If you die without a trust in place and leave all of your assets to your minor child, that child’s surviving parent will be able to manage the entire estate on behalf of the child. If you die while happily married, there is no issue. However, if you die while divorced, your ex-spouse will end up with ALL of your assets. The only way to prevent this from occurring is to set up a Separate Share Trust for your child, to be funded by your Living Trust at the time of your death. Don’t leave everything to your ex; leave it to your child. Get a trust in place immediately.
In addition to severely weakening the asset protection advantage of a single member LLC in Florida, the Florida Supreme Court’s decision in the Olmstead case unfortunately calls into question the effectiveness of multi-member LLCs in this state.
The Olmstead decision provides a stark reminder of two very important points:
1.Asset protection law varies significantly from state to state; and
2.Asset protection laws are constantly changing, both through statutory changes and court decisions.
Having a competent professional assist you with your asset protection planning is vitally important. It is also important to have any asset protection plan reviewed periodically because the law in this area is evolving very rapidly.
In a wise, but surprising turn of events, the President has agreed with the Republican Congress and adjusted the estate tax levels for 2011 and 2012. For the next two years, the estate tax will be levied on all estates over $5 million for an individual and $10 million for a married couple and at a rate of 35 percent. Historically, Republicans have often been known for their distain of excessive taxes and Democrats have been known as the party that favors big government and higher taxes. With the referendum against the Democrats in the last election and the heavy shift to a Republican House and Senate, the President had no choice but to cave to the Republican demand for a lower estate tax. If not, the amount of estate taxes paid by the families of middle-income voters would have been a hot button topic during the 2012 Presidential election, and could have been the cause of a loss of the White House.
So where does this leave us? While the estate tax is held in check for the next two years, there is no definitive answer as to where it goes after that. In 2013, we could have another year of no estate tax or we could have a 55 percent estate tax on everything over $600,000. Who knows? The only thing that we can do is hope for the best and prepare for the worst. A trust-based estate plan will ensure the most tax savings no matter what the estate tax number is in the year you die. In addition, there are more advantages to having a trust than just estate tax protection, including but not limited to probate avoidance, asset protection, and control of your assets from beyond the grave.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at [email protected] to schedule your free consultation. It’s a Wild world. Are you protected?
Pres. Obama and the Republican Congress have agreed that the estate tax will come back in 2011, but at an exemption and rate that many Republicans have been arguing for. Under the deal, the estate tax exemption would be up to $5 million for individuals and $10 million for couples. The tax rate would be at 35%. The exemption and rate would be in effect for two years.
We know where the estate tax will be for 2011 and 2012 but there is still tremendous uncertainty for 2013 and beyond. This decision saved a lot of people from “conveniently dying” this month but has just delayed the issue of a permanent solution.
It should also be mentioned that while the estate tax receives the most publicity, probate is still the biggest threat to most families.
A traveler set forth on a journey, with an Ass and a Mule, both carrying a heavy weight. Along the journey the Ass felt his load to be more than he could bear. He asked the mule to relieve him of a small portion of the weight, so he could continue with the rest; but the Mule refused.
Shortly thereafter, the Ass fell down, dead under his burden. The Traveler had no other option than to place the Ass’ hide and all the weight carried by it on the Mule. Because the Mule refused to carry a small burden he had to carry a large one.
It is important that you take a little time now to prepare your legal affairs rather than procrastinating and have to have your children and beneficiaries bear the consequences of an avoidable negative situation. As the old adage goes, an ounce of prevention is worth a pound of cure.