ESTATE AND TAX PLANNING SEMINAR: PLANNING FOR THE MODERN FAMILY Thursday, January 29, 2015 The Bridges 11350 Bloomingdale Avenue Riverview, Florida 33578 Friday, January 30, 2015 The Plaza Club at Freedom Plaza 3932 Upper Creek Drive Sun City Center, Florida 33573 OUTLINE Estate Planning: The Non-Traditional Family P. A. Baumann, Esq. I. INTRODUCTION: There was a time, not long ago, when estate planning for unmarried couples meant estate planning for same-gender couples. That was because unmarried mixed-gender couples were rare and gay couples could not marry. A. In 1960, only 1% of couples living together were unmarried. B. In 2010, 11.6% of couples living together were unmarried. C. Demography suggests that this trend will continue. Discovery, Fit & Health reports that between 2006 and 2010 48% of couples aged 15-44 reported that they were not married to their spouse. D. Although 67% of unmarried couples in that age group either get married within three years of when they started living together (40%) or eventually broke up (27%), 33% of those couples stayed together, unmarried. E. And, this is not just a lifestyle for young people. 1. For example, in the United Kingdom over the last 16 years, the number of couples living together doubled and the largest increase in cohabitation was among persons over the age of 65 years. 2. Similarly, in the US, the rates of couples living together unmarried over the age of 65 years increased by 50% between 2000 and 2006. II. WHEN YOUR CLIENTS ARE THE NON-TRADITIONAL FAMILY. The Blended Family Common problems when there are also children in the mix. A. Beneficiary designations can frustrate intended estate plan B. New spouse or partner gets most/all of the estate C. The Florida homestead conundrum III. UNMARRIED CLIENTS: Whether a couple is single-gendered or two-gendered, the considerations in estate planning for the unmarried couple are the same: A. No estate tax marital deduction B. No estate tax portability, a problem if one has over $5.43 million C. No joint income tax filing Page 1 of 5
IV. D. No tenants by the entireties ownership E. No rights to the partner s estate absent a will F. No right to be personal representative of partner s estate G. No rights to priority in managing the partner s person or property in the event of incapacity H. No family law protections in the event of breakup. TIPS FOR PLANNING WITH NON-TRADITIONAL COUPLE/CLIENTS Tip #1: Advise the clients to Plan Ahead Changing Beneficiary Designations alone is not enough o Be aware of the difference between a spouse and nonspouse beneficiary of a retirement plan. o An estate is never a designated beneficiary o A trust, properly drawn, can be a designated beneficiary. Adding someone to a bank account is not enough o Distinguish between joint accounts and convenience accounts. Accounts in two or more names are presumed to be survivorship accounts. FS 655.79(1). Making a will is not enough. But, each is important. Tip #2: Consider how real estate is titled If both contributed to purchase of home: JTROS may be best If only one partner purchased home: o Will provision if there are not minor children o Joint Ownership o Enhanced Life Estate Deed Tip # 3: Consider the possibility of poor health Health Care Surrogate Durable Power of Attorney Revocable Trust Priorities may go elsewhere Preference in appointment of guardian: o The court shall give preference to the appointment of a person who is related by blood or marriage to the ward. FS 744.312. o If a person fails to appoint a health care surrogate, the law defaults to a health care proxy FS 765.101(15). The authority to make health care decisions for an incapacitated person (to act as a health care proxy) devolves in the following order (FS 765.401(1): A. Court appointed guardian of the person B. The person s spouse C. An adult child of the person D. The person s parent E. An adult sibling F. An adult relative G. A close friend Tip #4: Plan in case it isn t forever End of marriages All kinds of legal protections Divorce voids will provision 732.507(2) Page 2 of 5
Divorce voids revocable trust provision FS 736.1105 Divorce voids Transfer on death or beneficiary designations 732.703(2) Even if divorced couple remarry, the trust and will provisions remain revoked Estate of Guess, 213 So. 2d 638(Fla. 3d DCA 1968) o BUT if the divorced couple remarries, TOD and beneficiary designations otherwise automatically voided on divorce are revived. FS 732.703(4)(i) End of cohabitation No kind of legal protection Create a living together agreement Do NOT mention sex in the agreement. Tip #5: Divorce of the former spouse Examine divorce agreements and orders Are retirement or insurance assets restricted? Check beneficiary designations: o Bank Accounts o Life Insurance o Retirement Plans Tip #6: Death of Former Spouse Are assets in QTIP or other trusts? Review all asset titles often they are not what the client thinks they are. Review all beneficiary designations also often not what the client thinks. V. PLANNING WHEN THE BENEFICIARIES ARE IN NON-TRADITIONAL RELATIONSHIPS A. Put definitions in your documents 1. What do you mean by spouse? a) Same-sex? (1) What if the jurisdiction where death occurs does not recognize same-sex marriages? (2) What if jurisdiction where spouses are living does not recognize samesex marriages? b) Unmarried partners? c) Common law marriage? Georgia, Idaho, Ohio, Oklahoma, and Pennsylvania recognize common law marriages established before a certain date. New Hampshire recognizes common law marriage for purposes of probate only. Utah recognizes common law marriages only if they have been validated by a court or administrative order. L. Wolven, The New Normal: Planning for the Modern Family, Heckerling Estate Planning Institute (2015). d) Consider terminating the spouse relationship when a dissolution petition is filed, rather than when a divorce decree is entered. 2. What do you mean by children? a) Step-children? b) Adopted minors? Florida Statute 732.108. c) Adopted adults? Note that Florida recognizes adoption of adults as a member of public policy. See, Dennis v. Kline, 120 So. 3d 11, 18 (Fla. 4 th DCA. 2013) (noting that [s]uch policy is articulated through the wording of the Florida Page 3 of 5
statutes, which provide, with minimal qualification, that any person, whether a minor or an adult ) d) Virtual Adoption? This should never come up in the estate planning context because it is really a theory of disposing of an intestate estate. However, what if your client s will leaves assets to a person s heirs? See, Matter of Heirs of Hodge, 470 So.2d 740 (Fla 5th DCA 1985) stating the elements require: i. An agreement between the natural and adoptive parents; ii. Performance by the natural parents of the child in giving up custody; iii. iv. Performance by the child by living in the home of the adoptive parents; Partial performance by the foster parents in takin the child into the home and treating the child as their child; and v. Intestacy of the foster parents. B. Have you planned for posthumous births? 1. Heirs of the decedent conceived before his or her death but born thereafter, inherit intestate property as if they had been born in the decedent s lifetime. Fla. Stat. 732.108 2. Will omits a child of the decedent born after the decedent s death is pretermitted and entitled to take an intestate share unless the omission was intentional or if at the time the will was drafted he had other children and nevertheless left his entire estate to the other parent. Fla. Stat. 732.302 3. Except in the case of gestational surrogacy, any child born within wedlock who has been conceived by the means of artificial or in vitro insemination or by means of donated eggs or preembryos is irrebuttably presumed to be the child of the husband and wife, provided that both husband and wife have consented in writing to the artificial or in vitro insemination. Fla. Stat 742.11 4. A child conceived from the eggs or sperm of a person or persons who died before the transfer of their eggs, sperm, or preembryos to a woman s body shall not be eligible for a claim against the decedent s estate unless the child has been provided for by the decedent s will. Fla. Stat. 742.17(4) C. Actual relationships to family 1. Child born to daughter-in-law is not son s descendant a) Presumption of paternity. See, Dept. of HRS v. Privette, 617 So. 2d 305 (Fla. 1993). While possibly a rebuttable presumption, it is one of the strongest rebuttable presumptions in Florida law. See, Gammon v. Cobb, 335 So. 2d 261, 264 (Fla. 1976). b) If son raises child as his own? E.g. a step-parent who treats a step-child as one of his or her own. 2. If son fathers a child that he does not even know during his lifetime? (1) Thurston v. Thurston, 777 So. 2d 1001 (Fla. 1st DCA 2001 holding that such an heir is barred by Chapter 95 Florida Statutes if paternity action is not brought within four years of the child s attainment of majority. (2) Thurston statutorily overruled. The paternity of the father {only for purposes of determining heirship] is established by an adjudication before or after the death of the father. Chapter 95 shall not apply in determining heirs in a probate proceeding under this paragraph. Fla. Stat 732.108(2) Page 4 of 5
YOUR NOTES Page 5 of 5