South Florida Estate Planning Law : Florida Estate Planning Lawyer & Attorney : David Shulman Law Firm : South FL Wills & Trusts

Sometimes, posts on law blaws can get a little bit esoteric. Every now and then I think it's useful to go back to the beginning, and set forth the documents that comprise a basic estate plan. Every single adult should have these in place, regardless of age, marital status, wealth, and whether or not they have children. These documents are:

1. Last Will and Testament - Your Last Will and Testament sets forth how and where your assets will be distributed, who will be nominated the personal representative of your estate, and if you have minor children, who will be nominated the guardians of your minor children. Without a proper Will, your assets may pass through intestacy, in which the law dictates who inherits your property instead of you.
2. Durable Power of Attorney - In your Durable Power of Attorney, you nominate a person, who, in the event you become incapacitated, will have the power to make all non-medical decisions for you. They can open your mail, pay your bills, manage your bank accounts, run your business. Everything that you could have done, the appointed attorney can do for you. Of course, you can make the nomination as narrow or as broad as you choose.
3. Designation of Health Care Surrogate - The designation of health care surrogate is like the power of attorney, except that it allows you to designate someone to make medical decisions for you in the event that you are incapacitated. This is not about "end of life" decisions, but the more basic medical decisions that you may be unable to make on your own. Without a Durable Power of Attorney and Designation of Health Care Surrogate, then if you become incapacitated, you might be subject to a "Guardianship." A Guardianship is a process in which the court appoints someone to make decisions for you. It can be extremely costly, and burdensome on you and your family.
4. Living Will - The Living Will contains your instructions, so that in the event that you are in an "end stage" condition, or a permanent vegetative state, you let your loved ones and caregivers know whether or not you wish to be kept artificially alive by machines, or to be removed from the machines and able to die with dignity.

Some estate planning professionals will state that every single person should have a revocable trust. As I've written in the past, while they are good for some people, not everyone needs them.

• Email This
• Print
• Comments (1)
• Trackbacks

Recently, the Department of Justice under President Obama has stated that they will no longer defend the constitutionality of the Defense of Marriage Act in court. What many people may not know is that the current case that prompted that decision is about the estate tax.

Edith Windsor and Thea Spyer were married in Canada in 2007 after being a couple for more than 40 years, and Spyer died in 2009, and left her entire estate to Windsor (this is actually simplified as the real dispositions involved transfers to trusts).

At the time of Spyer's death in 2009, the estate tax exemption, that is the amount an estate can be valued before being subject to tax was $3.5 million. Anything over that amount was taxed at a 45% rate. If Edith was married to Archie instead of Thea, then the tax owed would be zero. That is because of what is known as the marital deduction. Any property that you leave to your spouse is not subject to tax (it will eventually be taxed upon the second death).

Normally the federal government will treat a couple as married for estate tax purposes, if the state in which the decedent lived sees their marriage as valid. Incredibly, their marriage was recognized by New York State, and not subject to the state's estate tax. But because of the Defense of Marriage Act, the IRS was prohibited from allowing Thea's estate to take the marital deduction.

Edith is suing the government for a refund of the $360,000 estate tax that she (or the estate) had to pay due to the government's use of DOMA deny the refund.

What will happen next? Stay tuned.

Here is a copy of the ACLU's complaint filed on Edith's behalf.  http://www.aclu.org/files/assets/2010-11-9-WindsorvUS-Complaint.pdf

• Email This
• Print
• Comments
• Trackbacks

The Illinois Supreme Court ruled today in the Estate of Max Feinberg,

Even though I'm not an Illinois attorney (which means the case does not directly apply to me), I find it very interesting both as a Trusts and Estates attorney and as a Jew. Fort Lauderdale and Broward County have a large, often elderly Jewish population who are engaging in estate planning. I have, on more than one occasion, per my clients' wishes, drafted a will or a trust which provides that descendants are disinherited if they marry outside of the Jewish religion.

The facts of the case are as follows:

Max Feinberg died in 1986. Prior to his death he drafted a standard pourover will and revocable living trust. The trust provided that upon his death, his assets would be split into a standard credit shelter trust and a marital deduction trust. Max's widow, Erla, was the lifetime income beneficiary of both trusts, and had, according to the opinion, "a limited right to withdraw principal," presumably according to certain ascertainable standards.

Upon Erla's death, the property would be distributed to Max's descendants. Fifty percent of the trust estate was to be held in further, separate trusts for Max's grandchildren (or to be more specific, for the descendants of Max's children) during their lifetime on a per stirpital basis. However, and this is the key part, the trust provided that any descendant who married outside the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one year would be disinherited.

I'm cutting the facts very short here, but one of the grandchildren sued, saying that the provision disinheriting someone from marrying outside the Jewish faith should be void as against public policy. For a more thorough discussion of the facts see the case itself, or the lower court opinion.

The lower court opinion held for the grandchildren holding that the trust clause disinheriting someone if they married a non-Jew was void against public policy. The lower court held that under Illinois law the provision was invalid because it seriously interferes with the right of individuals to marry a person of their own choosing. While I think the term "impassioned dissent" is a bit of a cliche, in there was certainly an impassioned dissent in the lower court case. (I highly recommend that you read Justice Greiman's discussion on why this clause should be valid).

The lower court's decision was appealed to the Illinois Supreme Court, and has been closely watched by both Estate Planning attorneys (be they in Illinois, or Fort Lauderdale or elsewhere), and various religious and civil rights groups. As I wrote earlier, the Supreme Court reversed the lower appellate court's ruling and upheld the clause, but for different reasons.

What I did not point out earlier (and I'm a little surprised that the lower courts did not focus on it) was that Max granted his wife Erla a power of appointment, which Erla exercised giving $250,000 to each of her children and grandchildren who would not be deemed to be disinherited by the previous clause. The court changed and clarified the issue that they were deciding on. The Court wrote:

Thus, the question we must answer is whether the holder of a power of appointment over the assets of a trust may, without violating the public policy of the state of Illinois, direct that the assets be distributed at the time of her death to then-living descendants of the settlor, deeming deceased any descendant who has married outside the settlor's religious tradition. In effect, we are not called upon to consider the validity of Max's estate plan as a whole, which would have continued to hold the assets in trust for the benefit of the grandchildren only so long as they complied with the restriction. Rather, we must assess Max's beneficiary restriction clause in conjunction with Erla's directions for distribution."

I'll discuss the Court's decision and the legal reasons behind it in my next post.

• Email This
• Print
• Comments