It is more than likely that the reason for establishing your estate plan is to ensure that your family is financially secure after you are gone. Estate planning for families with minor children can present challenges and difficult choices to parents. The challenges originate from the minor’s legal restrictions on ownership of property and by the parent’s desire to gift assets to a minor but to defer the minor’s actual possession until the minor reaches some level of maturity or at least the age of majority. Additionally, planning for minors also involves planning for the custody of the minor in the event both parents die before the minor reaches the legal age of majority. Once appointed, the guardian has a significant impact on the child’s value system, religious beliefs, education and, in general, the child’s development to adulthood.

Once a guardian is chosen, the most effective way to make sure that each of your children receives the necessary financial support to ensure that they are well taken care of is to establish your Revocable Trust and draft a provision that would create Separate Share Trusts upon your death. A “Separate Share Trust” is called that because a separate trust is created for each of your children. This can make it easier for the parents to account for the differences in the needs and propensities of each child. If one child has special medical or education needs, or if there is a wide gap in the children’s ages, parents can establish the appropriate portion of the estate, and can establish the terms of the distribution accordingly. Thus, by using Separate Share Trust, you can ensure that each child is cared for according to their specific needs.

In Separate Share Trust the parent/grantor can decide under what circumstances and at what age each child has the maturity sufficient to take possession of the assets. This will ensure that children will not recklessly waste the funds when they turn 18. However, one disadvantage to using “separate share” trusts with multiple children is the difficulty in administration. Depending on the provisions of the trust agreement, the trustee (which does not have to be the legal guardian) may have to account to each beneficiary separately and may have to maintain records of the distributable net income attributable to each beneficiary for income tax purposes.

A grantor need not have a large estate to create a trust. The assets you will leave your children can add up faster than you think. If you add the value of your home, savings and investment accounts, you may find that you are well over $75,000. In these cases a trust is usually the best solution. In addition, the trust could be funded by life insurance policies which can push the value of their estate much higher. Once established, the trust would provide for the children’s care and education and make money available to them as they reach certain ages indicative of maturity 18, 21, 25, 30, 35 or any other age you specify. You’ve worked hard to provide for your family a bright future. Plan accordingly and make sure that your work creates the best opportunities imaginable for your children.

A difference between a corporation and an LLC is that a creditor of an owner may directly levy on the debtor/shareholder’s stock in a corporation and thus take all the rights that compose the stock share, such as voting rights, right to elect directors, etc. By contrast, a creditor of an LLC is usually limited to a lien against the debtor/member’s economic right to distributions only until the judgment is paid, but the creditor usually takes no other of the debtor/member’s rights in the LLC. (This is often referred to as a “charging order lien” from the form of the relief usually specified in the RULPA/RULLCA).

Keep in mind that one can have an “S-LLC” by the simple expedient of checking the box for the LLC to be taxed as a corporation instead of a partnership, and then making the S-election for the LLC.

Although the ruling in the Olmstead case subjected single-member LLC assets to liability tied to its single member, this may be held to be a bad ruling in the future. It certainly goes against the purpose and spirit of the LLC laws. In any event, this potential adverse result may be easily avoided by interjecting a second member in any Florida LLC until the law is further clarified. Another significant problem with an S Corp is that they are, by far, the worst structure for advanced planning purposes. The limitations imposed on financial planning and estate planning and the limitations against international shareholders are major impediments to using S corps, particularly in an increasingly more complicated estate and tax environment and a world that is quickly globalizing.

Too many attorneys and CPAs don’t seem to know that you can make the S election for the LLC; in general I much prefer the LLC for estate planning and asset protection purposes (although the single-member issues can be a concern if their are not two viable members to include in the LLC). While S corporations still have some effective uses, their use in the future as business entities will be far more limited, and LLCs will continue to be the vehicle of choice for privately-held and family businesses.

Divorce and second marriages present special challenges in estate planning. These challenges are common where the spouses have children from prior marriages. The emotions and people involved require a delicate balancing between the needs of the surviving spouse and those of natural children. The surviving spouse will want to insure a continuation of the lifestyle they enjoyed while both spouses were alive and children from a prior marriage may require support for education and maintenance until they are mature.

Multiple marriage spouses cannot afford to procrastinate or put off the issue for later. Some believe that the best approach to estate planning is to put everything into joint ownership with the new spouse and expect that person to be fair and honest. This rarely works; the messiest probate battles almost always involve step parents, step children and step siblings. Don’t be the person who left a legacy of hurt feelings and anger. Inheritance battles will permanently divide families. The feud between families can go on for a very long time because the expensive and emotionally draining probate litigation process can go on for years. If you love your family, don’t leave them to sort out your mess. With proper planning, the estates of multiple marriage spouses can be administered in an orderly, mature fashion, with provision made for all interested parties.

One convenient and effective solution is the Revocable Trust. In a Revocable Trust only the Grantor can amend the agreement. Upon the death, the Trust becomes irrevocable, since the only person who had the right to amend it is unable to do so. In order to ensure the welfare of the children of the prior marriage, each spouse’s Revocable Trust should be funded with that spouse’s separate assets. Separate assets funded in each spouse’s separate Revocable Living Trust, and subsequently maintained in that Trust during the course of the marriage, often remain separate in a subsequent divorce. The Grantor can name anyone they wish as Trustee to manage and distribute the trust assets. The trust will specify all the provisions necessary to ensure that the Grantor’s wishes are met. In contrast to a will there is no probate process and a trust will not be contested.

The needs and wishes of couples in second marriages vary widely, depending on the age of the spouses, their net worth, the length of their marriage, the age of their children, and their relative contributions to the marital estate. A heartfelt and mature conversation must take place to discuss what is best for the family. Consulting an experienced Estate Planning Attorney is a good starting point. The result of establishing the Trust is that the Grantor may provide for his or her surviving spouse, and be assured that the Grantor’s children will also be taken care of.

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 info@wfplaw.com to schedule your free consultation. It’s a Wild world. Are you protected?

Pet owners consider their beloved animals as friends, companions, and probably, as another member of the family. The law however views them only as property and without the proper planning a pet may be inadvertently destined to suffer and a live the remainder of its life without the care it is accustomed to because its owner did not know or was not well advised to establish a plan. Many times a pet owner will entrust his animal to a close friend or family member, but there are many reasons that the owner’s wishes will not be carried out. Many times the pet’s new caregiver may not be able to keep the pet because of allergies, lack of time, conflict with other pets or an apartment management’s prohibition of pets. A pet owner’s only assurance is to draft legally enforceable documents that will guarantee the pets future.

Many pet owners believe that by stating instructions for the care of their pet they are guaranteeing the pets future. They are wrong. Wills are valid after death, and their purpose is to distribute property not to leave standing instructions on how to take care of property. For example, Jerry gets the cat and the car. A will can’t force Jerry to give the car a tune up every few months. In the same manner, a will can’t force Jerry to take care of the cat in any specific way. Additionally, a will doesn’t allow for the pet’s care in case of the owner’s incapacity. A will cannot deal with the possibility that the pet may need to be taken care of during the owner’s lifetime.

Trusts for the care of an animal or “pet trusts” are recognized in 40 states, and unlike a will, provide many protections and advantages. First, the trust is valid during the pet owner’s life and after his death. Pet trusts are usually terminated at the death of the animal or if there are provisions for more than one animal, at the death of the last surviving animal. Second, pet trusts can control the disbursement of funds to the new caregiver. Detailed instructions can be left with provisions on how to use or spend any funds left for the purpose of taking care of the pet. Finally, a pet trust can provide instructions for your pet’s care in case of your incapacity.

Everyone would like to believe that their pet will be well taken care of in the unfortunate case of incapacity or death. No one wants a court to decide their pet’s future and well-being. The best sense of security for anyone is to know that their family and loved ones are provided for, for a pet owner that includes their pet. Discuss your pet’s future with your attorney so that you may ensure that your pet will get nothing but the best care, even after you can’t provide it anymore.

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 info@wfplaw.com to schedule your free consultation. Let us protect what you value most.

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 afterwards, 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 estate plan than to wait and have your family bear the consequences of an avoidable negative situation.