermen to pay property taxes, the interest portion of mortgage payments, insurance, and ordinary repairs. The decedent’s descendants, as the remaindermen, are responsible for paying the principal portion of the mortgage payments, and to make extraordinary repairs. This creates a difficult economic partnership, especially when the decedent’s descendants are not children of the surviving spouse. Often the surviving spouse cannot afford the obligations of the life estate. Other times, the remainder beneficiaries cannot.
The new changes to F.S. § 732.401 give the surviving spouse flexibility by providing an alternative form of ownership in the homestead property. This election would function similar to the elective share election (see F.S. § 732.201) and allow a surviving spouse to elect between a life estate interest or tenancy in common interest. If the surviving spouse elects to take a tenancy in common interest, either the spouse or the descendants of the decedent could then force a partition of the property. This partition remedy was previously not available.
Take Away Points
1. Probate attorneys must now analyze whether the surviving spouse should file election to take a tenancy in common interest within 6 months of the decedent’s death.
2. Estate planning attorneys should draft homestead election powers in most durable powers of attorney and inter vivos trusts.
3. In analyzing whether the surviving spouse should waive the life estate and elect tenancy-in-common, note that one potential downside to such election is that as tenant in common, the surviving spouse is now responsible for ½ of the mortgage principal and ½ of the interest; whereas without the waiver the surviving spouse is responsible for payment of only the interest. Depending on the age and structure of the mortgage, this could be a positive or negative for the surviving spouse.
Conclusion
The amendments to F.S. § 732.401 have widespread implications. For surviving spouse’s, it will be important to analyze whether to retain the life estate interest or to elect to take a one-half tenant-in-common interest by filing the appropriate election notice. For attorneys, it will be important to draft estate planning documents to allow for the election. For a more detailed explanation the amendments to F.S. § 732.401, see White Paper, HB 1237, Sections 7 and 16.
Posted in Probate | Tags: estate planning attorneys, florida estate planning attorneys, florida probate attorney | No Comments »
Olmstead Patch Bill Signed by Governor: Multi-Member Florida LLC’s Improved As Asset Protection Entity
June 11, 2011
Florida Counsel Trusts & Probate Alert:
Executive Summary:
Last summer in the case of Olmstead V. F.T.C the Florida Supreme Court held that a charging order is not the exclusive remedy against a single member LLC and indicated that it may not be the exclusive remedy against a multi-member LLC. 2010 WL 2518106 (Fla. June 24, 2010.) This case revealed a major flaw in Florida law for LLC’s: it showed that a Florida LLC could be attacked more easily since the creditor of a single member LLC was not limited to a charging order against a LLC member, but rather could step into the shoes of the member. The new legislation, HB 253, signed by the Governor on May 31, makes clear that a charging order is the exclusive remedy against a multi-member and single member LLC. However, for a single member LLC, the new law provides a significant exception that creditors may be able to utilize to penetrate the LLC, rendering single member LLC’s still vulnerable.
Who is Impacted by this Legislation:
Anyone with an ownership interest in a single member or multi-member Florida limited liability company (LLC).
Key Points of HB 253
1. Clarifies that the application of Olmstead does not extend to multi-member LLC’s.
2. Provides that a charging order is the “sole and exclusive remedy” by which a judgment creditor of a LLC member may satisfy a judgment from a judgment debtors interest in an LLC. Therefore, the remedy of foreclosure on a judgment debtor’s interest is not available to the creditor.
3. With respect to a single member LLC, the charging order is the “sole and exclusive remedy” available to the creditor. However, unlike the multi-member LLC, the new legislation creates an exception: if the creditor establishes that distributions under a charging order will not satisfy the judgment within a “reasonable time” then the charging order is not the exclusive remedy, and the court may order the sale of member’s interest in the LLC pursuant to a foreclosure sale.
Take Away Points
1. If you have a single member LLC, consider adding an additional member, even if only a 5-10% interest.
2. If adding an additional member is not feasible, (a) convert to a Florida limited partnership or specifically, a limited liability limited partnership (LLLP); or (b) consider an off-shore LLC, such as a Nevis LLC.
3. Multi-member Florida LLC’s should provide high-quality asset protection for the members.
4. Every LLC should have an up-to-date, robust and comprehensive Operating Agreement that limits a creditor’s rights and has numerous other provisions preventing a creditor from disrupting the business operation of the LLC.
5. Do not try to set up an LLC by yourself; consult with a Florida attorney who concentrates in asset protection or corporate law.
Conclusion:
The new Florida legislation does fix a major flaw in Florida law for multi-member LLC’s by clearly stating that a charging order is the sole remedy available to a creditor. The fix for a single member LLC is not as good, in fact, it may prove to be illusory: a creditor can still by-pass the charging order restriction by showing that the charging order will not satisfy the judgment within a reasonable time.
Disclaimer
Asset protection law is a specialized and complex area of law. The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in asset protection law. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.
For more information contact:
Phillip B. Rarick, Esq., Rarick & Associates, P.A. at (305) 556-5209 or email at prarick@raricklaw.com.
Posted in Asset Protection, Corporate, Uncategorized | Tags: asset protection, Corporation, Limited Liability Company, LLC | No Comments »
Living Trusts Do Not Protect Your Assets; So What Does?
March 3, 2012
Now may be an excellent time to attack a common misunderstanding about living revocable trusts: These trusts do not protect your assets if you are sued. If you can be sued, your revocable trust can be sued.
Some people believe that the living trust is like a “pink pill” solution: it solves everything. While the living trust is a powerful legal instrument that virtually every person should have because, among other benefits, it minimizes or prevents the intervention of a court into your personal or financial affairs, it does not solve all legal problems.
Specifically, the living revocable trust is not an asset protection entity. If you have any concern that you might be sued due to a foreclosure or some other matter, I would advise you to schedule an asset protection consultation with this firm. There are many options to consider.
At this consultation we will review your assets and identify those that are protected by state law (such as your homestead, annuity, IRA, or 401k) and assets that are exposed.
Note: Real estate that is not your homestead is a highly exposed asset since it is so easy to find. Now, with the internet, if you own real estate you might as well publish it in the Miami Herald. It can be discovered in minutes. To protect such property, you need to consider establishing an asset protection limited liability company (LLC), limited partnership, asset protection trust, or other entity. There is not one size fits all. We need to discuss which entity is the best one for your circumstances.
One Final Note: This type of planning should to be done when “the waters are quiet” – before you are sued. You may still have options after you are sued, but they may be limited.
Conclusion
For over 19 years Rarick, Beskin & Garcia Vega, P.A. has been asked by more than 400 similar law firms located in states outside of Florida to help their clients resolve legal issues concerning Florida probate, trusts, wills, asset protection, trust administration, tax controversies,guardianship or similar legal work. We welcome the opportunity to assist you.
Disclaimer
The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in Florida estate planning law. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.
Phil Rarick
Posted in Asset Protection, Corporate, Estate Planning | Tags: asset protection, living trusts | No Comments »
Lost Family Treasure Search
March 3, 2012
Spring time – and spring cleaning is approaching. Maybe there is some lost treasure underneath those sofa pillows. And maybe there is some lost treasure being held by the state of Florida that you or a family member has lost.
Now may be a good time to see if Florida has any unclaimed property for you or a family member – you may be in for a pleasant surprise! In the past we have had clients find more than $10,000 in old bank accounts that they had forgotten.
The search is easy. Click Here: Florida Treasure Hunt.
Good luck!
Phil Rarick
Rarick, Beskin & Garcia Vega, P.A.
Posted in Corporate, Elder Law, Estate Planning, Guardianship | Tags: Florida estate planning, florida probate law, florida unclaimed property | No Comments »
Watch Out for the Florida Stealth Tax: Documentary Stamps
February 18, 2012
Virtually all states are looking to increase tax revenues and Florida is no exception. One area in which the state is becoming more aggressive is the collection of documentary stamp taxes.
As outlined in Florida Statue §201.02, this stealth tax must be considered in virtually all transfers of interests between or within Florida corporate entities, and all transfers of real estate, including real property gifts between family members. Evaluating this tax can be tricky!
Here are some examples:
1. Hank transfers a Florida beach house valued at $1 million with a $750,000 mortgage balance to a LLC that is 100% owned by him. Documentary stamps are $5,250 calculated on the mortgage balance amount. (Note: the doc stamp rate is $.70 per $100 for all Florida counties except Miami-Dade where the rate is $.60 per $100. The following rates noted are for counties other than Miami-Dade.)
2. Husband and wife own a $2 million apartment complex as tenants by the entirety with a $1.5 million mortgage; they transfer this property to their LLC, owned by them as tenants by the entirety. Documentary stamps are $10,500 calculated on the mortgage balance.
Examples #1 and #2 will surprise many people because there is no change in beneficial interest. However, evaluating documentary stamps is a two-pronged test: Prong #1: Has there been a change in beneficial interest? No. Prong #2: Has there been consideration for the exchange of the property? Yes – the mortgages are the consideration for the exchange of property. The new owner, the LLC, takes the property subject to the mortgage balance. If the properties in Examples #1 and #2 had been free of mortgages the transfers would have been free of documentary stamp taxes.
Here is another common example:
3. Dad gifts son a Florida vacation home valued at $500,000 with no mortgage. Documentary stamps are $3,500 based on the fair market value of the property. In Example #3 the transfer failed Prong #1. There is a change in beneficial interest in the transfer from father to son. Documentary stamps on this property would be based on the fair market value of the property since there is no mortgage on the property.
Finally, it is important to evaluate documentary stamp taxes when transferring interests in a LLC that holds Florida real property. In the past transfers of interests in a LLC did not trigger payment of documentary stamp taxes, but recent legislation has attempted to close this loophole. It is advisable to contact a Florida attorney to assess the documentary stamp taxes on transfers of LLC interests.
In conclusion, it is important to analyze the impact of documentary stamp taxes in virtually all transfers of Florida real estate and all transfers between or within Florida entities.
We welcome your questions or comments.
Posted in Asset Protection, Corporate, Estate Planning, Real Estate, Uncategorized | Tags: Florida corporate law, florida doc stamps, florida documentary stamps | Comments Closed
12 Point Estate & Asset Protection Plan Checklist for 2012
February 12, 2012
______#1. Successor Trustee. This is the person you have appointed to step into your legal shoes if you become incapacitated – in other words, one of the most important decisions you can make. Who have you appointed to take charge if you are incapacitated? What is the order of succession of trustees? If you have any question whatsoever about your order of succession, please call the office at (305) 556-5209.
______#2. Asset Protection. Do you have any real estate that is underwater and could face possible foreclosure? Do you know which assets you own that are protected and which are exposed? Note: While a living revocable trust helps avoid probate and keep legal control in your family, it does NOT protect your assets. We have a number of other powerful legal tools to help make you an unattractive target for a lawsuit. If we have not done a recent asset protection analysis, now may be a good time to do so.
______ #3. New Durable Power of Attorney Law. Check the date of your Durable Power of Attorney in your portfolio book. If it is dated 2010 or earlier, it is highly advisable that you update this important legal tool because effective October 1, 2011 the Florida legislature overhauled the prior law. For more information see New Florida Durable Power of Attorney Law Makes Sweeping Changes.
______#4. Estate Tax Check. Do you know your estate tax exposure? Absent congressional action, the estate tax exemption will fall back to $1 million per person with a top rate at 55% on January 1, 2013. While many commentator’s do not think this will occur, this is the current law and will remain so if Congress continues to be mired in a logjam. The good news is that 2012 is an excellent year to make gifts in a tax efficient way as the lifetime exemption for gifts is now $5 million.
______ #5. Trust Funding. Funding is simply the transfer of your assets into your trust. If our firm drafted your trust, immediately after you signed your trust, we reviewed how your assets are titled and gave you detailed Funding Notes. Have you followed up on these instructions? It is a good idea to annually review the funding of your trust. It is also advisable to annually sign a new assignment of assets into your trust, that will help sweep into the trust assets acquired to date.
______#6. Transitions. Has there been a marriage, divorce, or separation of anyone named in your will or trust? Has there been a birth or adoption of a child or grandchild? If so, your estate plan may need to be amended.
_____ #7. Life Insurance. When is the last time you checked (a) the owner of your life insurance policies; and (b) the beneficiary designations for those policies? Most life insurance either should be owned by an irrevocable life insurance trust or name your trust as the primary beneficiary. Why? If the policy is owned by a life insurance trust that is properly maintained, you protect the full value of the policy by avoiding estate taxation if you have a taxable estate. If the policy does not name your trust as a beneficiary, all the instructions in your trust to safely manage that money will be useless.
______#8. Corporate Minutes. If you have an incorporated business, when is the last time that you updated your corporate minutes? It is important to keep annual minutes for income tax and asset protection purposes. Remember, the corporate veil can be pierced and your personal assets attacked if you do not follow the corporate formalities. We will review your corporate minutes at no charge; if the records need to be updated, we will advise you of the total cost to bring the record current.
______#9. $13,000 Gift Allowance. Do you wish to consider making gifts to family members to reduce your estate tax exposure? Current law allows you to make gifts of $13,000 per person per year ($26,000 if married) with little or no tax consequence to you or the recipient. For many persons, this is an effective tool to reduce your estate tax liability. However, see the warning in Point #10 for gifts to minors. Note: Gifting must be done prior to January 1, 2013.
______#10. Gifting To Minors. Beware of UGMA accounts! The full name is Uniform Gift to Minors Act. Unless your child is a future Warren Buffet, it is not advisable to give minors substantial gifts without placing those funds in a trust. UGMA accounts should be used for only small amounts – such as $1,000 or less. Otherwise, the minor can have complete access to the funds when he or she turns 21.
______#11. Health Care Surrogate. If you have a child over 18 who is now in college it is highly recommended that he/she give you legal authority to make medical decisions on their behalf. Remember, once your child turns 18, he/she is an adult, and you have no legal authority to make any legal decision on their behalf.
______#12. Estate Plan Review. Has it been more than two years since we sat down and reviewed your estate plan? If so, we recommend that you schedule a meeting as soon as convenient to assess whether it continues to meet all the needs of your family.
APPOINTMENT:
To schedule an appointment to review or update your estate plan or the funding of your trust, call Rarick, Beskin & Garcia Vega at (305) 556-5209 or email Katie at kmarti@raricklaw.com.
Posted in Asset Protection, Corporate, Estate Planning, Uncategorized | Tags: asset protection, Estate Planning, living trust, will | Comments Closed
Florida Corporate Filing Scam Alert – Again!
January 29, 2012
Last year I reminded you of a corporate scam called Compliance Services. This year I need to advise you that this company is still in business – and now there another highly questionable company to be on the alert.
First, if your client gets a letter that looks like an “official” letter from the state of Florida, or an email from a company called Compliance Services (not to be confused with the Florida corporation, Compliance Services, Inc.) asking for a fee of $125 for corporate minutes BEWARE. Minutes are not required to be posted with the Florida Secretary of State. Rather, they should be prepared and filed in your client’s corporate book. This company is trying to masquerade as a Florida government agency and scam your client out of $125. These messages should not be confused with notices from the Florida State Division of Corporations reminding each business entity to file its 2012 Annual Report. Such messages were sent out via email by the Florida Division of Corporations in early January.
Second, while not a scam, there is a web site that can easily confuse your client and trick them into paying extra money for filing their annual report. The “trick” site is sunbiz.com; the official web site for the state of Florida is www.sunbiz.org. Avoid sunbiz.com.
We welcome your comments or questions.
Sincerely,
Federal Estate Tax Rate and Exemption Chart
November 6, 2011
The scheduled rates and exemptions are as follows
| Year | Top Gift & Estate Tax Rate | Gift Tax Exemption Amount | Estate Tax Exemption Amount | GST Tax Rate | GST Exemption Amount |
| 2009 | 45% | $1 million | $3.5 million | 45% | $3.5 million |
| 2010 | 0 estate tax / 35% gift tax | $1 million | N/A | 0 | N/A |
| 2011 | 35% | $5 million | $5 million | 35% | $5 million |
| 2012 | 35% | $5 million | $5 million | 35% | $5 million |
| 2013 and beyond | 55% | $1 million | $1 million | 55% | $1 million (inflation adjusted) |