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Julie Garber

Wills & Estate Planning


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Another Do it Yourself Will Disaster Makes It All the Way to Florida Supreme Court

Monday April 21, 2014

If the recent decision handed down by the Florida Supreme Court in Aldrich vs. Basile isn't enough to dissuade you from making your own Last Will and Testament, then I don't know what will convince you not to do it. Here are the facts of the case:

  1. In April 2004, Ann Dunn Aldrich used an "E-Z Legal Form" to make her Last Will and Testament. In Article III of the form entitled "Bequests," just after the form's pre-printed language directing payment of debts, Ms. Aldrich hand wrote instructions stating that all of her "possessions listed" go to her sister, Mary Jane Eaton - this included Ms. Aldrich's house, contents, and lot; a Fidelity Rollover IRA; a United Defense Life Insurance policy; an automobile; and bank accounts.

  2. Ms. Aldrich also wrote that if her sister died before she did, then she left all listed property to her brother, James Michael Aldrich.

  3. The will contained no other provisions.

  4. Ms. Aldrich signed the will in front of two witnesses on April 5, 2004.

  5. Mary Jane Eaton died on November 10, 2007. As a result, Ms. Aldrich inherited her sister's real estate located in Putnam County, Florida, along with some cash which Ms. Aldrich deposited into a new Fidelity account that she opened in July 2008.

  6. In November 2008, on a sheet of paper with the pre-printed title "Just a Note," Ms. Aldrich hand wrote the following: "This is an addendum to my will dated April 5, 2004. Since my sister Mary jean Eaton has passed away, I reiterate that all my worldly possessions pass to my brother James Michael Aldrich, 2250 S. Palmetto, S. Dayton FL 32119. With her agreement I name Sheila Aldrich Schuh, my niece, as my personal representative, and have assigned certain bank accounts to her to be transferred on my death for use as she seems [sic] fit." Ms. Aldrich signed the "addendum" in front of Ms. Schuh, who is the daughter of James Michael Aldrich, on November 18, 2008.

  7. Ms. Aldrich died on October 9, 2009.

So, from these facts it appears that James Michael Aldrich should have inherited Ms. Aldrich's entire estate, right? Wrong, because, in attempting to write her own will and then a codicil, Ms. Aldrich's do it yourself documents failed miserably. Why? For two reasons:

  1. First and foremost, the will failed to dispose of all of Ms. Aldrich's property since it didn't include a "residuary clause" which would have addressed what should happen to any property Ms. Aldrich owned which was not included in her "possessions listed" as well as property Ms. Aldrich acquired after the date she signed the document.

  2. And, just as problematic, Ms. Aldrich's attempted codicil to address the property she inherited from her sister failed because she didn't sign it with the proper formalities required by the Florida Probate Code - under Florida law, wills and codicils must be signed in the presence of two witnesses; Ms. Aldrich only signed the "addendum" in front of one witness.

So who inherited the real estate located in Putnam County and the Fidelity account, in other words, the property that Ms. Aldrich inherited from her sister which was not listed in Ms. Aldrich's will? Enter Laurie Basile and Leanne Krajewski, two nieces of Ms. Aldrich who were the children of a predeceased brother. They intervened in the probate administration, claiming that since Ms. Aldrich's will didn't contain a "residuary clause" and the November 2008 "addendum" didn't legally qualify as a codicil under Florida law, then they should share in the distribution of the Putnam County real estate and the new Fidelity account. While the lower court sided with Mr. Aldrich, who thought that he should inherit Ms. Aldrich's entire estate (which appeared to her intent, didn't it?), this case made it all the way up to the Florida Supreme Court, which sided with Ms. Basile and Ms. Krajewski.

Now as I said at the beginning, if this case isn't enough to convince you not to write your own Last Will and Testament, then I don't know what will. And by the way, E-Z Legal Forms has a website where you can apparently purchase a pre-printed Last Will and Testament Form for only $2.95 - what a bargain!

The lessons learned from the Aldrich case have been summed by nicely by Justice Pariente, who wrote in his concurring opinion, "I therefore take this opportunity to highlight a cautionary tale of the potential dangers of utilizing pre-printed forms and drafting a will without legal assistance. As this case illustrates, that decision can ultimately result in the frustration of the testator's intent, in addition to payment of extensive attorney's fees - the precise results the testator sought to avoid in the first place." Amen.

Obama's 2015 Budget, Florida Personal Representatives, Financial Transaction Tax Top Most Read Wills & Estate Planning Blogs in March 2014

Tuesday April 15, 2014

President Obama's 2015 budget as it relates to estate planning, who can't serve as a Personal Representative in Florida, living wills and trusts, and the financial transaction tax topped the most read Wills & Estate Planning blogs in March 2014:

Top 5 Blogs Posted in March 2014

  1. Obama's 2015 Budget and Estate Planning - Everything Old is New Again
  2. Who Can't Serve as Your Personal Representative in Florida?
  3. Living Will vs. Living Trust - Do You Know the Difference?
  4. What is the Financial Transaction Tax and Why Should You Care About It?
  5. Living Trust vs. Testamentary Trust - Do You Know the Difference?

Meanwhile, the most read blogs in March 2014 that were posted at any time were just a little different from those that were the most read in February 2014:

Top 5 Blogs Posted at Any Time

  1. 2013 Estate and Trust Income Tax Brackets
  2. 2011 Gift Tax Exclusion - Annual Exclusion vs. Lifetime Exemption
  3. What Does Per Stirpes Mean?
  4. When is a Federal Estate Tax Return Required to be Filed?
  5. Tax Day is Looming, So Do You Need File IRS Form 1041 for Your Revocable Living Trust?

Read more:

How to Determine if You Need to File a Gift Tax Return for Gifts You Made in 2013

Saturday April 12, 2014

It's that time of year again - time to think about that other tax return that is due on April 15 of each year, for taxable gifts that were made during the course of any given year - IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Here is how to determine if you will need to file a gift tax return for gifts that you made during 2013:

  • Did you give anyone other than your spouse who is a U.S. citizen a gift or series of gifts during 2013 which exceeded $14,000 in value? If you answer yes to this question, then you will need to file a 2013 Form 709. Note that gifts made to one individual during 2013 that do not exceed $14,000 in total value qualify as annual exclusion gifts.

  • Did you give your spouse who is not a U.S. citizen a gift or series of gifts during 2013 which exceeded $143,000 in value? If you answer yes to this question, then you will need to file a 2013 Form 709.

  • Did you give anyone a gift or series of gifts during 2013 that were considered gifts of a future interest? If you answer yes to this question, then you will need to file a 2013 Form 709.

  • Did you receive a gift or series of gifts during 2013 that exceeded $14,000? Even if you answer yes to this question, you will not have to file a 2013 Form 709, nor will you have to include the amount gifted to you in your taxable income -think about it, if you did include the amount given to you in your taxable income, then how could it have been a gift in the first place? It is the person who makes the taxable gift who must file a gift tax return, not the person who receives the gift.

If you need to file a 2013 gift tax return but will not be able to file it on or before April 15, 2014, then there are two ways for you to receive an automatic six-month extension of time to file the return:

  1. If you timely file Form 4868, Application for Automatic Extension of Time to File Individual Income Tax Return, to automatically extend the time to file your personal income tax return, then this will also automatically extend the time to file your gift tax return.

  2. If you do not need to extend the time to file your personal income tax return, then you can receive an automatic extension to file your gift tax return by timely filing Form 8892, Application for Automatic Extension of Time to File Form 709.

Note that as with income taxes, any gift taxes that will be due for gifts that you made during 2013 must be paid on or before April 15, 2014, regardless of whether you request an automatic six-month extension of time to file Form 709, otherwise interest and possibly penalties will accrue until the gift tax is paid in full.

Note that for 2014, the annual exclusion from gift taxes remains at $14,000.

Say Goodbye to Minnesota's Gift Tax, Hello to Higher Estate Tax Exemption

Wednesday April 9, 2014

For those who were surprised by Minnesota's enactment of a state gift tax that went into effect on July 1, 2013, you will be just as surprised to learn that the gift tax has been completely repealed retroactively. And if that's not confusing enough, the Minnesota estate tax exemption was increased from $1,000,000 to $1,200,000 retroactively back to January 1, 2014. And that's not all - the Minnesota estate tax exemption will increase annually by $200,000 until it reaches $2,000,000 in 2018:

  • 2015 exemption - $1,400,000
  • 2016 exemption - $1,600,000
  • 2017 exemption - $1,800,000
  • 2018 exemption - $2,000,000

But hold on, that's not the end of it:

  • The estate tax rate was tweaked so that the first dollars are taxed at a 9% rate which maxes out at 16%.
  • Married couples will be allowed to use ABC Trust planning in order to defer the payment of all estate taxes until after the death of the second spouse.
  • The law enacted in 2013 with regard to taxing a nonresident decedent's interest in a pass-through entity was also modified to exclude certain publicly traded entities, but it still applies to entities taxed as partnerships or S corporations that own a closely held business, farm, or cabin.

Photo: Minnesota Welcomes You Sign, by VisionsofAmerica/Joe Sohm/Photodisc/Getty Images

Further reading:

New York Estate Tax Exemption Increases More Than Two Fold And Won't Stop There

Monday April 7, 2014

Listen up New Yorkers: Effective April 1, 2014, the New York estate tax exemption increased from $1,000,000 to $2,062,500. And that's not all - the New York exemption will continue to increase on an annual basis until it matches the federal estate tax exemption in 2019 as follows:

  • Deaths between April 1, 2014 and March 31, 2015: $2,062,500
  • Deaths between April 1, 2015 and March 31, 2016: $3,125,000
  • Deaths between April 1, 2016 and March 31, 2017: $4,187,500
  • Deaths between April 1, 2017 and December 31, 2018: $5,250,000
  • Deaths on or after January 1, 2019: New York exemption will match federal exemption

The federal estate tax exemption has been indexed for inflation on an annual basis since 2012 and will continue to be indexed in the future. In 2014 the federal exemption sits at $5,340,000 and is expected to be $5,900,000 in 2019.

A couple of other things to note about the changes made to New York estate tax and gift tax laws:

  1. Although there was a proposal to cap the top estate tax rate at 10%, the maximum rate will remain at 16%.
  2. If an estate is valued at as little as 5% more than the New York estate tax exemption, then the estate will be taxed at its full value instead of just the value that exceeds the exemption (see The New New York Estate Tax Beware A 164% Marginal Rate by Forbes writer Ashlea Ebling for an example of how this New York estate tax "cliff" will work).
  3. The New York estate tax exemption will not be "portable" between spouses like the federal estate tax exemption.
  4. Gifts made by New York residents on or after April 1, 2014 and before January 1, 2019, will have a three year look-back period, meaning that the gift will be pulled back into the taxable estate if the person making the gift dies within three years of making the gift.

Photo: New York State Capitol, Albany, by VisionsofAmerica/Joe Sohm/Photodisc/Getty Images

Further reading:

How Will Your Family Find Your Will?

Tuesday April 1, 2014

One of the most read articles on this website is How to Obtain a Copy of a Deceased Person's Will (in fact, in February 2014, this article was viewed nearly 16,000 times). It describes in detail how to figure out where a deceased person's will has been filed for probate and then how to get a copy of the will from the probate court. This is possible because wills filed for probate become public court records that anyone can read. But what about a will that has not been filed for probate? Better yet, how do you go about finding the original will of a loved one who has died so that it can be filed for probate?

Recently I had the pleasure of meeting the director of The U.S. Will Registry (or www.WillsUS.com), Stacey Jerome-Miller, who was unfortunate enough to have been involved with the estates of two relatives who told her that they had made Last Wills, but to date Mrs. Miller has not been able to locate them (the relatives died over 10 years ago). The frustration Mrs. Miller experienced with her own family has prompted her commitment to making the public aware of The U.S. Will Registry, which is a website that emphasizes the importance of making a Last Will and Testament and creates a safe and secure place for the public to store pertinent information about where their original Last Will and Testament and duplicate copies (if any) are being held in safekeeping. The website can also be used to store information about a Living Will.

So how does The U.S. Will Registry work? As follows:

  1. First you enter your name and some basic information so you can clearly be identified by The U.S. Will Registry staff. Your information is password protected, so only you can access it.
  2. Next you make a payment through the secure website. The one-time fee for storage of information about your Last Will is $29.95, for your Living Will is $9.95, or for both the one-time fee is only $34.95. The website also offers free Living Will forms for each state.
  3. The last step to complete your registration is to enter the specifics about where you have stored your Last Will and/or Living Will (including where the original is located as well as any duplicate copies).

Once you complete these three steps, you will receive a Certificate of Registration which should be placed where your family members can easily find it when needed. It is also recommended that you tell select individuals that you have registered your Last Will and/or Living Will with The U.S. Will Registry. In addition to the Certificate of Registration, you will also receive convenient membership cards that can be placed in your wallet next to your health insurance card.

So then what happens if your loved ones need to locate your Last Will and/or Living Will? The staff of The U.S. Will Registry will release information about the location of your Last Will to the attorney you identified when registering, but only after a death certificate is presented. (Note: If you didn't identify an attorney when registering, then the information will only be released to an attorney representing the person seeking your Last Will after that attorney presents your death certificate.) In the event of a medical emergency, the copy of your Living Will will only be released to the medical facility caring for you.

Mrs. Miller also encourages estate planning attorneys to register the wills of their clients with The U.S. Will Registry, since often times family members are unaware of who to contact regarding their loved one's estate planning documents. The U.S. Will Registry has a "Find A Will" link for those searching for a missing will, which will lead back to the attorney of record.

The tagline for The U.S. Wills Registry is "Where there's a will, there's a way - for those left behind to find peace of mind." Mrs. Miller's s website is a step in the right direction to making the public aware that while creating a Last Will and a Living Will are an important part of the estate planning process, these documents are completely worthless if your loved ones can't find them. Please take some time to look over The U.S. Will Registry website at www.WillsUS.com and send them any questions you may have.

Changes Are Coming to Maryland Estate Taxes, Maryland Inheritance Taxes Remain Unchanged

Monday March 31, 2014

The Maryland legislature has passed a bill that will gradually increase the current $1,000,000 state estate tax exemption as follows:

  • $1,500,000 in 2015
  • $2,000,000 in 2016
  • $3,000,000 in 2017
  • $4,000,000 in 2018
  • Match the federal exemption in 2019 (the federal exemption is currently $5,340,000 and is indexed for inflation each year)

Governor Martin O'Malley is expected to sign the bill into law in short order. However, no changes will be made to Maryland inheritance taxes which are assessed against the inheritances passing to nieces and nephews, aunts and uncles, cousins, and friends.

Photo:  Maryland State House, by Hisham Ibrahim/Photographer's Choice/Getty Images

Is Kurt Cobain's Death Investigation Being Reopened?

Monday March 24, 2014

Nirvana's frontman, Kurt Cobain, is just one of many celebrities who died without having made a Last Will and Testament. And while Cobain died nearly 20 years ago from a self-inflicted gunshot wound, rumors were flying last week that the investigation into the musician's death was being reopened when Seattle news station KIRO 7 reported that police there "have reexamined the case." But don't get too excited - Cobain's death is not being re-investigated. As it turns out, recently Seattle police decided to have a cold case detective review the Cobain files since the 20th anniversary of his death is on April 5 - actually, Cobain was last seen in public on April 3, 1994; his body was not found until April 8, but the Seattle coroner estimated that the singer's death occurred on April 5, 1994. So why re-examine the Cobain files now? Because Seattle police believe they will be getting lots of questions about the singer's death investigation as the 20th anniversary approaches. According to Detective Renee Witt, a Seattle police spokeswoman, "No, we have not reopened the Kurt Cobain case." She added that the detective "dug up the files and had another look, and there was nothing new."

Unlike Cobain, who left a detailed suicide note but not a Last Will, the Seattle condo where Alice in Chains frontman, Layne Staley, was found dead was owned by a trust called the Larusta Trust (apparently a twist on the AIC song, Rooster). Ironically Staley died eight years to the day after Cobain - well, again, the Seattle coroner had to estimate the date of Staley's death since the last time he was seen alive was on April 4, 2002, but his body was not discovered until April 19, 2002, when his accountants informed his former manager that no money had been withdrawn from Mr. Staley's accounts for about a week.

Photo: Kurt Cobain on 'MTV Unplugged,' Nov. 18, 1993, by Frank Micelotta/Hulton Archive/Getty Images

Further Reading:

Living Trust vs. Testamentary Trust - Do You Know the Difference?

Tuesday March 18, 2014

In the estate planning world, the type of trust that you have, or that a loved one has set up for you, is a very important detail. And when it comes to Living Trusts when compared with Testamentary Trusts, they couldn't be more different.

As the name implies, a "Living Trust" is created while the Trustmaker - meaning the person who creates the trust, also referred to as the Grantor, Settlor, or Trustor - is alive and well. When I hear the words "Living Trust," I immediately think of a Revocable Living Trust, like in this blog: Living Will vs. Living Trust - Do You Know the Difference? In that blog I'm referring to a Revocable Living Trust, but in reality referring to a trust as a "Living Trust" doesn't necessarily mean that it's a revocable trust because it also could refer to an irrevocable trust. With that said, in my 18 years of practice as an estate planning attorney, I never heard anyone refer to an irrevocable trust as an "Irrevocable Living Trust."

So then what's a "Testamentary Trust"? It's the opposite of a Living Trust, which means that it's a trust that's created only after the Trustmaker dies. Common examples of Testamentary Trusts include the A Trust and B Trust created for federal estate tax planning purposes, as well as the C Trust created for state estate tax planning purposes. A Testamentary Trust also refers to a trust that's created in a Last Will and Testament since by definition the person creating the trust in their Will must be deceased in order for the terms of the Will to take effect.

Confused? Don't be. If you're not sure what type of trust you're dealing with, then let your estate planning attorney tell you.

Living Will vs. Living Trust - Do You Know the Difference?

Monday March 17, 2014

I've met my fair share of people who think that they have their estate plan under control because they have a Living Will that they got at the hospital. While it's great that they took the time to fill out a Living Will, unfortunately it won't do them any good after they're gone.

What's so bad about relying on a Living Will as the foundation of your estate plan? Everything. Why? Because a Living Will is not the same as a Living Trust, which is where the confusion comes from - people think that by filling out a Living Will, they've really filled out a Living Trust. Not so. A Living Will only becomes important if you suffer from a terminal injury or illness, while a Living Trust covers three phases of your life: (1) While you're alive and well, (2) If you're alive but not so well, and (3) After you die.

That's a big difference, isn't it? The other big difference between a Living Will and a Living Trust is that most states provide for a statutory form for a Living Will that will be acceptable in that state while no state provides a statutory form for a Living Trust - instead, you will need to work with an estate planning attorney in your state to create a Living Trust (no, a do-it-yourself Living Trust is simply not an option).

If you have a Living Will that you got at the hospital and think that you have a Living Trust, then please see a local estate planning attorney right away.

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