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If you are the court-appointed Guardian of the property of a minor or of an incapacitated adult, you are legally required to update the Court on the status of your ward.

Every year, a Guardian must file a guardianship plan and either an accounting or an annual memorandum to the Court, in addition to other requested documents.  If a Guardian fails to do so, the Guardian and their attorney face serious consequences, including jail.

If you have questions about your obligations as a court-appointed Guardian, you can call Lavender Greenberg at 786-832-4694 to speak to an attorney who can help guide you through the process.

 

Martindale-Hubbell has recognized Coral Gables estate planning attorney Monique Lavender Greenberg with a Martindale-Hubbell Peer Review RatingTM.

Monique Lavender Greenberg was given an “AV Preeminent” rating from her peers, which means that she was deemed to have very high professional ethics and preeminent legal ability.  Only lawyers with the highest ethical standards and professional ability receive a Martindale-Hubbell Peer Review Rating.  Monique Lavender Greenberg focuses her practice on estate planning, probate and guardianship matters.AV-WH-200

The Martindale-Hubbell Peer Review Ratings evaluates lawyers based on the anonymous opinions of members of the Bar and the Judiciary, including both those who are rated and those who are not.  The confidentiality, objectivity and complete independence of the ratings process are what have made the program a unique and credible evaluation tool for members of the legal profession.  The legal community values the accuracy of lawyer peer review ratings because they are determined by their peers – the people who are best suited to assess the legal ability and professional ethics of their colleagues.

shutterstock_188080733In a world where estate tax only applies where an individual US person has over $11 million in assets (or $22 million for a married couple), the main focus of estate planning clients is often avoiding probate and the fees that come with it.  (Attorneys’ fees in a Florida probate case can be as high as three percent of the deceased person’s assets.)

Probate is the process of changing ownership from the deceased person to their heirs.  People often try to avoid probate by transferring assets to their children during life or naming their children as co-owners of assets during life.  Almost every week, we speak to a potential client who has named their children as co-owners of real estate, business interests and investment accounts.  While this strategy can help a person avoid probate, it is not always the best practice, as it ignores basis planning and capital gains tax ramifications.  In an attempt to avoid probate, a person can create tens of thousands, and even millions of dollars, in capital gains liability instead.

Tax basis represents an owner’s initial investment in an asset and taxes are usually assessed on the difference between the item’s fair market value or sale price and the item’s basis.  For example, if a stock is purchased for $5, and the share appreciates to $9, the owner’s basis is $5 and the owner will be taxed on the $4 of appreciation upon the sale of the stock.

When you gift something to someone during your life, the tax basis in the item is your basis.  An asset inherited upon a person’s death has the current fair market value as its basis.

For example, Mary is a widow and she specializes in real estate investments. Ten years ago, Mary bought a building for $1 million.  The building has appreciated to be worth $5 million ($4 million in appreciation).  If Mary gifts the building to her son Sam during her life, or names him as a joint owner, Sam’s basis in the property, even after Mary’s death, is $1 Million.  If Sam sells the building, he will pay capital gains tax on the $4 million of appreciation (up to $952,000). If Sam inherits the same property on Mary’s death, his basis is the current fair market value of $5 million and he pays zero capital gains tax upon sale.

This applies to most assets, including real property, investment accounts, and ownership interests in LLCs and Corporations.

The important question then is “Can I avoid my heirs paying unnecessary capital gains tax and also avoid the cost of probate?” The answer is YES.  In most situations, the majority of probate expenses and unnecessary capital gains taxes can be avoided by putting the property in a Revocable Trust during life.  During life, there are no changes in how the property is taxed and the person who creates the trust continues to use their social security number for all trust business.  Upon death, the property distributed to the deceased person’s heirs receives a new basis, which avoids huge exposure to capital gains tax and the costs and inconveniences of probate are avoided.  To speak to a knowledgeable Miami Estate Planning Attorney about Revocable Trusts, Basis Planning and Avoiding Capital Gains Tax, Call the law office of Lavender Greenberg at 786-832-4694. 

In Florida, Guardianship can often be an expensive and slow process.  In a Guardianship, the Court appoints a “guardian” over a person (the “ward”), the person’s property, or both.  This happens when the ward is deemed incapacitated, which can occur due to:

  1. Mental illness that leads to the ward not being able to manage their own affairs;
  2. Physical illness or injury which makes it impossible for the ward to manage their own affairs effectively; or
  3. The ward’s minority (under the age of 18).

A comprehensive estate plan can help adults avoid guardianship completely and, in the case of minors, avoid guardianship over assets left to a minor while simultaneously allowing a minor’s parents to tell the Court who they would like to care for their children.

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At Lavender Greenberg PLLC, an experienced Estate Planning Attorney will help you compile a comprehensive estate plan to avoid Guardianship wherever possible To do so, we utilize the following:

Durable Power of Attorney: A document granting legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). This document allows the agent to act on behalf of the principal in their legal and financial affairs without a court order.  Durable powers of attorney make filing for guardianship unnecessary in many situations where it would otherwise be needed.

Example: Harry and Wendy have listed their second home for sale because they just retired and need the money to meet expenses.  They have accepted an offer where the contract states they will close in 30 days.  Before they sign the papers, Harry is in a tragic car accident and ends up in a coma.  Without an estate plan in place, Wendy would need to file for guardianship over her husband to be able to sell the property.  This could potentially cost thousands of dollars in legal fees and lead to her missing the close date.  The use of a durable power of attorney could have avoided this result, as Wendy would have be entitled to sign on his behalf so long as she was acting based on his best interests.

Healthcare Surrogate. A document granted by a person (the principal) allowing another (the agent or attorney-in-fact) to act for him or her on medical matters and treatment decisions if the principal is unwilling or unable to make their own healthcare decisions. This avoids the need for the Court to appoint a guardian to manage medical decisions.

Example: John, a widow with two adult children, suffers from a stroke and is currently unable to make his own healthcare decisions.  His children disagree about the appropriate course of treatment.  His daughter files for guardianship and his son challenges her petition, asking that he be appointed instead of daughter.  Instead of coming together as a family, his children are fighting during an already difficult time.  The use of a Designation of Health Care Surrogate appointing a specific individual to make health care decisions on John’s behalf could have avoided the expense and strain of filing for Guardianship.

Revocable Trust or Wills with Testamentary Trust Provisions.  When assets are owned by a revocable living trust, and the person who created the trust becomes incapacitated, a Successor Trustee can take over as Trustee during the period of capacity without any court intervention.  Additionally, if assets greater than $50,000 are given outright to a minor child upon someone’s death, the assets must be managed by court-appointed guardian until the child’s 18th birthday, after which the child will receive the assets outright.  At the Miami Estate Planning Firm Lavender Greenberg PLLC, we encourage our clients to leave gifts tominors through revocable living trusts created during life or testamentary trusts created upon death, in order to: (1) avoid guardianship before a child turns 18; (2) place a person the client trusts in charge of the assets; and (3) avoid giving the child full access to the assets once they turn 18, waiting until they have matured and learned financial management skills to do so instead.

Guardianship Provisions for Minor Children.  If our clients have minor children, we draft documents naming who they would like to serve as the Guardian(s) of their children so that a Court can weight their wished in determining the best interests of the minor children.

To speak with an experienced Miami Estate Planning Attorney, call us at (786)832-4694 or email monique@lglawmiami.com

 

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If a minor child inherits property worth more than $15,000.00, under Florida law that money must be held for their benefit by someone serving as the guardian of their property.  This means that if a child’s parents pass away and leave their child an inheritance over this amount, the following will occur:

  • The money will be managed by a Guardian chosen by the court, and not by someone chosen by the deceased parent;
  • A court order will be necessary for any major changes in investments or any sale of assets;
  • The guardianship of the property of the minor will terminate by law upon the minor turning 18 years old; and
  • As soon as practicable after the child’s 18th birthday, the guardian will be required to give the child all of the property the guardian was holding for the child’s benefit, even if the guardian believes the child is not responsible enough to properly manage the property.

By failing to have an estate plan that includes a testamentary or revocable trust, the parents in this situation lose control.  With proper planning, the results can be drastically different:

  • The property can be managed by one or more Trustees chosen by the parent(s), whom they trust and who they believe to be fiscally responsible, diligent, and honest;
  • The Trustee does not need court approval to sell assets or change investment vehicles, and can avoid the slow and costly process of a guardianship;
  • The child is protected from their own lack of maturity and fiscal experience, as a trust need not terminate at 18, and therefore the child is not handed a large sum of money at the young age of 18;
  • Instead, the parents can decide, by specifying in their will or trust, an age at which their child is entitled to receive certain assets and for what purposes the Trustee is allowed to distribute funds to the child before the stated age.

Having an estate plan in place can give a parent the peace of mind that even when the worst happens, their children’s financial interests will managed by someone they trust in a manner specified by the parent, and not a court; it can protect a child from receiving (and spending) a large inheritance at a young age; and it can prevent the burdens created by a guardianship.  For more information on how your estate plan can protect the interests of your minor children, call Lavender Greenberg PLLC at 786-832-4694 to speak with a Miami Estate Planning attorney.

Don’t forget tomorrow is Tax Day! Income Tax, Estate Taxes (often referred to as “Death Taxes”) and Estate Planning are all integrally Intertwined. Check out this NPR article to check your tax knowledge.

http://www.npr.org/…/we-asked-people-what-they-know-about-t…