Trusts & Estates

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Your primary residence in Florida (“Homestead”) can be a very useful tool for protection of assets from creditors during your life, and after your death for the benefit or your spouse and heirs.

The Florida Constitution, Article X, Section 4 sets forth the applicable restrictions on forced sale and the devise of your Homestead.  If your Homestead is one-half acre or less within a municipality or 160 acres or less outside a municipality, the entire Homestead is generally protected from forced sale by someone that sues you and obtains a judgment.  This same protection from judgment creditors will also benefit your spouse and/or heirs who inherit your Homestead after you’re gone.

However, there are exceptions to every rule and your actions could unwittingly subject your Homestead to the claims of creditors.  Have I peaked your interest?  If so, you won’t want to miss my series of blog posts discussing Homestead issues in Florida.  Stay tuned!

  Heather L. Ries is an attorney with the Financial Restructuring and Bankruptcy Department of the law firm of Fox Rothschild LLP. Heather focuses her practice in matters related to bankruptcy, creditors’ rights, commercial workout and foreclosure disputes, and commercial litigation. You can contact Heather at 561-804-4419 or hries@foxrothschild.com.

 

In a proceeding contesting the validity of a will, the proponent of the will only has the burden to establish that the will was executed with the required formalities.  The burden then shifts to the contestant to establish the will’s invalidity.

In cases contesting the validity of a will on the basis of undue influence, the contestant must prove undue influence by the greater weight of the evidence, unless the contestant can show sufficient facts to raise a presumption of undue influence.  This is known as the Carpenter’s exception.  In Florida, the presumption of undue influence arises when:

  1. A substantial beneficiary under a will,
  2. Occupies a confidential relationship with the decedent, and
  3. Is active in procuring the contested will.

The term “confidential relationship” is very broad and arises whenever one person trusts and relies in another.  Thus, a confidential relationship can be both formal, such as a fiduciary relationship, or informal, such as a social or personal relationship.

Courts examine the following non-exclusive criteria to determine active procurement:

  1. Presence of the beneficiary at the execution of the will;
  2. Presence of the beneficiary on those occasions when the testator expressed a desire to make a will;
  3. Recommendation by the beneficiary of an attorney to draw the will;
  4. Knowledge of the contents of the will by the beneficiary prior to execution;
  5. Giving instructions on preparing the will by the beneficiary to the attorney drawing the will;
  6. Securing of witnesses to the will by the beneficiary; and
  7. Safekeeping of the executed will by the beneficiary.

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A contestant is not required to prove each of the above criteria to establish active procurement.  “Each case is fact specific and the significance of any (or all) of such criteria must be determined with reference to the particular facts of the case.”

Once the contestant establishes that the Carpenter exception applies, the presumption of undue influence arises.  The burden of proof then shifts to the proponent of the will to establish by a preponderance of the evidence the nonexistence of undue influence.  In other words, the proponent must come forward with a reasonable explanation for his or her active role in the decedent’s affairs.

If the proponent can successfully show a reasonable explanation for his or her role in the decedent’s affairs, then the court is left to determine the validity of the will according to the greater weight of the evidence.

 

The Internal Revenue Service (IRS) has issued final regulations that may increase the amount of the gift tax exemption available to a surviving spouse.  Specifically, the IRS issued final regulations governing portability of a Deceased Spousal Unused Exclusion (DSUE) amount.  Generally, the tax code allows an exemption to the gift tax for a decedent’s estate.  The exemption amount is indexed for inflation and varies by year.  For example, for 2015, the exemption is $5,430,000 per person.  The new portability rules allow the estate of decedent to pass the unused portion of the decedent’s exclusion to a surviving spouse.  This election is made on the decedent’s estate’s tax return.

The practical impact of the new portability rules are that, if the first decedent spouse passes along a Deceased Spousal Unused Exclusion to the surviving spouse, then the surviving spouse will be able to claim a larger estate tax exemption when he or she dies.  The surviving spouse’s estate tax exemption will be his or her personal estate tax exemption, plus the transferred Deceased Spousal Unused Exclusion.  A Fox Rothschild LLP attorney may be able to help you decide whether or not these new rules apply to you and whether they should be factored into your estate plan.

The key provisions are located at 26 U.S.C. § 2010 and 26 U.S.C. § 2505.  The new regulations were enacted pursuant to the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, and were made permanent through the American Taxpayer Relief Act of 2012.  The new rules apply to the estates of married decedents who die on or after January 1, 2011.

Eric A. Bevan is an attorney with the law firm of Fox Rothschild LLP and a member of the firm’s Litigation, Financial Services Industry and Construction practice groups.  He represents clients in the resolution and litigation of complex commercial disputes, including federal and state court litigation as well as alternative dispute resolution methods such as private arbitration and mediation.  You can contact Eric at 561-804-4470 or ebevan@foxrothschild.com.