Black Friday, for a lot of people, is a day to score great deals, and it has been practically a holiday itself since the 1980s. The American Philatelist was the first magazine to use the term “Black Friday,” coining it in reference to dealing with the additional hours, extra long shifts, and traffic. The term was, at the time, negative, but it has since become standard for anyone talking about the day after Thanksgiving. It’s the busiest shopping day of the year.

The Black Friday we’re talking about is somewhat of a “Reverse Black Friday.” Instead of assets that you’re going to buy, this article is about assets you already own and want to protect from possible sources of liability. This article will serve as a guide to the different ways you can do that. 

Source of Liability 

There are many more sources of liability than those listed below, and there is only a brief definition provided for those listed. However, these are some of the most common: lawsuits, underinsurance or no insurance, divorce, callable loans, and debt. These can all result in your assets being taken from you—no matter how precious. 

Lawsuits 

You might think of a lawsuit as only something that happens to you when you do something wrong, but that’s not always the case. America is a very litigious society. Each year, over 40 million lawsuits are filed in the U.S. Businesses can be subject to employment discrimination, worker’s compensation, malpractice, breach of contract, and other lawsuits that can cost you, if not in judgment, in legal fees. 

Uninsured or Underinsured 

If you’re in an auto accident and you don’t have insurance (or you don’t have enough insurance), a lawsuit can go after your assets. States do have minimum liability requirements, but juries aren’t exactly opposed to handing out millions of dollars in awards. 

Divorce 

Your ex-spouse knows more about your finances than most creditors, and a divorce can hit you where it hurts, especially since you cannot usually discharge back child support or alimony in the case of bankruptcy. Things get even trickier if you and your ex own a business together—especially if the divorce is acrimonious. 

Callable Loan

Lenders, in certain cases, can “call” a loan and demand you pay it back immediately. If you have the means, you can refinance the debt and hope that works. If not, your assets are going to be the first to go as a way to avoid bankruptcy.

Debt 

Though federal law puts a limit on liability from the debt that is secured by your home, there are no restrictions like that on commercial loans. If you fall behind on your mortgage (one of the most common debt problems), commercial foreclosure can put other assets at risk; that is, unless you take steps before to contain the fallout. 

Asset Protection from Liability

The above list has just some of the many sources of liability that can come as a shock. Below are some “Reverse Black Friday” ways to protect what you already own from people coming to collect, including use of business entities, insurance, retirement accounts, homestead exemptions, titling, annuities, and elimination. 

Business Entities 

Business entity types (such as sole proprietorships, partnerships, LLCs, and more) are a double-edged sword. For example, there is no limit to personal liability if you own a sole proprietorship. A partnership can leave you liable for your partner’s actions, even if you do nothing wrong. 

Business entity types that can limit liability include LLCs—limited liability companies—and corporations. In some cases, a lawsuit can pierce the veil of this protection, but these types of business structures are generally very protective.

Insurance

You’ve heard it a million times—get insurance, and make sure you get the best type of insurance you can afford. If you can afford umbrella coverage, get it. Do not bet on the odds of something not happening. Homeowner’s insurance, commercial liability insurance, auto insurance, long term care insurance, and more are just some of the many ways you can safeguard yourself. Pay now or pay later.

Retirement Accounts

If you have an ERISA-qualified retirement plan, federal law provides you with unlimited asset protection. If you have an IRA, you are protected for up to $1 million if you go bankrupt. Some states have even more protection, though others have less because they opted out of the Bankruptcy Reform Act. Retirement accounts offer at least some asset protection. 

Homestead Exemptions

Florida is a state that provides a certain amount in home equity if you go bankrupt. You might have to contribute extra to your mortgage payments, but it is worth it, as taking advantage of the homestead exemption is a must-do.

Titling

How is your home titled? For example, owning the home as tenants in the entirety with your spouse means that, if one of you gets sued, the creditors cannot force your spouse to sell their interest. The interest isn’t divisible—your home may be protected if your state doesn’t have a sufficient homestead exemption. 

Annuities

Some states, including Florida, provide protection to assets in cash value life insurance and annuity balances. Florida statute §222.14 protects annuities and their proceeds from creditors. If you don’t have a life insurance policy, annuities protection is a good reason to get one. 

Elimination 

Last but not least, creditors cannot take what you don’t have. Consider transferring title of the asset to someone else—an heir, for example. You can give away (as of 2020) up to $15,000 in gifts without getting taxed. 

This short guide should prove that there is hope for asset protection, but you need to act now before anything has happened (or could happen). The best time to protect your assets is before the source of liability strikes—after that, it is often too late. 

Find out more about asset protection when you visit our website.

Did you know that Thanksgiving dates back to 1621? In 1621, the Wampanoag Native Americans and Pilgrim colonizers shared a meal together at Plymouth Plantation. Contrary to popular belief, the meal didn’t exactly start as a sit-down dinner. The Plymouth Pilgrims were shooting off guns to celebrate an unknown occasion, and the nearby Wampanoag tribes went to investigate the sound. The groups met and cautiously ended up eating together. 

It wasn’t until the 1860s that President Abraham Lincoln made Thanksgiving a national holiday, trying to further a narrative that would bring the country together during the Civil War. 

Now, centuries later, we all sit down for a day of food, football, and family. Speaking of family, there’s no denying that they are probably the most important part of your life. When thinking about being thankful, there are ways to show that thankfulness all year ‘round—including after you’re gone.

What happens after you die?

This might sound like a heady philosophical question, but don’t worry; it’s not. We’re really just referring to what happens to your estate after you pass away. Do you have a will? Do you know what will happen to your property—cash, assets, real estate, etc.? 

Asset Protection 

If you die without a will, your assets will be unprotected. A probate court will divvy up what you own and use your assets to pay off creditors. Your family will get what’s left. Though a last will and testament is one way to provide instructions for asset protection, there are other means of doing so as well, including: trusts, gifts, and college funds. Picking your power(s) of attorney and legal guardians for your kids are two other important legal tools.

Trusts

One of the best things about trusts is how varied they are. A trust is a three-party relationship where the donor transfers legal title of an asset to a trustee, who holds the asset for the benefit of the beneficiary. At the donor’s specification (such as when he or she dies or when the beneficiary turns eighteen), the trustee will hand over legal title to the beneficiary.

Though this sounds simple, there are many different types of trusts. The most common include revocable, irrevocable, asset protection, charitable, construction, special needs, spendthrift, and tax bypass. And that list is by no means exhaustive. An estate planning attorney can help you determine which trust is best for your financial situation. Visit our website and learn more about estate plans and trusts.

Gifts

As of 2020, in America, you can give away $15,000 in gifts to as many people as you want without having to pay tax or report the giveaways. Once you hit the $15,000 threshold, you must file a tax return for the gift(s). Gifts can include money, real estate, property, or cars. Giving gifts of under $15,000 helps you legally avoid taxation on assets, while still benefitting your loved ones.

College Plans

The IRS allows people to save money in tax-advantaged college savings’ programs, called 529 plans. Depending on your state, this tuition money can be used for in- or out-of-state tuition or for private and public schools. Again, this depends on the state. 529 plans are a good way to get a head start on your kids’ future. 

Powers of Attorney

Though it’s important to protect your assets and property for your family after you pass on, the postmortem protection isn’t the end of the story. Pre-mortem arrangements, such as picking a power of attorney, mean that you will have a trusted person in charge of your financial and medical decisions if you are too incapacitated to make them yourself. It might go without saying, but self-protection is just as important as asset protection. 

Guardianship

Finally, if you have minor kids, you need to arrange legal guardianship for them in the event of a worst-case scenario. Talk to your proposed guardian and make sure they are on-board with your plan before drawing up the papers.

Though this list is by no means exhaustive, it hopefully helps provide the basics for keeping your family safe and secure, no matter what happens.  

One thing 2020 has not been is boring—aside from the months spent in quarantine, that is. 2020 is coming to an end, which is something that pretty much everyone can be grateful for. There are loose ends to wrap up before January 1, 2021 dawns, and, when it comes to your family, these loose ends might include taxes: income, estate, and gift. 

Income Tax

While we all know what income tax is, you might have a couple after-the-fact questions about the process itself, such as: 

When do I get my refund? 

Your tax refund usually comes within 21 days after you electronically file your tax return. If you file paper tax returns, your refund is issued within 42 days. The IRS has introduced a “Where’s my refund?” tool on its website that will help you track your refund status. Though you can call the IRS if your refund is late, note that the chances of getting to talk to a customer service representative are slim to none, as the IRS is very busy during this time.

The IRS suggests that you wait at least 21 or 42 days after electronic or paper filing to contact the 1-800-829-1954 hotline. Additionally, if you’re trying to find out where your refund is, there is an IRS2Go mobile app. 

If your refund is delayed, there might be a few reasons. It’s possible that the check, if you received a paper one, was lost in the mail or even stolen. The IRS must confirm the check was lost or stolen before issuing a new one. If your refund was direct-deposited, there might be a problem with the bank information you put in. The IRS can contact your bank to try to help.

Before panicking, give it some time. Though mistakes with refunds happen, that’s not the case for the majority of delays. Usually, it comes down to the government moving slowly. It’s been a hectic year, and, as we all know, everything takes a little longer because of the pandemic. Also, it is an election year. The USPS is giving first priority to mail-in ballots. Other mail comes second.

What if I did my taxes wrong? 

Visions of jail time might dance in your head, but that’s actually a very, very, very unlikely possibility, especially if the mistake was just that—an unintentional accident. The IRS catches and fixes most errors itself, alerting you about the mistake after they fix it and telling you what they did to rectify it. 

If you catch it before they do, you can solve the error through the electronic filer, or you can use form 1040X to amend your tax return. Missing forms (two of the most common mistakes) is an example of an error that is not automatically solvable. The IRS will alert you of the problem, and you will have to send in the missing form. 

You aren’t the first person to make a mistake on your taxes, nor will you be the last. A mistake is not that big of a deal. You won’t have to redo your entire return unless the whole thing is wrong.

Estate Tax

Next up, and slightly more complicated—if you can believe it—is estate tax. This is a tax on the right to transfer your property after you die, which means that your relatives or lawyer will be the one worrying about it if it’s your estate. 

How does the IRS calculate estate tax? 

The IRS calculates estate tax by taking an accounting of everything you own or in which you have interests at the date of your death, including trusts, insurance, annuities, real estate, cash, and more. The fair market value of the tallied items is used to compute the total, which is the “Gross Estate.” From the “Gross,” there are certain deductions you can take, depending on the estate. After that’s settled, the “Taxable Estate” is what’s left, and that is the total from which the IRS takes the tax.

Who must file?

The requirements for filing have increased. In 2021, if your estate is worth over $11.7 million, you must file an estate tax return. That number has been increased from $11.58 million in 2020, and the previous years have also been increased. For more information, you can look at the IRS’ Form 706 Instructions. 

Gift Tax

Finally, there is a gift tax. Gift tax is a tax on the property or money that someone gives to someone else. You are legally required to report gifts over $15,000. Don’t bother trying to hide a gift, because if you get audited, you will end up paying not only the correct tax, but also likely a fine. The gift tax exclusion lets you give away $15,000 in assets or cash to as many people as you want. Gifts can include stocks, land, cash, cars, and more. Once you hit the limit, you must report and pay taxes on it. 

This article is not the be-all, end-all of the many ways the government can tax you. As with everything in law, there are a million and one details and exceptions to these laws. However, this is a basic primer that might help you tie up any loose taxation ends that you might be facing. As always, it never hurts to hire a lawyer to help you with tax matters. It’s cheaper to do it right the first time than to fix costly mistakes. Visit our website to learn more.

A trust is a legal document that a grantor (also known as a trustmaker or settlor) creates. The grantor creates the trust for the benefit and use of a beneficiary. A trustee is a third party who is tasked with maintaining the trust assets and ensuring that they are handled properly. 

“Trust administration” concerns the trustee’s job—namely, distributing and maintaining the trust. In this article, we’ll go through the basics of trust administration. 

What is Trust Administration? 

Trust administration is the last main stage of the trust. It goes into effect when the grantor is incapacitated, dies, or otherwise indicates that he or she wants the trust to be administrated. Trust administration is a process, and it is the trustee’s job to faithfully carry out the wishes of the grantor. 

What Does a Trustee Do? 

Once the grantor dies, the trustee becomes responsible for a myriad of tasks. These tasks include (but are certainly not limited to) providing copies of the trust and notice of the commencement of administration to all beneficiaries/heirs. State statute or the trust document will specify the format to which the copies and notice must adhere. 

The trustee must notify the state of the grantor’s death, request a taxpayer ID from the IRS, file an estate tax return, and handle the process of distributing trust assets and/or proceeds to the proper beneficiaries. The process of trust administration is usually faster, more efficient, and less publicized than court-supervised probate.

However, many trustees are unfamiliar with these procedures. This is why it is important for a trustee to work with a lawyer, CPA, and/or financial advisor to ensure everything is done correctly. This collaboration is yet another important task for the trustee. 

Advantages of a Trust 

Trusts have many advantages; chief among them is avoiding probate court. According to CNN Business, the basic trust plan will cost between $1,600 to $3,000 (though this is just an estimate—costs can vary). In many states, the typical probate cost will be 5%-10% (again, estimated) of the total value of the estate. 

In addition to being faster and more private, trusts are usually more cost-efficient than the probate court process. Depending on the type of trust, trusts can protect your property and assets from lawsuits and creditors. 

Trusts can reduce gift and estate taxes. During trust creation, you can name your trust administrator and put conditions on your posthumous asset distribution. This level of personalization is a major benefit of trusts.  

Disadvantages of a Trust 

As with any legal document, trusts and trust administration have their disadvantages, including the loss of control over assets if you make the trust irrevocable (which means that the trust cannot be changed once the document is finalized). 

If you make the trust revocable (which means that the trust can be changed, even after finalization), that revocability may have tax-related consequences. It might also have negative effects on stamp and estate duty and asset protection. 

Lastly, bad trustees are out there. You might appoint someone that you think is trustworthy, only to find out that that was a miscalculation. Luckily, courts offer remedies to protect you in the event of trustee misconduct.

Trustee Misconduct

It is relatively rare, but it does happen. When a trustee commits misconduct, this is called a “breach of fiduciary duty.” In Florida, there are four main examples of a breach of fiduciary duty: self-dealing, excessive compensation, poor investment choices, and stealing assets. 

The first is self-dealing. For example, a trustee who is selling property or using assets for personal gain is self-dealing by using trust assets to benefit his own wallet.

Secondly, a breach might involve excessive compensation. This occurs when the trustee is paying himself too much. Though trustees are legally permitted to accept payment for their efforts, said payment must be reasonable. 

Third, a breach occurs if a trustee is making inappropriate or poor investment choices. These choices might be the result of impaired judgment, self-dealing, or both. For example, a trustee investing trust assets into his own underperforming, badly-managed business has engaged in both self-dealing and in improper investment.

Fourth, is just plain old theft. A trustee breaches his fiduciary duty (and may be susceptible to criminal penalties) for stealing assets from the trust. Pilfering assets usually requires intentionality. 

The main defense to a breach of fiduciary duty is showing that the trustee was acting within the bounds of the trust document. This process—the allegations and the defense against them—will be handled in a court of law. 

Remedies for Breach of Fiduciary Duty 

The main defense to a breach of fiduciary duty is showing that the trustee was acting within the bounds of the trust document. This process—the allegations and the defense against them—will be handled in a court of law. The court will hear both sides and determine what relief, if any, is required by law. 

There are legal and equitable remedies available to grantors if a trustee breaches his fiduciary duty. These remedies include appointment of a new trustee, damages, a constructive trust, injunctive relief, and even criminal penalties. 

When deciding whether to set up a trust, you should consider all the advantages and disadvantages. Even in the event of misconduct, a court can still offer relief. Talk to an attorney about the best decision for you and your property, and learn more from our website. 

Halloween is the season of pumpkins, ghosts, goblins, and more. You might like your Halloween frights tame and filled with corn mazes and G-rated movies, or you might be a hard-core horror movie and haunted house fan. Either way, there’s no denying that Halloween is one of the best holidays around. 

However, it isn’t the scariest thing in the world. Halloween comes once a year, but the frights and scariness that come with not having an estate plan is year-round. Listed below are the basic things to know about estate plans, wills, and (eek!) probate court.

Requirements of a Last Will and Testament

The last will and testament is a legally-enforceable document that you create. It outlines your wishes for what you want to happen to your assets (property, personal possessions, money, etc.) after you die. In Florida, there are several requirements for a last will and testament. And, within some of those requirements, there are exceptions.

First, the testator (person who is making the will) must be eighteen or older and of “sound mind.” Sound mind isn’t overly complicated. It just means that you need “testamentary capacity.” You need to mentally understand the extent and nature of the property your will dispose of posthumously, and you need to understand your relation to those who will claim a benefit from your will. Essentially, you must know you’re writing a will, and you need to be cognizant of the property in your will and the people to whom you’re transferring the property. 

Second, the will must be in the correct form of writing, i.e. non-holographic. It cannot be “holographic” (AKA “olographic”). A holographic will is a will that has been completely handwritten and signed by the writer/testator. It is an alternative to a lawyer-written will. Some states might allow holographic wills, but Florida does not.

Third, the testator must sign the will. If the testator is unable to sign it (quadriplegic paralysis is a common example of why a testator might be unable to sign his will), the testator may direct another person to sign it on his behalf. That person must sign the will at the direction of the testator and in the presence of the testator.

Fourth, the will must be signed at the bottom. The signature doesn’t have to be formal—it can even be a symbol or letter; so long as the testator uses that symbol as his signature, it is acceptable. 

Fifth, two competent witnesses must be present at the signing. The witnesses must sign the will in the presence of the testator and one other person. 

What is Probate Court? 

Probate court is the court where last wills and testaments go to be authenticated (validated as real) and then executed. It is also where people who die intestate go. If someone dies intestate, that means that they die without a will.

In the case of intestacy, the probate court itself will divvy up the deceased’s property. Creditors will be the first recipients, followed by anyone else with a legal claim. Probate court is time-consuming, expensive, and, in the case of intestacy, it doesn’t always reflect what the deceased would have wanted. 

How to Avoid Probate Court 

Even if you don’t die intestate, you will likely have to go through probate court unless your estate is extremely small. A trust is another way to transfer assets without going through probate court. A trust goes into effect when you’re alive, not when you’re dead. You transfer legal title to an asset to a trustee, who holds it until you want the beneficiary to receive it. A trust can be created in a last will and testament. 

The bottom line (and the most takeaway from this article) is that you must have a plan for your asset distribution after you die. Going to probate court for will authentication is far different than going there for intestacy. You don’t need to wait until your old or sick to make an estate plan. In fact, the best time to do it is when you are in good health and clear-headed.

Though not having an estate plan might not have the same fright-factor as Michael Myers chasing people with a knife, it’s still scary. Make sure you talk to an attorney to find out how you can protect yourself and your family from the real-life horror movie that is dying intestate. Learn more about probate. 

Well, there’s no getting around it. Election day is fast approaching, and, in less than one month, we’ll all be making one of the most important choices of the year. No matter who you’re voting for, it’s important to get out there and make sure that your voice is heard. Many states have early and mail-in voting, and, of course, you can vote in person, too.

Elections aren’t the only events in life that require tough choices. Some of the most difficult phases of and events in our lives require serious decisions. The key is to make sure you always have a plan, no matter what. In this article, we’ll talk about three major life events and the legal documents they involve.

Death

Death is inevitable, and though you might not live on, your assets will. You have a few options when it comes to asset (money, property, possessions, etc.) distribution. Two of the main ones are last will and testaments and trusts. 

A last will and testament is the estate planning tool with which most of the population is familiar. This document lays out how you want your assets distributed after you die. A will must be authenticated in probate court before the wishes enshrined in it can be executed. 

For a will to be authentic in Florida, there are a few requirements. First, the testator (person writing the will) must be at least eighteen years old. Second, he or she must be of sound mind. Third, he or she must sign the will. Fourth, there must be two competent witnesses, and fifth, the will cannot be “holographic” (handwritten). There are certain exceptions/tweaks to the third and fourth requirements, but those five are the basic must-haves. 

A trust, by contrast, goes into effect immediately, not just when you die. A trust is a three-party relationship. You (the grantor) sign title to your asset(s) over to a third party (the trustee). Then, upon your direction—or when you die—the trustee turns over the asset(s) to the person you intended as the recipient all along. This recipient is called the beneficiary. 

Divorce

Divorce can shake up your estate plan. Revisit your estate plan after the divorce is finalized. There are certain documents, such as healthcare proxy, power of attorney, and any trust beneficiaries, that require updating if you are divorcing your spouse. Even if the divorce is amicable, you will need to make changes. 

You might still want to leave your spouse something, which is your right, divorced or not. Check your prenuptial and/or postnuptial agreements, as well as your state’s laws, to see what can and cannot be altered in your estate plan.

There are some documents you might not be able to change during the divorce. In some states, you cannot change beneficiary designations for life insurance, 401(k) plans, pensions, and similar accounts until after the divorce has been finalized. 

The bottom line is this: divorce means you have a lot to do to ensure that your estate plan reflects your wishes accurately.  

Sickness

While divorce requires you to update and correct, sickness (and old age) require even more proactive action. It’s best to complete certain documents, like a living will, power of attorney, and guardianship papers before something happens.

A living will, in contrast to a last will and testament, goes into effect while you are still living. This legal document contains directions for your medical care. If you are too sick or incapacitated to tell doctors and nurses what you want, the medical staff can refer to this document for assistance. Examples of items included in a living will are preferences for pain management, DNR (Do Not Resuscitate), and organ donation. The living will tends to reflect the patient’s values and spiritual or religious views.

A power of attorney is a trusted individual that you appoint to manage your financial and/or medical affairs if you’re unable to do so yourself. This person is usually a spouse, family member, or trusted friend. 

Guardianship papers are important for those with minor children. These documents designate who will take custody of your dependents in the event of your death or incapacitation. 

Though life is always going to be fraught with surprises, some good and some bad, having a solid plan will alleviate stress and allow you to face difficulties head-on. Talk to an estate planning attorney today about how to safeguard yourself and your loved ones, and learn more about asset protection. 

And don’t forget to vote!