The Florida Legislature recently passed a bill drastically changing the existing durable power of attorney statute. Governor Rick Scott has yet to sign the bill but it is expected to become law shortly. When it becomes law, it will affect powers of attorney executed on or after October 1, 2011.

The new statute makes a great number of changes to the old law, clarifies some previously existing “gray” legal areas and greatly expands the previously existing statute. Some key provisions include:

•Powers of attorney must now be notarized as well as have two (2) witnesses for valid execution;

• Powers of attorney executed in other states are valid in Florida if validly executed in their state of origin;

• Special rules are provided for co-attorneys-in-fact;
• “Springing” Powers of attorney are eliminated after the effective date, although Springing powers executed before the effective date are still valid;
• Certain powers contained in the document must be initialed in order for the attorney-in-fact to perform such actions;
• Only qualified people can get paid to serve as the attorney-in-fact; and
• Much more specific standards of conduct must be followed by the attorney-in-fact.

You can view the contents of this bill here.

The net effect of this bill will provide for drastic changes to your average power of attorney. At DeLoach & Hofstra, we continuously work to improve and update our powers of attorney. This is another opportunity to make our documents even better and help our clients as best we can.

A person who accepts the role of Personal Representative (known as an “executor” in other states) in a person’s will has numerous responsibilities once that person dies. In Florida, the Personal Representative typically takes the following actions:

• Hires an attorney to become appointed Personal Representative by the Probate Court

• Identifies all the deceased’s assets, including descriptions, locations, and valuations

• Prepares a formal inventory for the probate court and beneficiaries

• Completes paperwork to change the title of assets from the decedent to the estate

• Pays all appropriate debts and taxes due on the estate

• Defends the estate against any lawsuits or other difficulties

• Distributes the assets in accordance with the deceased’s will or under the laws of Florida

Legal Issue Insights:

There is considerable work involved in being a person’s Personal Representative. It is not simply an honor bestowed upon a friend or relative. Family disputes frequently arise out of the distribution of a deceased’s estate. The Personal Representative executor, ideally, should be someone who is neutral among family and other beneficiaries.

Call DeLoach & Hofstra to get a seasoned, reliable attorney to help you with estate planning or probate issues, and to better prepare your Personal Representative.

Last December's signing of the "Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 has important tax and estate planning implications.  The act reinstates the estate tax but with a higher exclusion rate (the value an estate must exceed before estate taxes are due).  For 2011 and 2012, the new exclusion is $5 million, essentially protecting any estate below that threshold from federal estate taxes.  In light of these changes, individuals and families should revisit their current estate planning strategies by reviewing them with a competent estate planning and probate attorney.  Such review should include:  credit shelter trust planning, life insurance policies (both within the taxable estate as well as outside the taxable estate in irrevocable life insurance trusts), account titling and beneficiary designations, and business-succession and wealth transfer plans.

Regardless of the size of your estate, a plan makes it easier for surviving family members.  If you don't have an estate plan, please call me so that we can schedule an appointment to discuss your goals.

Last December's signing of the "Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 has important tax and estate planning implications.  The act reinstates the estate tax but with a higher exclusion rate (the value an estate must exceed before estate taxes are due).  For 2011 and 2012, the new exclusion is $5 million, essentially protecting any estate below that threshold from federal estate taxes.  In light of these changes, individuals and families should revisit their current estate planning strategies by reviewing them with a competent estate planning and probate attorney.  Such review should include:  credit shelter trust planning, life insurance policies (both within the taxable estate as well as outside the taxable estate in irrevocable life insurance trusts), account titling and beneficiary designations, and business-succession and wealth transfer plans.

Regardless of the size of your estate, a plan makes it easier for surviving family members.  If you don't have an estate plan, please call me so that we can schedule an appointment to discuss your goals.

The avoidance of probate is one of the key goals of many of our clients.  We generally agree that probate should be avoided because probate involves extra time, costs and attorney's fees.

There are many ways to avoid probate, some good and some bad.  In many, but not all, situations, we advise creating a revocable living trust. The trust is a good way to bring all of your assets together for a final and orderly distribution to your heirs.

This week, I received a phone call from the son of an elderly client.  I had suggested a trust to the client but the child thought that beneficiary designations on dad's bank accounts would suffice.  I agreed that while this may be the case for some families, dad had five children who were spread out around the country.  If beneficiary designations were used on dad's accounts, then all five children would have to appear at each financial institution to withdraw their inheritance. This could be difficult, expensive and time consuming based upon his children's lives. Thus, a trust would put a successor trustee in charge to manage all of the assets for the children, making distribution much easier upon dad's passing.

While there are exceptions to the rule, we generally prefer a revocable living trust to avoid probate.
 

It never ceases to amaze me how people can be unprepared for their death or incapacity. I recently received a phone call from a concerned child regarding her parents who lived in the area.  Here, both of the parents were physically and mentally incapacitated due to a recent health emergency. The father had always told the children that “everything was taken care of” but when the children visited to help, they only found old last wills and testaments. The father, a retired lawyer, apparently never prepared a power of attorney, designation of health care surrogate or living wills, even though his wife had advancing dementia.

I do not know what the children are going to do, but they will likely have to file a guardianship for one or both parents.  Under most circumstances, a good general durable power of attorney can avoid the cost and hassle of a guardianship.

The real problem in this story is the lack of preparation by the parents, which creates a terrible burden for the children.  If your parents are experiencing health problems such as advancing dementia, you need to make it your business to know about your parents’ estate plan. You should talk to them about their assets, their wills, their end-of-life wishes.  It may be a difficult subject to broach, but it can save many hours of work, frustration and costs for everyone involved.

Last week I met with a potential client regarding his uncle.  The uncle was mentally incompetent and was in a nursing home. Not knowing what to do, the client came to us on advice for asset protection and long term care planning.

As part of the consultation, I reviewed the uncle’s power of attorney and advanced directives and found them to be in order.  But to really create problems, I found that the existing living trust was completely inadequate.  In our situation, we would need to remove the uncle as trustee of his revocable living trust so the nephew could manage the uncle’s finances.  Upon closer inspection of the trust, the trust did not have standard provisions to remove the trustee due to mental incapacity. This is one of the most basic elements of a revocable living trust and it was created by a local attorney. I cannot overstate the importance to be able to remove a trustee due to his or incapacity.  The likely only alternative in order to help the uncle will be to go to Court to remove him as trustee.  This will be costly, time consuming and a complete waste of resources.

Remember, in doing your estate planning documents, not all trusts (or wills, powers of attorney, etc.) are created equally.  Please remember to have your documents reviewed on a regular basis so that the next attorney (hopefully us) will catch the drafter’s mistakes.

Last week I met with a potential client regarding her uncle.  The uncle was mentally incompetent and was in a nursing home. Not knowing what to do, the client came to us on advice for asset protection and long term care planning.

As part of the consultation, I reviewed the uncle’s power of attorney and advanced directives and found them to be in order.  But to really create problems, I found that the existing living trust was completely inadequate.  In our situation, we would need to remove the uncle as trustee of his revocable living trust so the niece could manage the uncle’s finances.  Upon closer inspection of the trust, the trust did not have standard provisions to remove the trustee due to mental incapacity. This is one of the most basic elements of a revocable living trust and it was created by a local attorney. I cannot overstate the importance to be able to remove a trustee due to his or incapacity.  The likely only alternative in order to help the uncle will be to go to Court to remove him as trustee.  This will be costly, time consuming and a complete waste of resources.

Remember, in doing your estate planning documents, not all trusts (or wills, powers of attorney, etc.) are created equally.  Please remember to have your documents reviewed on a regular basis so that the next attorney (hopefully us) will catch the drafter’s mistakes.

It never ceases to amaze me about the general misconception the general public has regarding the probate process.  In many cases, people do not know what probate actually is, but they know that they just want to avoid it. I understand the desire to avoid probate and that is usually the goal in any good estate plan, but probate really is not the horrible process some view it to be.  I believe the negative view on probate is partially contributed to bad attorneys, out of state practices and many other sources of misinformation.  Let’s face it: there are few places to learn what probate really is.

Yesterday I gave a talk on estate planning to a group at the Pinellas County Extension office.  As part of our discussion, a member of the audience raised her hand and told the group that ”Florida probate, on average, takes 2.7 years to complete.”  I told her that this was not my experience but she insisted that the financial planning company she was working with told her these figures.  While she can only rely on what she believes are knowledgeable sources, this is certainly not our experience.  Out of the hundreds of estates DeLoach & Hofstra has administered, only a small handful of estates have lasted more than two years.  On average, the vast majority of our estates last around 6 months, although a good many do not even take that long.  Please see our handout on Probate in Florida that confirms the time frames involved in probate.

 Remember, most good estate plan avoids probate, but probate is not the horrible process many would believe.