Category Archives: Estate Administration

Use of Separate Writing for Disposition of Tangible Personal Property

In this article we explain crucial points to keep in mind as you prepare a separate writing to dispose of certain items of tangible personal property. By carefully preparing a crystal clear and unambiguous writing detailing your intentions will only help your representatives be better suited to carry them out at the appropriate time.

WHAT CAN GO IN THE WRITING?:

Most items of tangible personal property owned by you may be included in this writing. Tangible personal property includes, but is not limited to:

  • Household goods
  • Furniture
  • Furnishings
  • Clothing
  • Boats
  • Automobiles
  • Books
  • Objects of art
  • Club membership
  • Articles of personal or household use or adornment.

ITEMS YOU CANNOT INCLUDE IN THE WRITING:

On the contrary, keep in mind this writing cannot be used for the following:

  • To dispose of real property
  • Property used in trade or business
  • Money or books, paper or documents whose chief value is as evidence of intangible property rights such as bank books, stock certificates, promissory notes, insurance policies, and like.

Also, of importance, we request that you do not use the separate writing to dispose of a coin collection, since the law regarding this has not been finalized.

PREPARING YOUR WRITING:

The separate writing may be prepared either in your own handwriting or by typewriter or word-processor. For your convenience, we have included a copy of the Florida Statute explaining separate writings below.

EXCERPT FROM FLORIDA STATUTES:

732.515 Separate Writing Identifying Devises of Tangible Property. A Will may refer to a written statement or list to dispose of  items  of  tangible  personal  property  not  otherwise specifically disposed of by the Will, other than money and property used in trade or business. To be admissible under this section of intended disposition, the writing must be signed by the testator and must describe the items and the devisees with reasonable certainty. The writing may be referred to as one in the existence at the time of the testator’s death. It may be prepared before or after the execution of the Will. It may be altered by the testator after its preparation. It may be a writing that has no significance apart from its effect upon the disposition made by the Will.

THE IMPORTANCE OF DETAILS:

We cannot stress the importance of being as specific as possible in describing the items of property and identifying its intended beneficiary. The more detailed the writing the more it will increase the chances this process with go smooth for the person you want to receive your personal property. This may go without saying, but we wouldn’t mention this if we didn’t see this time and time again. Remember to date and sign the writing.

CHANGES HAPPEN:

You can make a change on the separate writing at any time. Just keep in mind that it’s important that each change is initialed by you. For example, if you would like for an item to go to another person if your first beneficiary is deceased, you should indicate this on the form by inserting the secondary beneficiary’s name. If you don’t want an item to go to a named person, you should insert this specific language after you have named the first beneficiary “if living and if not, disposed of as the balance of my tangible personal property in my Will”.

Below is an example of this: To my son, JOHN DOE, if living, and if not, then to his wife,JANE DOE; or, to JOHN DOE, if living and if not, to be disposed of as the balance of my tangible personal property as set forth in my Will.

REMOVING AN ITEM:

There may be cases where you no longer have an item contained in your original writing.  For example, you may have sold an item or gave it away. Just be sure to indicate this on the separate writing in detail so the item will not be treated as missing later.

SAFEKEEPING YOUR WRITING:

We encourage you to keep the separate writing safe as though it were your Will. As a matter of fact, it should be kept with the Will, since the assets enumerated in the separate writing will be administered as though they were actually set forth in the Will.

NOT SURE WHERE TO GO FROM HERE?

As always, it may be wise to consult with an Estate Planning attorney who can guide you through this process and assure your writing is not “paper thin” when reviewed by authorities.     The Nici Law Firm specializes in Estate Planning and has helped countless clients avoid issues with tangible property disputes by composing a separate writing for Disposition of Tangible Personal Property that is rock solid. If you have any question you can contact Nici Law Firm at (239) 449-6150.

Qualified Personal Residence Trusts

Qualified Personal Residence Trusts (QPRT)

 

There are many ways to utilize trusts to reduce estate tax liabilities. The Qualified Personal Residence trust (commonly known by its acronym “QPRT” and pronounced “Q-Pert”) is a great way to pass real estate to one’s heirs while minimizing gift and estate taxes.  It is a simple concept: the owner of a personal residence transfers it into a trust, but retains the right to live in the residence for a specified number of years.  At the end of that period, the beneficiaries of the trust become the owners of the residence.

Let’s take a look at an example of how a QPRT works:

In 2002, the owner of a personal residence creates a QPRT, and transfers ownership of their residence into the QPRT. Because the beneficiaries of the trust cannot take ownership for a specified period of time, the value of the gift is discounted. This discount is based on several factors, including the age of the donor, the number of years the donor will retain the right to occupy the property, the appraised value of the property, and the current IRS actuarial tables. For example, if the donor in 2002 established a 20 year QPRT to hold a $1 million residence, the discounted value of the home (based on the interest rate in effect in January, 2002) would only be $192,270.

Trust Agreement Terms

A QPRT trust document may allow for the following:

  • The donor could be the sole Trustee of the QPRT, and make all management decisions.
  • The trust would continue for a specified number of years, after which the property could be transferred either outright to the remainder beneficiaries, or in further trust for their benefit. The number of years that the QPRT is designed to continue requires careful thought since the tax benefits are lost if the donor dies before the QPRT ends. A longer trust term increases the tax advantages, but also increases the risk that premature death will erase those advantages.
  • During the term of the QPRT, the donor would be entitled to all rights of occupancy, and would be responsible for all costs of maintenance.
  • If the residence is sold during the term of the QPRT, another home can be purchased to replace it in the trust. If a replacement home of equal value is not purchased, the unused cash proceeds must either be distributed back to the donor (thus forfeiting the tax benefit), or the cash must be invested and the donor will be paid an annuity for the balance of the QPRT term (thus reducing, though not necessarily eliminating, the tax benefit), after which the remaining trust assets will be distributed to the remainder beneficiaries.

Considerations When Forming a QPRT

The objective of the QPRT is to reduce inheritance taxes by removing the property from the donor’s estate. If the donor’s death occurs after the QPRT has ended, the donor’s taxable estate for federal estate tax purposes will include only the value of the remainder beneficiary’s future interest in the residence when the trust was created, and all appreciation in value after the date of the gift will have been removed from the donor’s estate.

On the down side, if the donor has survived the QPRT term, the residence will not receive a “step- up” in its income tax cost basis to estate tax value, because the residence will not have been taxed in the donor’s estate. For this reason, the QPRT is best suited for a home likely to stay in the family until the children’s deaths, when the residence will get the desired step-up in basis. However, even if the property is later sold by the children, the capital gains tax (at least under current tax law) will be far less than the estate tax that, otherwise, would have been due had the QPRT not been created.

During the QPRT term, the donor will be treated for income tax purposes as if he or she were still the owner of the property; i.e., the donor can deduct real estate taxes, take advantage of tax elections on the sale of the property, etc. If the property is sold by the QPRT, a capital gains tax will be due in the same amount as if the donor still owned the property. And, the donor must pay the capital gains tax out of the donor’s own funds, which often produces a good estate tax result because payment of the tax reduces the donor’s taxable estate.

If the donor dies before the completion of the term of years specified in the QPRT, the trust will end and the property will be disposed of by the donor’s Will or Revocable Trust. The tax advantages will be lost, but there will be no tax detriments—taxes will be calculated as though the QPRT had never been created.

If the Estate Tax Is Repealed, Will Estate Planning Still Matter?

Estate Planning - Tax Attorney Naples, FL

Nici Law FirmIf the Estate Tax Is Repealed, Will Estate Planning Still Matter?

 

For generations, families have used estate planning and trusts to transfer wealth and preserve their legacies. Unfortunately, estate planning and trusts continue to suffer from a common misconception that the sole purpose is to reduce estate taxes. This association is so strong that President Trump’s promise to repeal the federal estate tax has clients asking: If the estate tax goes away, will we still need estate planning and trusts?

The answer is yes. While irrevocable trusts help shelter assets from estate taxes, they also offer numerous non-tax-related benefits. Revocable trusts, also offer compelling benefits.

Below are 10 reasons estate planning and trusts still matter, regardless of what happens to the federal estate tax:

Estate Planning - Tax Attorney Naples, FL

1. Protection when you need it most

If you become seriously ill or incapacitated, a fully-funded revocable trust can provide for the efficient management of your finances without the cost and delay of guardianship proceeding. A revocable trust may also help avoid the complications that can arise when someone acts as your attorney-in-fact under a power of attorney: many financial institutions are reluctant to recognize power of attorney documents that are created by other firms. A revocable trust typically provides the successor trustee with discretion to pay living expenses, including in-home medical care. If you are married, the revocable trust agreement can allow for distributions to support your spouse.

2. Offering your beneficiaries immediate access to funds

Without a revocable trust, financial assets will be frozen until your will has been submitted to the court and a personal representative appointed. This may cause cash-flow problems for your spouse or beneficiaries if they need to access those accounts to pay funeral expenses, medical bills and other related costs. Unlike assets held in individual name, assets held in a revocable trust can be available immediately to pay taxes, administration expenses and debts without waiting for the court’s approval. Even if funds aren’t needed, knowing they are available can provide a good deal of comfort to family members at a difficult time.

3. Avoiding the hassle of probate

The process of having the court handle the administration of an estate is time-consuming and expensive (although its costs and inefficiencies are sometimes exaggerated). If you own real property in more than one state, it may be necessary to open probate in multiple jurisdictions. In contrast, assets held in a revocable trust are not subject to court supervision and probate is not required to transfer them to your beneficiaries. That’s not to say that no work is required—you must transfer assets to the revocable trust during your lifetime and there is a process that must be followed when administering a revocable trust after death. But administering a revocable trust is much less cumbersome than administering assets through a probate proceeding.

4. Protecting your family’s privacy

If privacy is a concern for you and your family, a revocable trust could be beneficial. While the terms of a will become public information during the probate process, the terms of a revocable trust remain private.

5. Precise control over the distribution of assets

Control has always been a primary reason for establishing any kind of trust. As the person who creates the trust, you determine how it is structured, the timing and purpose of distributions, and how the assets are managed. You can create a trust for a single beneficiary or several beneficiaries, including charities, individuals and multiple generations of family members. The trust might require the payment of all income to a particular beneficiary, limit the use of principal distributions to educational or medical purposes, or trigger distributions based on age. You decide exactly how your assets will be distributed rather than leaving the decision up to a beneficiary.

6. Recognizing the complexities of modern families

Divorces, multiple marriages and blended families present challenges for individuals who want to make sure their wealth truly stays within the family. By leaving an inheritance in trust, including trusts for your spouse, you can ensure that your wealth ultimately passes along to your children or whoever you include in your definition of family. Trusts become especially important in the event of divorce because assets held in an irrevocable trust for a beneficiary are generally shielded from creditors. Proper drafting is required to take advantage of this protection.

7. Protecting beneficiaries from the unexpected

In our increasingly litigious society, asset protection has become a pressing concern. Families with considerable wealth can be especially vulnerable because they are perceived as having the financial means and motivation to settle out of court, especially when faced with claims that are scurrilous and might be made public. Beneficiaries who work in certain high-liability professions (such as doctors and lawyers) also face the threat of malpractice lawsuits. Properly structured irrevocable trusts can protect your beneficiaries from the claims of future creditors. Proper drafting is required to take advantage of this protection.

8. Caring for beneficiaries with special needs

Approximately 15% of all children under the age of 18 in the US have special healthcare needs, according to the US Department of Health and Human Services. A well-crafted trust can include provisions for the long-term care of these beneficiaries, even if their medical needs have not yet been identified. For example, your trust could be written with enough flexibility to provide special accommodations for an adult child who becomes disabled, or a grandchild (or a future grandchild) diagnosed with a serious, long-term disability.

9. Keeping your treasured property in the family

Transferring ownership of real estate or other unique assets to a trust can ensure that the property is maintained properly over the long term. A trust can also be useful when you want to divide beneficial ownership of a vacation home or some other piece of property that you want to keep in the family.

10. Benefitting from professional management

Last but not least, a professional trustee can help ease the many burdens that otherwise fall on the shoulders of family members or other trusted individuals. While you are living, professional management may help prevent you from becoming a victim of elder abuse. A professional trustee can also be responsible for communicating with your beneficiaries, handling conversations that might be difficult for you personally or for your family. Professionally managed trusts can offer the convenience of professional record-keeping and administrative services as well as the skills of professional investment managers. When you work with a trusted partner all of these services can continue without interruption, generation after generation.

Note: This memo focuses on the potential benefits of trusts, but please keep in mind that estate planning can be a complicated endeavor. The pros and cons of creating a revocable or irrevocable trust are influenced by a wide variety of factors, including the specific type of trust you are considering, the costs of establishing and maintaining the trust, and your family’s unique financial profile. If you have any questions about the federal estate tax or your family’s estate plan, please don’t hesitate to contact Nici Law Firm by phone at (239) 449-6150 or on the web at nicilawfirm.com.

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This document is intended to convey to you the principal characteristics associated with estate planning using trusts, including ways to protect a beneficiary’s inheritance from creditors. For this reason we have deliberately simplified technical aspects of the law in the interest of clear communication. Under no circumstances should you or your other advisors rely solely on the contents of this document for technical advice nor should you reach any decisions with respect to this topic without further discussion and consultation with an attorney. Revised February 2017.

Avoid Unnecessary Taxes by Implementing the Generation-Skipping Trust

What are Generation-Skipping Trusts?

naples-estate-planning-attorney-generation-skipping-trust-800A generation-skipping trust (GST) is an option to provide tax relief on financial gifts upon one’s passing. This trust shelters estate gifts from the GST Tax and estate tax while being able to protect children from:

  • Bankruptcy
  • Creditor claims
  • Divorce proceedings
  • Similar potential financial threat

It’s designed to provide for your children while negating death taxes that could take away from the inherited benefit that’s been left to them.

Who Needs Generation Skipping Trusts?

People who are financially considered to be middle-to-upper class require GSTs to offset the taxes that could burden their loved ones. A minimum amount isn’t required to create a GST and allows for a maximum exemption of $5,490,000 per individual who is leaving an inheritance. Therefore, a married couple can take advantage of a $10,900,000 exemption to use while still living or at the time of their passing.

How to Take Advantage of Generation-Skipping Trusts

Taking advantage of GST tax saving benefits while the benefactor is still living up to the maximum amount will provide:

  • sheltering of the entire gift so that it remains tax-free, even when the gift is an investment that grows substantially.
  • the ability to give tax-free financial gifts to one’s own children and grandchildren
  • peace of mind knowing that financial legalities have been arranged to allow the beneficiaries to receive their financial gift readily

Should the benefactor choose to give a set financial amount upon their passing, they may shelter up to the maximum amount of $5,450,000. The 40-percent GST tax will be applied to any amount over the exemption level.

Use the Generation-Skipping Trust for Financial Guidance and Tax Reductions

The generation-skipping trust will help to guide the benefactor’s children by giving the financial assets passed down to the children to the grandchildren should their parent pass away. It’ll help them to prepare for future generations by providing financial relief to family members in need. These trusts are also referred to as being “safety nets” that can be implemented into a person’s estate planning measures for familial assurance of receiving a guaranteed tax-free gift.

Maximize GST Savings With the Knowledgeable Help of an Attorney

Creating an estate plan with the generation-skipping trust need not be difficult when you receive help from a knowledgeable attorney. Nici Law Firm is skilled at the use of technical wording and the process required to successfully implement tax-saving opportunities for your loved ones. We will explain these benefits of gifting your hard earned investments while you’re still alive and upon your passing to maximize the potential earnings of your estate investments and monetary accumulations.

Transferring Property to Revocable Living Trusts

Transferring Property to Revocable Living Trusts in Naples, FL

Transferring Property to Revocable Living Trusts in Naples, FL

Revocable living trusts are trusts set up to provide financially for one’s offspring, with some quid pro quo requirements. Usually the income earned by you is placed within the trust, and you have the option to revoke the amounts you expect to give to your beneficiaries while you are alive. This is very different from probate, which is an expensive post-mortem option that trickles out the money and property to your beneficiaries through a probate lawyer. A revocable living trust allows more control over what your beneficiaries can receive while you are alive, and grant them previously-assigned amounts of the remaining money and property after your death.

Transferring Title to Property- The First and Most Important Step

When you choose to assign property to a trust, you are giving the gift of real estate in addition to, or in lieu of, the money. To do this, you should call the bank and/or broker with whom you conduct most of your business and ask for their assistance. If you plan to complete this process without assistance from a law firm, you will need this information because there is no uniformity in regulations or processes across these organizations or even across a single state. If your beneficiary resides in another state, there may be additional steps to transferring the property to the individual or charitable group.

Usually, there are a few forms you will need to fill out in order to transfer the property to a descendent/heir. Additional forms are required to transfer the property to an organization. Your banker or broker can inform you on which forms are needed, and where you can find them. You may also go to the bank or the broker’s office and request the forms in person, along with detailed instructions on how to fill these forms out and file them fyxognu.

Completing the Papers Necessary to Transfer Title

Once you have the papers in hand, be aware that you should clearly identify the title of the trust by using a name that is easy to remember and easy to discuss with your financial advisors. Important things to include on the trust paperwork are:

  • Name or organization to whom you are granting the property
  • Last known address of the beneficiary (this can be changed at any time, if necessary)
  • Address of the property you are transferring into the revocable trust
  • Date you created the trust and granted the property to the named person(s) or organization
  • Tax Identification number (for you, although it may help to transfer the property more smoothly if you know your beneficiary’s tax ID number too)
  • Your signature and the signature of any co-trustees

If you feel overwhelmed, you can consult with a legal firm, like NICI Law Firm, to help finish all of the paperwork for you. They can make sure that everything is on the legal up and up for your trust, regardless of where you and your beneficiaries reside, or even the type of property you wish to transfer.

The Role of Personal Rep of Fla Estate Adminstration

The Role of Personal Rep of Fla Estate Administration

estate-planning-lawyer-naples-fla-role-of-admi-800

3 years ago, a family member in Naples, FL contacted me to let me know my stepfather was diagnosed with pancreatic cancer.  Once the sudden shock, and fear dissipated my mother asked me if I was comfortable handling some the financial decisions for the family.  I was not ready to take on this responsibility as I knew my weakness was finances.  I was always good at making money but without some guidance, I was not the best at managing it.  I had no clue what responsibilities it would add to my plate or whether I was the best person to handle this.  Of course, I agreed to help in any way I could, and quickly realized the steep learning curve.  Therefore, I wanted to share this memo James Nici wrote to help people like me navigate the complexities of being a Personal Representative for a Florida Estate Administration.

 

MEMO PROVIDED BY JAMES NICI: (NOTE: This piece gives limited attention to tax-related duties, an area of separate concern.)

 

DUTIES:
  • Determination of the residency and domicile of the Decedent and, if a Florida resident, whether there is any real estate owned in Florida.
  • Assumption of control over Decedent’s Will, all Codicils thereto, and separate testamentary writings, as well as any inter vivos (lifetime) trust agreements existing. Will, Codicils and separate writings should be deposited with the Probate Court in the Florida county of residence pursuant to Florida Statutes by Personal Representative(s) or their agent (usually the attorney selected for the probate administration).
  • Determination of any special burial, funeral or other personal instructions of Decedent and implementing their performance.
  • Determination of the identify, relationship, age, address, and Social Security number of Decedent’s spouse and any and all beneficiaries/heirs named in Will, Codicils, separate writings and/or trusts (inter vivos or those commencing with death), for dissemination to Estate’s attorney in first conference.
  • Assumption of control over all of the Decedent’s assets and means of access thereto, including safe deposit box keys and review of adequacy of insurance coverage on all assets (to continue throughout Estate administration).
  • The following steps are carried out in conjunction with the Estate’s attorney, assisting the Personal Representative(s) to fulfill their responsibilities under Decedent’s Will and Codicil (and trusts, to the extent the duties of the Personal Representative(s) overlaps with Trustee’s duties) as well as responsibilities under the Florida Statutes and Probate Rules.
  • Review and sign initial probate administration pleadings, including Petition for Administration, Oath of Personal Representative and any appropriate consents to the appointment of the Personal Representative(s) and waivers of notice, etc.  (If Waivers of Notice of Administration are secured from persons interested in the Estate, the necessity to formally serve the Notice of Administration to such persons can be avoided to the extent waived in writing.)
  • Attend any formal probate hearing required (a rarity in Florida), obtain a Bond of Personal Representative, if required by the Probate Judge, and wait for the Probate Court to issue the Order Admitting Will (and Codicil(s), as appropriate) to Probate and the Letters of Administration (“Letters”).    The Letters, when issued, constitute formal authority for the Personal Representative(s) to act in the stead of the Decedent. A supply of certified copies of the Letters is provided to the Personal Representative(s) by the Estate’s attorney for presentation to asset custodians and all other purposes requiring formal proof of appointment.
  • After issuance of Letters, formally publish the Notice to Creditors in a local newspaper of general circulation in the county of the Decedent’s Florida residence (or a legal newspaper, if published in the county) once per week for two consecutive weeks and await, with attorney, the issuance of the Affidavit of Publication of Notice to Creditors by the publisher.
  • While the Notice to Creditors is being published, work closely with Estate attorney to determine all of the Decedent’s assets and interests, with all necessary data related thereto, such as real property descriptions, bank and brokerage account numbers, names and manner in which joint assets held, and values on date of death. The responsibility of marshaling the assets remains the most important duty of the administration, as “missed” assets or interests can cause delay later in the proceeding which can be avoided with careful attention to asset and interest identification as the estate administration begins and proceeds to the Inventory stage.
  • Insure that all mail directed to the Decedent is reviewed with care and any pertinent matters noted for attention of the Estate’s attorney. In connection with mail, any Social Security checks for benefits paid for any month subsequent to death should be collected and returned to the Social Security Administration with notice of the Decedent’s death. At that point, application can be made by any surviving spouse for all appropriate benefits payable arising by virtue of Decedent’s death. This is usually best handled by the Personal Representative(s) or spouse directly rather than the attorney. A personal conference with the local Social Security office will usually complete the matters in the most expeditious fashion.
  • Advise all regular correspondents of the Decedent’s death; cancel memberships and subscriptions, etc.
  • As part of the asset marshaling discussed above, develop a detailed list of all insurance payable by reason of Decedent’s death, including standard life insurance (with policy numbers and all details) and insurance sometimes overlooked, such as that with credit card accounts (usually not payable unless death was due to accident) and professional association, fraternal, alumni, memberships, etc.
  • Throughout the administration, and commencing with the day of death, (even prior to first consultation with attorney), maintain precise records of all expenses paid for the Decedent and the source of the funds as well as all debts of Decedent and estate administration expenses paid later. Even though the Will may direct the prompt payment of Decedent’s debts, these should not be routinely paid until there has been a review with Estate’s attorney, who may suggest that the Personal Representative(s) await a Statement of Claim before payment. This often has ramifications to the Estate for various tax purposes, and the natural tendency to make certain Decedent’s debts are paid quickly should be restrained pending review and planning.
  • On consultation with Estate’s attorney, open any estate and/or trust checking or other accounts as needed and arrange for the closing and revision of existing accounts to estate and trust name, with clear demarcation of principal and accrued interest to date of death.    Closing accounts to seal the determination of principal and accrued interest as of date of death is the better practice for probate and testamentary trust assets, while any lifetime trust assets may continue in administration as prior to death, with date-of-death values necessary there, as well, for federal estate tax purposes.
  • When the Affidavit of Publication of Notice to Creditors is returned, the Estate’s attorney will file the original with the Probate Court and will serve copies via Certified Mail, Return Receipt Requested (a requirement of the Florida Statutes and Rules) on all persons interested in the Estate who have not waived such notice and service in writing.
  • The first date of publication of Notice to Creditors begins a three-month claims period in which objections to Decedent’s Will, the appointment of the Personal Representative(s) and related matters must be filed along with all creditors’ claims for debts of the Decedent purportedly payable at death. As any such claims are received (anything other than creditors’ claims are rare), Estate attorney will provide copies to Personal Representative for determination as to validity and amount, although even those determined valid are not usually paid until the end of the claims period (three months after the first publication of the Notice).
  • Any claims found objectionable must be challenged by formal Objection filed within four months of the date of first publication (the objection period is 30 days after the 90-day creditor period). The filing of a formal Objection in the Probate Court obligates the claimant to institute a separate lawsuit (outside the Probate Court) within 30 days of service of the Objection, or the claim is forever barred. As with debts in general, no claims filed or other debts, however valid in the eyes of the Personal Representative(s), should be paid without a review with the Estate’s attorney, as there may be tax ramifications. Paid claims are documented by appropriate satisfactions and releases secured and filed by the Estate attorney.
  • In an estate requiring a federal estate tax return (Form 706), the Personal
  • Representative(s) will file a Personal Representative'(s)’ Proof of Claim within the claims period to document Decedent’s debts and certain other items for deduction on the Form 706. The Proof of Claim lists Decedent’s funeral and funeral-related expenses, medical and related expenses pending at the time of death, and any debts owed by the Decedent at the time of death paid by the Personal Representative(s) or intended to be paid for which no formal creditor’s claim was filed. Typical debts listed in a Proof of Claim are credit card balances, utility bills for the month of death, and taxes owed but not paid at the time of death (such as quarterly installments on income tax). The Proof of Claim does not require formal satisfaction and release, since it reflects items already paid by the Personal Representative(s) or items which will be paid later in the estate administration.
  • At the same time objections to creditors’ claims are due (four months after the first publication of the Notice to Creditors), the Personal Representative(s) files a Statement Regarding Creditors identifying by name and address any potential claimants, such as known creditors who could not reasonably be expected to see the published Notice to Creditors, who have been formally served with a copy of the Notice. Those who have filed actual claims or whose claims have been set forth in the Proof of Claim need not be included in the Statement Regarding Creditors. Thus, the Personal Representative(s) cannot rely solely on publication of the Notice to Creditors to raise all claims which must be addressed.  The Personal Representative(s) has an affirmative duty to conduct a diligent search of the Decedent’s records to identify and serve any reasonably ascertainable creditor or other claimant. This search and the action resulting from it is documented in the probate record through the Statement Regarding Creditors.
  • While the steps above are in progress, another, shorter, deadline  is  approaching. Within 60 days from the issuance of the Letters, the probate estate Inventory (setting forth only those assets in the Decedent’s sole name, including Florida real estate and personal property wherever located) is to be filed with the Probate Court and served on the interested persons as well as the Florida Department of Revenue. The service must be by Certified Mail, Return Receipt Requested, proof of which is filed later by the Estate’s attorney in the same manner as the certified mail Proof of Service of Notice to Creditors filed earlier. In a substantial estate in which there is a federal estate tax return due (nine months after death), this firm’s usual procedure is to request an extension of time to file Inventory, proposing an Inventory filing date which will coincide with the federal estate tax return due date.
  • Concurrent with filing the Inventory and Form 706, a Florida Form DR-313 must be recorded in the appropriate county to show that there is no Florida estate tax lien. Where no Form 706 is required, the recording of Florida Form DR-312 is the only death tax filing, unless ownership of property in other states requires ancillary tax proceedings and/or probate.
  • During the period leading up to the filing of the Form 706, determinations should be made with the Estate’s attorney as to liquidity to fund tax payments. This area is a general concern of post-mortem tax planning and, as such, beyond the scope of this Memorandum. However, this is something the Personal Representative needs to keep regularly in mind, as substantial funds may be needed at the nine-month point, if not prior thereto.
  • While asset marshaling is in progress, and as part of it, any pending business affairs of the Decedent should be carefully evaluated with the Estate’s attorney and appropriate action taken.
  • * Vehicle titles and other similar indicia of personal property ownership should be transferred (after they have been appraised to determine value) as provided for in Decedent’s Will, consistent with the Estate’s liquidity situation.
  • * Partial distributions in the nature of specific bequests of personal property and cash can be made at any time after Letters are issued, again, consistent with the Estate’s liquidity position and on consultation with the Estate’s attorney. Each should be handled through the attorney in the same manner as the payment of claims, already mentioned, to assure that an appropriate Receipt of Beneficiary is secured in each instance and filed with the Probate Court. Substantial partial distributions are better left until the expiration of the creditors’ claims period.
  • * The Form 706 filing is due nine (9) months from the date of death, unless a Request for Extension has been filed. Within eighteen (18) months after the appointment of the Personal Representative, the Florida Statutes and Rules call for the Personal Representative(s) to file estate closing documents consisting of a Petition for Discharge, Report of Distribution and form Order of Discharge, accompanied by either a Final Accounting in the probate estate or waivers of that accounting by all of the interested parties, which is our usual practice.  In nearly every estate in which there has been a federal estate tax filing, this will be impossible, as the estate must remain open (and the Probate Court will need to see final determinations on the federal taxes) to accommodate tax proceedings.  The usual practice in this common situation is to file a Petition for Extension of Time to File Accounting and Petition for Discharge, requesting a filing date far enough into the future to allow for the IRS determination to be completed with respect to the Form 706.
  • As noted, we prefer to file waivers of the Final Accounting, and when the IRS Closing Letter has been received and recorded in the appropriate county, the Personal Representative(s) works in conjunction with the Estate’s attorney to complete distribution and any trust funding and to circulate copies of the proposed Petition for Discharge, consents and waivers and receipts of distribution to the interested parties. To the extent these consents and waivers can be secured, the final settlement of the Estate can be greatly expedited, avoiding the necessity of a Formal Accounting, notice served on the Petition for Discharge, an actual court hearing, and the resulting record of the Estate’s size and composition.
  • Once the above-mentioned documents have been filed with the Probate Court and   the Judge finds them to be satisfactory, an Order of Discharge will be issued. The Order of Discharge is written directions signed by the Judge that the estate is closed and the Personal Representative(s) is released from his/her fiduciary responsibility.

 

WRAPPING IT ALL UP

So, there you have it, all the duties broken down.  This would have been a huge help for me 3 years ago. If you find yourself entering that period of life where you may be called upon to help your family administer an estate plan, do yourself a favor and get up to speed as to what is required so you are not unprepared like I was.  The Nici Law Firm is highly qualified, fair, knowledgeable and conscience of the tough decisions that need to be made.  If you need guidance please contact James Nici.