Many people are under the false impression that if you write down what you have and who you want it to go to when you die, you are covered and don’t need an official will.  This is a dangerous misconception.  Holographic wills are not valid in the state of Florida.  So what exactly is a holographic will?  While the name might lead you to believe that it has something to do with a third dimension, a holographic will is a will that is entirely in the testator’s handwriting and signed by the testator.

In Florida, according to section 732.502 of the Florida statutes, in order for a will to be valid it has to be signed (or acknowledged) at the end by the testator in the presence of two witnesses who must be in the presence of the testator and the presence of each other when signing.  If there are two witnesses, but each sign separately, and do not see both each other and the testator sign, then the will is invalid.  Moreover, the will must then be notarized by a licensed Florida notary that witnesses the testator sign the will and then witnesses the witnesses sign the will.

Some states have a rule that if a will is executed by a resident of another state and that will would have been valid in that other state at the time it was executed, then it will be valid in the new state too. Florida has a similar rule.  According to Florida Statute 732.502, “Any will, other than a holographic or nuncupative (oral) will, executed by a nonresident of Florida, either before or after this law takes effect, is valid as a will in this state if valid under the laws of the state or country where the will was executed.”

In other words, even if a Holographic will would have been valid in another state, it still will not be accepted in Florida. Of course, if the will is properly witnessed and notarized, then it is valid in any state.  A “nuncupative” will is an oral will.  They are not valid in Florida either, even if videotaped or put on YouTube for the world to see.

For more information about creating a valid will and protecting your family after you are gone, please contact the law offices of Wild Felice & Pardo, P.A. at 954-801-4635 or via email at info@wfplaw.com.  Let us protect what you value most.

While the benefits received from a life insurance policy are not treated as income for tax purposes, if the life insurance policy was owned by the deceased within three years of his death, the estate of the deceased will be taxed on any amount of the insurance proceeds above the estate tax threshold.  Okay, now in plain English.  If you take out a life insurance policy on your own life, fund the policy during your life, and leave the proceeds to your spouse or other family member, they will owe big time taxes.  So what can you do to avoid this tax?

Creating an Irrevocable Life Insurance Trust (or “ILIT”) will protect your family from the burden of estate taxes upon receiving the benefits of the life insurance policy.  This estate tax savings can be accomplished either by the insured establishing an ILIT and giving existing life insurance policies to the trust, or by the trust itself purchasing a new policy on the insured’s life.  The insurance will be excluded from the insured’s estate because the insured will not own the policy at the time of death.

There are three requirements: (1) the insured must not own or retain any incidents of ownership in the insurance, (2) the proceeds must be payable to the trust rather than the estate, and (3) if policies are given by the insured to the trust, the insured must survive the gift by 3 years.  To avoid any gift tax consequence, simply borrow against the existing life insurance policy for the amount of equity/value already attained by the policy since instituting it.

An ILIT also provides the benefit of instructing who gets the money, at what age they get the money, and under what conditions they can get the money.  For instance, you wouldn’t want your 7 year old to inherit $2 million in one lump sum.  How much candy and video games do they actually need?  Instead, the ILIT can name a trustee and pay for the needs of the child until the child reaches a suitable age for inheritance, such as 18, 21, or 25.  You can see that your child is cared for but not given the opportunity to frivolously spend away the inheritance.

For more information on the benefits of life insurance and your ability to save your family hundreds of thousands of dollars in estate taxes, please contact the attorneys of Wild Felice & Pardo for your free consultation at 954-944-2855 or via email at info@wfplaw.com.

Although the name sounds like a description for a poorly drafted trust, a Crummey trust is actually an estate planning tool that allows the settlor to utilize the annual gift tax exclusion when gifting into the trust.  The trust beneficiary must have notice of the gift into the trust and retain the right to withdraw the gift from the trust.  However, this right can expire after a reasonable length of time, usually 30 or 60 days.

The Crummey trust allows the buildup of a large trust fund over a number of years if the beneficiary does not withdraw the annual gifts into the trust.  Another good use of the Crummey trust occurs when the trustee purchases life insurance on the life of the settlor and pays the premiums with the annual gift into the trust.  This creates the potential that a large trust fund will be created when the insurance is paid to the trust on the settlor’s death.  Because the Crummey Trust is irrevocable, the trust is not considered part of the settlor’s estate and thus is not subject to the Federal estate tax.

To learn more about the Crummey Trust and other estate planning techniqes that can be implemented to preserve your wealth, please contact our estate planning attorneys at 954-944-2855 or via email at info@wfplaw.com.