Estate Planning is important – even if you’re not super wealthy!

coupleA year ago, Congress dramatically raised the federal estate tax exemption, which for 2013 was $5.25 million (or $10.5 million for a married couple). And that caused some people to mistakenly believe that they no longer need to think about estate planning if their assets are less than $5 or $10 million. However, nothing could be further from the truth. And people who don’t keep their estate plan up-to-date are making a big mistake that could still be very costly to them and their families.

There are a multitude of reasons for this, but here are just a few:

Protecting your heirs.

Many of the techniques that people have used in the past to avoid estate taxes – such as trusts – have lots of other purposes in addition to saving taxes.

For instance, leaving assets to someone in a trust can protect them over the long term if they’re not good at managing money. Trusts can also shield children from losses in the event they get divorced, face a lawsuit, or start their own business. And if you have children from a former marriage, a trust can be a way to care for your new spouse if something happens to you, while still protecting your children.

Trusts can also protect children and grandchildren if they should ever have a problem with gambling or other addictions, or if they have special needs. All of these benefits still exist regardless of the level of the federal estate tax exemption.

Other kinds of taxes have gone up.

While the federal estate tax is less of a problem, other taxes – such as income and capital gains taxes – have increased recently. There’s also a new 3.8% surtax on investment income.

So you should know that techniques such as trusts, LLCs, and family limited partnerships, which in the past were used primarily to avoid estate taxes, can also be used to reduce these kinds of taxes, by giving you the flexibility to funnel income and capital gains to family members in the lowest tax brackets. Techniques such as charitable remainder trusts can also be used to shift income taxes from current years until post-retirement, lower-bracket years. And with capital gains taxes going up, it’s increasingly important to use estate planning to adjust your heirs’ basis in the property they inherit.

Most of the time, if a person dies owning assets that have appreciated in value, his or her heirs receive the assets with a new, “stepped-up” basis as of the date of death. Suppose Martha buys some stock for $50,000, and many years later it’s worth $90,000. If Martha sells it, she’ll have to pay tax on a $40,000 capital gain. But if she dies and leaves the stock to Lou, then Lou will have a “stepped-up” basis of $90,000, and if he sells it right away, he won’t owe any tax. While capital gains basis is typically stepped up at death, it isn’t always, so it’s important to engage in estate planning to make sure your heirs aren’t stuck with a large and unnecessary tax bill.

Health care costs.

If you’re not super-wealthy, health care costs in later years can be a bigger destroyer of wealth than the estate tax ever was. It’s critical to consider health care in retirement as part of a complete estate plan.

State estate taxes.

While the federal estate tax is now a problem only for the very wealthy, many states impose their own estate taxes, and these often kick in at much lower thresholds. New Jersey, for instance, imposes a tax on all estates with assets of more than $675,000. Six other states have estate tax thresholds of $1 million or less. It’s still important to plan around avoiding these taxes.

In addition, some states impose inheritance taxes. Inheritance taxes are different from estate taxes, because estate taxes are paid by a dying persons estate, while inheritance taxes are paid by the dying person’s heirs. Inheritance taxes don’t depend on where the heir lives; they’re based on where the dying person lived or owned property. So if you live in Florida but you inherit assets from a relative in Arizona who owned property in Iowa, you might owe Iowa inheritance tax.

In some states, the inheritance tax rate varies depending on the heir’s relationship to the dying person – so a child might pay one rate, a cousin might pay another, and a lifelong friend might pay yet another.

It’s important to plan for this, too, if for no other reason than to compensate your heirs if you’re going to saddle them with unexpected taxes after you die.

Family issues.

Estate planning has always been about more than just taxes, or even just financial assets. It’s about family. What will happen to your family home, or a beloved vacation home? What will happen to a family business? If you have minor children, how will they be taken care of? Who will receive possessions that have sentimental value? Will your children feel that they’ve been treated fairly, and be encouraged to get along and use their legacy in accordance with your values? All these issues can (and should) be dealt with in a complete estate plan.

Why Choose Me?

At the Law Firm of Dana Bowie, we are committed to providing the highest level of quality legal representation possible. My firm’s commitment and my personal commitment to servicing my clients is backed by over 35 years experience representing individuals and families in the State of Florida.

After passing the Florida Bar in 1975, I worked in the legal department of a large insurance company. As time went on, I saw the company and its people change. Corporate decisions were made solely out of concern for increasing profits at the expense of the people they were meant to protect. Staffing was decreased and workloads increased resulting in an inability to properly and
prudently make sound legal decisions. Continue reading Why Choose Me?

About Us

The Law offices of Dana Bowie, P.O. handles divorce and property cases, child custody and support, visitation, wills and estate planning, elder law, and other family law legal matters.

Our philosophy of offering quality legal services to families and the elderly at reasonable cost to our clients has made us the law firm of choice in the community we serve.

The Law Offices of Dana Bowie, P.A., demonstrates the strongest commitment to the pursuit of professional excellence and the highest ethical standards.

At the Law Offices of Dana Bowie, P.A., we are here when you need us most!

 

Probate Q&A

Close up Questions & Answers too many question marks

Probate is a court-supervised process for identifying and gathering the decedent’s assets, paying taxes, claims and expenses and distributing assets to beneficiaries. Generally, probate assets are those assets in the decedent’s sole name at death or otherwise owned solely by the decedent and which contain no provision for automatic succession of ownership at death. Continue reading Probate Q&A

Wills

We Specialize in Wills

Florida residents must sign wills at the end of the document in the presence of at least two witnesses who are both present at the same time and place with the testator (person making the Will), and also signed in the presence of a notary public so that the Will is self-proving in case of death. Self-proving Wills can be admitted to probate after the death of the testator without having the witnesses come to the courthouse. Continue reading Wills

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Estate Planning | Asset Protection

Secure Money  Price Lock Made From Photographed MoneyWhen you lose a loved one, you want to know that his or her estate will be handled respectfully and in a manner in which your family member requested. Estate Planning and Asset Protection involves the careful use of Wills, Trusts, Durable Powers of Attorney, Health Care Surrogate Designations, and Living Wills.

Certain aspects of Estate Planning protect you while living, while other aspects protect you, as well as your family members, upon dying. Proper Estate Planning can accomplish a number of things, such as providing for the care of minor children in the event of an unforeseen disability or death, protect and transfer assets and valuables to loved ones upon dying, and avoid or mitigate estate taxes.

Having a will, along with other essential documents, can lend a great deal of peace of mind to individuals. Everyone’s situation is different, which is something we understand at the Law Offices of Dana Bowie, P.A. Therefore, we will tailor an Estate Plan that’s just right for you.

Probate Law is the legal process in which the assets of a deceased person are passed to his or her heirs. Sometimes, probate is necessary even if there is a Will. Often, assets needing probate may include bank accounts, real estate, IRA’s, as well as other retirement plans, and life insurance policies. Some types of Estate Planning may avoid probate.

We so often hear that hard work is the path to achieving the American dream. But retaining as much of our earnings as possible for our family can be a challenge. An estate planning attorney can help you to ensure that your assets are protected from creditors.

Name Change

Hello, My Name IsGenerally it is possible to effect a name change through legal proceedings or, in some cases, without any legal proceedings at all. The following paragraphs set out the parameters of changing names.

Change of Name Without Any Legal Proceedings:

  1. At common law it is possible to assume another name as long as there is no fraudulent reason for doing so. Florida law does not prohibit someone from using a different name than the one they were given at birth. There are restrictions on the use of fictitious names, however.
  2. A woman’s name is changed by marriage and the marriage itself will serve to change her name on government records. There is no requirement for a court proceeding. A woman cannot be compelled to adopt her husband’s surname but if she does, she can keep that name for as long as she wishes, even after the marriage has ended by death, dissolution or annulment. She cannot be compelled to adopt her maiden name after the marriage ends. Also, she can change her name back to her maiden name after the marriage if she wants.
  3. The name of a child born out of wedlock may be changed if the mother and father later marry and they both request a change and there is no father’s name on the birth certificate. The name of a child can also be changed if both mother and father sign an affidavit acknowledging their paternity. Or, the father can sign an affidavit voluntarily acknowledging his paternity. This will also result in a change of name for the child. If the father’s name is listed on the birth certificate, however, both mother and father must resort to legal proceedings to change the name of the child and to change the name on the birth certificate.

Change of name as a result of legal proceedings:

Name changes can occur as a result of legal proceedings such as adoption, dissolution of marriage, annulment or establishment of paternity. In these cases, the name change is a part of the legal proceeding and no separate proceeding is required.

Change of name through formal proceedings:

F.S. 68.07 sets out the procedure for a formal change of name. Generally this can be done if there is no illegal or fraudulent motive. A petition is filed along with a set of fingerprints of the person requesting the name change. The petition must allege the reason for the request and show the court that there is no fraudulent motive for the name change. The petition must contain detailed information about the petitioner’s credit history and criminal records, if any.

Note: This article discusses name changes through legal proceedings in a family law context and does not cover corporate names, fictitious names or professional names. These are all governed by separate statutes.

Paternity

Portrait of Happy Father and Son In ParkPresumption Of Legitimacy

  1. F.S. 382.013 provides that the birth certificate serves as a legal document indicating an initial determination of paternity for all children born during a marriage.
  2. F.S. 741.10 provides for a voluntary acknowledgment of paternity. Paternity may also be voluntarily acknowledged by signing an affidavit along with the birth certificate. This creates a rebuttable presumption of paternity.

Judicial And Administrative Proceedings

F.S. 742. 011 provides that any woman who is pregnant or has a child, any man who has reason to believe that he is the father of a child, or any child may bring proceedings in the circuit court to determine the paternity of the child when paternity has not been established by law or otherwise.

Note that scientific testing to determine paternity can be ordered by a court on its own motion or can be compelled by one of the parties. Blood tests are not automatically admissible. See F.S. 742.12 regarding blood tests.

The Best Interests Of The Child Is Controlling

Case law interpreting the above statutes provides that once children are born legitimate, they have the right to maintain that status. In cases where one party trying to question the legitimacy of the child it must be proven by clear and convincing evidence that it is in the best interests of the child to overcome the presumption of legitimacy.

Custody And Support

The issues of custody and support of an illegitimate child are controlled by the general Florida Statutes regarding shared parental responsibility ( F.S. 61.13) and child support ( F.S. 61.30) The courts generally have the power to order child support and to establish visitation.

F.S. 742.031 provides that if a paternity order is entered without a specific ruling on custody, but the order contains an award of child support or visitation, it is presumed to award primary residential care to the parent receiving support or the parent that was not granted visitation without prejudice.

Dis-Establishment Of Paternity

Florida statute 742.18 provides a detailed procedure by which a male may disestablish paternity or terminate child support. A petition must be filed stating that there is newly discovered evidence since the initial determination of paternity and the petitioner must provide scientific testing results that are less than 90 days old or request in the petition that testing be done and the petitioner must also file an affidavit stating that he is current in his child support or that any delinquency arose from inability to pay for just cause.

The statute goes on to provide a list of factors all of which must be present for the court to make a finding of disestablishment of paternity;

  1. newly discovered evidence has come to light;
  2. the scientific testing was properly conducted;
  3. the male ordered to pay child support is current on all child support payments or that the male ordered to pay child support has substantially complied with his child support obligation and that any delinquency in his child support arose from his inability to pay for just cause;
  4. the male ordered to pay child support has not adopted the child;
  5. the child was not conceived by artificial insemination while the male ordered to pay child support and the child’s mother were in wedlock;
  6. the male ordered to pay child support did not act to prevent the biological father of the child from asserting his parental rights with respect to the child;
  7. the child was younger than 18 years of age when the petition was filed.The court may not disestablish paternity if the male engaged in the following conduct after learning that he is not the father of the childmarried the mother of the child and voluntarily assumed the parental obligation and duty to pay child support;
  8. acknowledged the paternity of the child in a sworn statement;consented to be named as the child’s biological father on the child’s birth certificate;voluntarily promised in writing to support the child and was required to support the child based on that promise;
  9. received written notice from any state agency or any court directing him to submit to scientific testing which he disregarded;
  10. signed a voluntary acknowledgment of paternity as provided in F.S. 741. 10(4)

Gestational Surrogacy Contracts

If you wish to enter into a contract for gestational surrogacy, you must comply with the provisions of F.S. 742.15 and F.S. 742.16. Basically F.S. 742.15 provides that the surrogate must be 18 years of age or older and that the commissioning couple are legally married and are both 18 or older.

The statute permits these kinds of contracts only when a physician certifies that the commissioning mother cannot carry a pregnancy or the pregnancy will cause a risk to her health or the pregnancy will cause a risk to the health of the fetus.

The contract itself must provide that the surrogate will be the sole source of consent with respect to clinical intervention and management of the pregnancy and that the surrogate agrees to submit to reasonable medical evaluation and treatment and to adhere to reasonable medical instructions. The surrogate further must agree to relinquish any parental rights unless it is determined that neither member of the commissioning couple is the genetic parent of the child. The commissioning couple must agree to accept custody and to assume full parental rights and responsibilities for the child immediately upon the child’s birth regardless of any impairment of the child unless neither of them is the genetic parent.

F.S. 742.16 provides that the commissioning couple may petition the court for an expedited affirmation of parental status within 3 days of the birth of the child.

Relocation

Cardboard Box with Warehouse Relocation on Hand Truck White Background.

Relocation has become an important and often contested part of dissolution proceedings. In our society many people have to relocate. The Florida statutes define relocation as “a change in the principal residence of a parent of at least 50 mile for at least 60 consecutive days”. This does not include temporary absence for vacation, education or the provision of health care for the child.

Both parents can agree in writing to the relocation as long as the agreement reflects their consent to the relocation and spells out a time sharing plan for the non relocating parent along with any transportation arrangements needed for visitation. You must seek ratification of the agreement by the court. There may not have to be a hearing unless one is requested. If both parents cannot agree then the statutes provide for the court to make the decision.

Florida has changed the relocation statute to eliminate the requirement that a notice of relocation be filed before a petition to relocate is filed in court. Now, in the absence of an agreement between the parents, a parent seeking relocation files a court petition immediately and must serve it on the other parent. The other parent has 20 days to file a written response to the court just as in any other court proceeding. The court then schedules a hearing.

There is no presumption for or against any relocation. The factors that a court will consider in determining whether to allow the relocation are set out in the statute 61.13001.

Failure to follow this procedure and removal of the child without permission subjects you to contempt of court and other proceedings to compel return of the child.

If you are faced with this situation I strongly recommend that you consult the attorney of your choice.