FLORIDA PROBATE ATTORNEY and  PROBATE ESTATE ADMINISTRATION LAW

THE ESTATE PLANNING LAW FIRM, P.A.   954 458-6010 

Florida Probate Attorney Direct ext 954 920-2886

Serving Broward County, Palm Beach County, and sorrounding counties with Florida Probate, Inheritance Law, Wills and Estates.

David S. Luber, LL.M. is an Estate Planning Master of Laws focussing on assisting clients with Florida Probate, Inheritance Law, Probate Administration, Summary Probate Administration, Estate Administration, Ancillary Probate Administration, Estate Planning, Wills, Trusts, and Estates in Broward and Palm Beach County as well as assisting with probate nationwide for those who have family or property in Florida. The firm provides personal attention and can be reached toll free. In Broward 954 920-2886 for Palm Beach Probate law 561 948-8906 or outside the local Broward County and Palm Beach County areas toll free nationwide at 866 561-1499. David can also be reached by at email David@FloridaProbate.org or at his direct extension of 954 920-2886.

Administration - Probate or Trust: The process of handling the affairs of a deceased person's estate or a trust. Florida Probate and Trust Administration.

Ancillary Administration: probate proceedings in another state. This is usually necessary when the deceased person owned real estate in their sole name in a state other than his or her home state. It could be avoided by putting the property into a trust or passing the property so the beneficiary (beneficiaries have) has a remainder interest in which the property will pass to them by operation of law upon the death of the decedent. With limited exceptions such as requiring documents from the decedents probate in their home state ancillary probate in Florida is generally treated according to the same rules as if the decedent were domiciled in Florida.

Applicable Exclusion Amount an amount that can pass free of estate tax. Currently this amount is $1.5m and is scheduled to progressively rise to $2m in 2006 $3.5m in 2009 and unlimited in 2010 prior to returning to $1m in 2011. When there is a husband and wife the estates need to be properly planned though or the exclusion amount of the first spouse to die may be wasted. The Gift Tax Exclusion amount remains at $1m and is not currently scheduled to change.

Annulment--Made legally void, as if it never happened. A marriage that has been annulled is treated as if it never occurred (for most purposes).

Attorney-in-Fact--The person selected to have the authority to act on the behalf of a principal. An attorney-in-fact can be any adult that the principal selects. (He or she need not be a Florida lawyer.) Typically, people appoint an attorney-in-fact in a power-of attorney, granting the attorney-in-fact the power to transact business (enter into agreements, contracts, make transfers of property, etc.) in accordance with the power-of-attorney. The authority of the attorney-in-fact cannot last beyond the life of the principal. This is also known as a Power of Attorney and typically becomes effective at the time that the document is signed and not at the time of disability. Florida law provides it is not impacted by a persons subsequently disability. The agent can also use this power to help the principal qualify for Florida Medicaid.

Annual Gift Tax Exclusion Each person has an annual gift tax exclusion of $11,000 annually free of gift tax if it is a gift of a present interest such as cash, tickets to Miami Dolphins games that are currently being given or a new car. If you are not giving the current right to enjoy the property and giving up complete control of it unless an exception applies such as a Crummey power for an irrevocable life insurance trust there will not be an exclusion and the value of the gift will use up part of the individuals applicable exclusion amount or if it has been used subject them to gift tax. A husband and wife can elect to split gifts for a year and are then able to give $22,000 to an individual in a year for gifts of a present interest with no tax. Other then spouses who are not US Citizens or residents spouses can give one another an unlimited amount of gifts of any type of interest during their lives and it will not be taxable at that time.

Assets Subject to Florida Probate Administration: Refers to assets that are in the sole name of the decedent and therefore need to go through probate so the title can be changed to those entitled to receive them. Assets owned jointly with another as joint tenants with right of survivorship or with a spouse through tenancy by the entireties, property with a designated beneficiary such as a life insurance policy, IRA or other retirement plan account or property that is designated to be Transferred on Death to a specified person are not part of the probate estate and therefore will not be subject to probate administration. It is a good idea to avoid probate administration in Florida because of the additional time and cost it takes to receive the property.

Beneficiary: In the estate planning context this is a person entitled to receive property that was left to them by a will or trust or as a named beneficiary. This is contrasted by a person who receives property merely because of their family or marital relationship to the decedent which would be known as an heir. It may also include someone who is a named beneficiary of property such as a life insurance policy or a retirement account.

Charitable Lead Unitrust (CLUT)--Income goes to charity and remainder to one's heirs or beneficiaries. Generally for the very rich and for those whose children won't need the income until years later when the trust ends. For example Jacklyn Kennedy Onassis used this to save taxes when she was seeking to benefit John Kennedy Jr. and Carolyn Kennedy.

Charitable Trust - One of several different types of charitable trusts, including Charitable Lead trusts and Charitable Remainder Trusts, established to benefit a particular charity or the public. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of Federal (and some states') estate and gift taxes and/or to save capital gains tax. It can be a win win situation since the donor is able to achieve a tax reduction while still providing for a very worthwhile charity that provides a great service to the public. When this is done during life an income tax deduction is available then the property is out of the estate for estate tax purposes or will generate a deduction to remove it. Some of this tax saving is often the put into the premiums for a life insurance policy as a wealth replacement technique. The insurance policy can be designed so the payment of the premiums will not result in a gift and the value of policy is not included in the estate. Used in this combination the donor is able to provide for a gift to charity through the charitable trust they can still receive income from the trust and despite their gift to charity their children can end up with as much and in some cases more money then if no charitable trust planning had been taken.

Charitable Remainder Trust (CRT)--A trust funded with assets that go to charity upon death. The donor/trust creator can sell the assets without paying capital gains taxes and receive an annual income. Will also receive a tax deduction for the charitable gift and eliminate appreciated assets from one's estate.

Charitable Remainder Annuity Trust--A charitable remainder trust in which the trust donor is paid an annual fixed dollar amount.

Charitable Remainder Unitrust--This pays an annual fixed percentage of the fluctuating value of trust assets.

Claim: Claims are debts of the estate. There are two types of creditors in Florida a known or reasonably ascertainable creditor and all others. For claims the Personal Representative is aware of or should be aware of a creditor in Florida has the greater of 30 days from being served or 3 months from publication to file a claim in the probate court or the claim will likely no longer be valid. For all other creditors they are limited to 3 months from publication. If there is not enough money in an estate to pay all the claims then Florida statute 733.707 would determine the order of payment.

Codicil: A written amendment to a will.

Community Property--Property acquired during a marriage and while living in one of the 9 community property states (see below). As a general rule, everything derived from the earnings of either spouse is shared equally by a husband and wife. Each spouse owns only one-half of the community property because the other half belongs to the other spouse. Community property rules can be modified by pre-marital and post-marital agreements made by the spouses. See also separate property, commingle, quasi-community property, and commingle. Florida law is a separate property state. Property that was Community property may retain its character as Community Property though when someone moves from one state such as Arizona to another such as Florida.

Community Property States--States in which community property laws apply. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington State and Wisconsin are considered community property states.

Cost Basis--The amount originally paid for property. The Tax Basis is the value that is used to determine gain or loss for income tax purposes. Generally, the tax basis will equal the cost basis plus the cost of capital improvements, less depreciation. Once the property is transferred upon the owner's death, it is revalued as of the date of death; this is called the Stepped-up Basis for Federal Income Tax purposes.

Crummey Letter--A written notification to the beneficiaries that contributions of money -- typically to an irrevocable life insurance trust -- have been received on their behalf. The beneficiaries then have a period of time to withdraw the funds. If the beneficiaries do not withdraw the money, they are regarded as having received a gift. The funds can then be used to pay the premium on insurance on the grantor's life. Use of a Crummey Letter can avoid certain potential tax problems arising from the gift of a future interest.

Devise: To give away real, personal or intangible property under a will or trust.

Devisee: An entity or a person selected in a will or trust to receive a devise.

Domicile: The place that a person presently lives with the intent to remain. This is usually a persons permanent residence but if they are merely away on military service, to receive medical care or go to college for example but intend to return home to another place that they intend to return to will be the domicile. The law governing the state and county of domicile will control the disposition of the person's property upon their death.

Donee: A person or entity who receives a gift. This can also be referred to as a beneficiary.

Donor: A person who makes a gift.

Broward County Probate, Wills and Trusts help 954 920-2886

Florida Probate help Elsewhere 866 561-1499 

Escheat: Property that passes back to the state of Florida because there was no will or trust validly directing the property and no heirs at law who it would pass. This is very rare as the intestate laws of Florida have numerous options if property is not validly devised to anyone.

Estate: For probate purposes whatever was in the sole name of the decedent upon his death and does not pass to another by operation of law, by contract, or as a named beneficiary and this property is subject to probate administration. For US Estate Tax purposes, it refers to all of a deceased person's assets that are included in the person's estate for tax purposes. Items such as an Irrevocable Insurance Trust on the decedents life may be excluded from their estate. The current exemption amount that can be excluded from an estate for tax purposes as of 2004 is $1.5 million. This is scheduled to increase to $3.5 million in 2009 and be unlimited in 2010 then drop to $1 million in 2011 if the law is not changed by then. Following his re election President Bush has stated the permanent repeal of the estate tax was one of his legislative priorities. It still appears that is unlikely there seems to be a reasonably good chance that the exemption amount will not be reduced back to $1 million in 2011 although that is the current law.

Estate Planning: The process of preparing and planning for a persons financial, health care and personal affairs. It includes documents to designate an agent in the event of a future disability such as a living will or health care surrogate to assist with health care matters if one is unable to do so, a power of attorney to help with financial matters, and wills and trusts to pass financial property to family, friends and possibly other organizations. Estate Planning can ensure that a person is able to pass their property exactly as they desire instead of how Florida law or their home state would dictate it pass and then if trusts are prepared they can direct how the property will be handled long after the grantor is dead. Estate Planning is critical for all people and not merely those with a large estate. It determines who the guardian of minor children would be, who the personal representative/trustee (if there was also a trust) would be that handles the affairs and a guardianship from having to be imposed where the court would take control. Florida probate could be avoided as well through the use of trusts and or proper designations for the way that property is held saving time and money. Also if it is a large estate money could be saved that would otherwise have to be paid for estate taxes. Once all the persons assets exceed a certain exemption amount the estate is taxed at over 40%. With proper planning substantial amounts of money can be saved.

Exempt property: Florida law (Florida Statute 732.402) provides the right of a surviving spouse or children to receive tangible personal property such as furniture and furnishings within the homestead property up to $10,000 as well as the automobiles regularly used by the decedent if they are not devised to someone else. These properties are not subject to any claims except those with perfected security interests on them. Those entitled to such designation may be required to file the probate forms to declare such property as exempt within 4 months of publishing notice of administration of the probate administration. A surviving spouse and/or children are also entitled to a designation of homestead property that the property is exempt from creditors.

Fair Market value This is what a willing buyer will pay a will seller with neither being under a compulsion to buy or to sell and both having knowledge of all relevant facts.

Family Allowance: An allowance that a surviving spouse, minor or dependent children are entitled to from his or her deceased spouse's estate. If there is a surviving spouse this is typically given to them and may be up to $18,000. It is intended to provide some money for the spouse and family to live on during a probate administration.

Fiduciary: This refers to a person (or entity) that serves in a representative capacity. Personal representatives, trustees, guardians, conservators, and agents under powers of attorney are all fiduciaries. A fiduciary stands in a position of confidence and trust with respect to each heir, devisee, and/or beneficiary. They are subject to a responsibility to act in the best interests of the person that they are serving on behalf of and can be sued if they act improperly.

Formal Probate: a proceeding before a probate judge either with a will or intestacy which is not a summary administration or disposition of property without administration and is governed by chapter 733 of Florida statutes.

Gift A voluntary transfer of property for which nothing of value is received in return. If Internal Revenue Service is to recognize a transfer as a gift, the donor(s) must unconditionally transfer all title and control of the property to the recipient(s) at the time the gift is given. It is not a completed gift if full control over the property is not given away. With adequate disclosure of the gift the Internal Revenue Service is not allowed to revalue the gift after 3 years.

Grantor: The designation for a person who is transferring their property through a trust or a deed.

Guardian: an adult appointed by a surviving parent in his or her will or by a court, who is responsible for a minor child or legally incapacitated person's personal care and nurturing.

Grantor Trust For income tax purposes this is a trust, in which the grantor or a third party, because of certain rights to income or principal or certain powers over the disposition of income and principal, is treated as the owner of the trust and taxed on the income thereof. Consequently, a grantor trust is not treated as a separate entity for income tax purposes. A grantor does not need to get a separate id number for a revocable trust until the trust becomes irrevocable.

Heir: person, who inherits property from the estate of a deceased person who died without a will.

Holographic Will A will written entirely in the testator's own handwriting.

Homestead exemption: In Florida, this refers to a surviving spouse's or lineal heirs right to receive the primary residence of their family member free of claims from creditors other then perfected security interests on it such as the mortgage. In Florida there is no limit to the value of the property that is covered by a Florida homestead exemption.

Intangible Personal Property: The value of such property is not derived from the property itself but what it represents. For example types of this property include cash, stock, bonds, mutual funds, and bank accounts. The paper themself has virtually no value but the promise to pay or designation of a certain value by the company, government or stock market provides the value of the property. Florida has an intangible property tax on intangible property that a Florida resident owns as of January 1 above a specified amount. An intangibles trust can be prepared to avoid this tax.

Inter Vivos Trust: A trust that takes effect while a grantor is still living.

Intestate: Refers to dying without a will or other designation of how one's property should pass.

Intestate property will pass to the decedents heirs. In Florida if a person has a surviving spouse and children the spouse will receive the first $60,000 then 50% of the remainder if all the children are the spouses children as well otherwise the spouse will receive 50% and the children will receive 50%. If there is only a spouse or a children the spouse or children receive all the property.

Intangible property Property that only represents real value such as bonds, stock certificates, promissory notes, certificates of deposit, bank accounts, contracts, leases, and other similar items.

Intestate succession The distribution of property to heirs according to the statutes of the State of Florida upon the death of a person who owned the property but did not leave a valid will.

Incidents of Ownership Includes a variety of rights and powers that an insured decedent may have held over a life insurance policy; the possession of one or more of these incidents of ownership within three years of death will bring the policy proceeds into the insured's gross estate. This may subject them to estate tax if the estate has more money then the applicable exclusion amount under current law. As of 2004 this amount is $1.5 million.

Income Beneficiary The beneficiary of a trust who is entitled to receive the income from it.

Income in Respect of a Decedent (IRD) Income earned by a decedent or income to which the decedent had a right prior to death, but which was not properly includible in his or her gross income prior to death (This is Internal Revenue Code section 691).

Individual Retirement Account (IRA) A tax-deferred retirement account for an individual that can be established by a person with earned income and the spouse who files a joint return. Earnings accumulate tax-deferred until the funds are withdrawn beginning at age 59.5 or later and are required to be started by the age of 70.5 (or earlier then 59.5, with a 10% penalty). A Roth IRA does not provide an initial tax deduction for the money but both the money and the subsequent appreciation grow tax free and will pass tax free when the property is withdrawn. Distributions are not required to be started upon reaching 70.5 and it can continue to accumulate tax free.

Inventory: A list of the assets of the decedent or disabled person that is prepared by an attorney and signed by the fiduciary (personal representative or conservator/guardian). This is required to be filed in Probate court.

Irrevocable Trust - A trust that is not amendable or revocable by the grantor. Can be created during a grantor's lifetime, often called an "inter vivos" trust, or upon a grantor's death, often called a testamentary trust. Some common types of irrevocable inter vivos trusts include life insurance trusts, gift trusts, generation skipping trusts, Qualified Personal Residence Trusts (QPRT) Grantor Retained Annuity Trusts ("Grat"), Intentionally Defective Grantor Trusts, Charitable Remainder Annuity Trusts (CRAT) and Charitable remainder Unitrusts (CRUT), Charitable LEAD Annuity Trusts (CLAT) and Charitable Lead Unitrusts (CLUT). Some common types of testamentary trusts include, unified credit exemption trusts, marital trusts, generation skipping trusts, testamentary charitable remainder trusts and charitable lead trusts.

Insurance Trust An irrevocable trust established to own an insurance policy or policies and thereby prevent them from being included in the insured's estate. The insured must not retain any incidents of ownership. These trusts are typically used just by those who anticipate they may have more property then the applicable exclusion amount would allow them to shelter upon their passing or the passing of their spouse so it can save money from potentially having to pay estate taxes on the proceeds. There are additional administrative costs and responsibilities involved with this but with the estate tax starting at around 41% it can be a very useful way to save on estate taxes.

Intentionally defective grantor trust - An irrevocable inter vivos trust created by a grantor for beneficiaries other than the grantor that attributes all income tax to the grantor. Generally used when the grantor wants to irrevocably gift the property to the beneficiaries and exclude the property from the grantor's taxable estate for estate tax purposes, but intends that the transfer be ignored for income tax purposes. Often used in conjunction with a sale of discounted assets by the grantor to the trust, to avoid capital gain on the sale of the assets.

Joint tenancy A form of joint asset ownership by two or more persons in which each person has an equal undivided ownership interest that passes directly to the surviving joint tenant(s) upon the death of any joint tenant. Any joint tenant can petition the court seeking to compel partition of a joint tenancy asset but they cannot do so with tenancy by the entireties. (A form of joint tenants only available to husband and wife). If the joint tenants are not husband and wife and the intention is that it pass with right of survivorship in Florida it is important that the deed specifically provide that it shall pass with the rights of survivorship.

Kiddie Tax Unearned income (dividends, rents, interest, etc) Unearned income of a child under age 14 will be taxed to the child at the parent's income tax rate.

Lack of Marketability Discount When the value of an asset is less than its initial or expected fair market value due to unusual circumstances that make it not readily saleable. For example, a limited partnership interest.

Florida Probate/Inheritance Attorney - Direct Extension 954 458-6010

Florida Probate Administration 866 561-1499

Legally Incapacitated Person: A person who has been determined by a court as not capable of handling his or her personal and financial affairs.

Letters Of Administration: Letters are issued by the probate judge to a personal representative, showing that the personal representative has the authority to act on behalf of an estate.

Limited Liability Company (LLC) An entity formed under state statute that has the legal characteristic of limited liability similar to that of a corporation, while it may qualify to be treated as a partnership for tax purposes. In Florida there is a 5.5% state tax on Limited Liability Companies. Limited Liability Companies are covered by Florida statutes chapter 609.

Limited Partner A partner in a partnership who can't participate in the management of the partnership's business. A limited partner's liability is limited to the loss of his or her investment in the partnership.

Limited Partnership Form of partnership composed of both a general partner(s) and a limited partner(s); the limited partners have no control in the management of the company and are usually financially liable only to the extent of their investment in the partnership.

Living Trust also known as Revocable Trust of Revocable Living Trust: A trust that one establishes during one's lifetime which is not part of one's will, but is established by a separate written trust agreement. A revocable trust is one of the primary means for avoiding probate. I can also allow for a specific distribution such as the children receiving 1/3 of the inheritance at 25 1/3 at 30 and 1/3 at 35 if the parents are already deceased or providing longer term asset protection on their behalf. It can provide for professional management of the trust assets, help to ensure that the grantor or their trustee can maintain control over their affairs and has many useful benefits.

Living Will A legal document in which an individual states, in advance of final illness or injury, his or her wishes regarding which procedures and equipment designed to extend life they choose to avoid. Basically it is a document that says if extraordinary measures are needed and they will merely extend the time but not the quality of life that the person chooses to have the plug pulled and to have a natural death. This is very important that it be done and not leave your fate to the government or the court who may act contrary to your desires.

Marital Deduction A deduction allowing for the unlimited transfer of any or all property from one spouse to the other generally free of estate and gift tax. This is usually just a deferral of tax and an exemption from it so it is usually not advisable to have everything pass outright in a manner that would qualify for the marital deduction. In the spouses revocable trust should be a credit shelter trust to make sure each spouse is able to use their exclusion amount.

Marital deduction trust - A trust that qualifies for the marital deduction for estate tax and gift tax purposes. Several types of trusts so qualify, including: general power of appointment marital trusts, qualified terminable interest property trusts, and qualified domestic trusts. Unless the property is then deferred from tax but unless it is spent or is the spouse is under the exclusion amount upon the passing of the surviving spouse the marital property is subject to estate tax on the death of the surviving spouse.

Minority Discount A discount applied to the value of an interest in a corporation, limited liability company or limited partnership that is not publicly marketable to reflect the fact that a minority interest in the company has less value than a controlling interest, since the holder of the former cannot control business actions.

Minor: In Florida, a person who is under the age of 18 who is not married or legally emancipated.

Notary is a person with a state commission to attest to the validity of the signatures on documents. A will, trust and power of attorney are all required to be notarized.

Pay on Death (POD) Designation is the selecting of a beneficiary to receive an account balance on one¿s death. This can also be referred to as Transfer on Death or (TOD).

Personal Representative - The individual or individuals (or institution) named in a will or appointed by the Probate Court who is responsible for gathering a decedent's assets, paying debts, taxes, and expenses, selling assets of the estate, if necessary, and distributing the remaining property and money according to the terms of the will (or the intestate laws of the state of residence). The personal representative must preserve and protect the estate assets and unless an accounting is waived account to the estate beneficiaries for estate income and expenses. The personal representative must file a federal and state estate tax return, if required, and must also file final state and federal income tax returns for the decedent, and, if necessary, federal and state income tax returns for the estate.

Per Stirpes A way of distributing an estate so that the surviving descendants will receive only what their immediate ancestor would have received if he or she had been alive at the time of death. State law definitions can vary. This means that if a decedent dies with two children one of who had predeceased him and the predeceased child left two children each of them will receive 1/4 of the property or collectively 1/2 of the property that was to go to the children and the other child would receive the other half.

Pour Over Will This is a Will used to transfer (pour over) into a trust any property that is left in a person's estate after death.

Postnuptial agreements - Contracts entered into by a husband and wife after marriage, defining the rights of each spouse in their marital, non-marital and jointly-owned property in the event of divorce, legal separation or the death of one of the parties.

Power of Appointment A right given to another in a written instrument, such as a will or trust that allows the other to decide how to distribute your property. The power of appointment is "general" if it places no restrictions on who the distributees may be. A power is "limited" or "special" if it limits the eventual distributee.

Prenuptial (Antenuptial) agreements - Contracts couples can enter into prior to marriage in order to govern their respective rights in marital, non-marital, and jointly-owned property in the event of divorce, legal separation, or the death of one of the parties. It is advisable to execute these documents well in advance of the marriage to avoid the potential claim of duress as a means to attack the document. Each side should have independent attorneys of their own choosing.

Pretermitted Child A child by birth or adoption who became a child after the execution of the current estate planning and was not mentioned in the will or trust. If a person has a child or children after executing their will and do not prepare a codicil after or name the child in the document the child will be entitled to receive the share they would be allowed if the estate were to pass by Florida intestacy laws.

Probate is a legal process through which (a) a judge determines whether or not the decedent's will if any is valid; (b) a personal representative is appointed to (1) collect the decedent's assets in his or her probate estate, (2) pay the decedent's legal debts, and (3) distribute the remaining assets in the decedent's Florida probate estate to the individuals or entities entitled to the assets in accordance with the will or laws of Florida intestacy; and (c) the court approves the transfer of the decedent's assets to the individuals and entities designated in the will or the laws of intestacy. The probate court will also determine the rights, if any, of a spouse and children to the decedent's property in addition to what they have been left in the will and supervises any claims filed against the estate, objections to claims and probate claims which are barred by time.

"Prudent Investor" Rule Legal term that refers to the duty of the fiduciary to invest and manage assets in the best interests of another.

Revocable Trust: A revocable trust is a trust that can be amended and revoked, by the grantor who established the trust. This trust may become irrevocable and no longer amendable when the grantor of the trust dies or becomes permanently incompetent.

Testamentary Trust: A trust that is part of a person's will. It does not become effective until the person passes away.

Testate: This occurs when a person dies with a valid will in existence.

Testator: The person who makes a will.

Broward County 954 920-2886

Florida Probate 866 706-7099

Trust: A written document which provides for the management and disposition of assets. It normally involves three parties: the person who establishes the trust (In Florida usually called a grantor sometimes could also be called a donor, settlor, or trustor), a trustee, and one or more beneficiaries.

Trustee: A financial institution or adult who has mental capacity and has not been convicted of a felony that is designated to be responsible for the administration of a trust. There may be more than one trustee (co-trustees), and an individual and a financial institution may serve as co-trustees.

Qualified Domestic Trust (also known as a QDOT) A trust arrangement which allows property transferred to a surviving spouse who is not a U.S. citizen to qualify for a special exclusion instead of the regular marital deduction; and which ensures that, at the death of the surviving spouse who is not a United States citizen, the assets placed in such a trust will incur federal estate taxation since the tax was avoided at the first spouse's death

Qualified Personal Residence Trust ("QPRT") - An irrevocable inter vivos trust under which a grantor transfers his/her interest in a personal residence to the trustee to hold for the grantor's use and occupation during a specified term of years, and, upon expiration of the term, the residence passes to the remainder beneficiary or beneficiaries. Primarily used to gift the residence to the remainder beneficiary that is susceptible to application of valuation discounts and actuarial discounts based on the grantor's age and the term of the trust, and is most beneficial if the residence is expected to significantly appreciate in value. It is allowed for a primary residence or one vacation home. Although it could be helpful to put a home in this trust from a tax perspective it is possible it could destroy the homestead exemption for creditor purposes since the home is no longer owned by a natural person as required in Article X section 4 of the Florida Constitution.

Qualified Terminable Interest Property (QTIP) Property qualifying for the marital deduction at the election of the donor or the decedent's personal representative. The spouse retains a qualified income interest in the property for life, with the income payable at least annually. The corpus ultimately passes to a specified remainderman, under a special power of appointment given to the spouse. This can be especially helpful in second marriage situations where the donor wants the spouse to receive the income from the property but then have the property itself actually pass to their children (or in some other designated beneficiary).

S Corporation A corporation whose income is generally taxed to its shareholders, thus avoiding a corporate level tax. An election available to a corporation to be treated as a partnership for income tax purposes. To be eligible to make the election, a corporation must meet certain requirements as to kind and number of shareholders, classes of stock, and sources of income. The rules for S Corporations are in Internal Revenue Code Sections 1361-1378.

Section 2503(c) Trust for Minors A trust designed to comply with Section 2503(c) of the Internal Revenue Code so that a gift placed in such a trust for the benefit of a minor will qualify for the gift tax annual exclusion although they are not gifts of a present interest.

Special Needs Trust/Supplemental Needs Trust: A trust established for the benefit of a disabled person to provide supplemental support without disqualifying the beneficiary from eligibility for governmental assistance programs such as Florida Medicaid. It is a discretionary trust that a person other then the disabled person serves as trustee for.

Spendthrift Trust: A trust established to provide a fund for an individual that includes a provision intended to secure it against that person's lack of caution and protect it against the claims of creditors. A person can typically prevent against their own creditors but they can achieve some asset protection for others they choose to provide for such as children who have a trust but a trustee with discretionary powers whether or not to distribute property.

Step Up In Basis A decedent's property that passes to others escaping capital gains tax when sold by the person who inherits the property. Persons inheriting the property receive it at date-of-

death fair market value. (Internal Revenue Code section 1014) In effect, the basis in this property is deemed to be "stepped up" and does not reflect the decedent's original cost basis for determining applicable capital gains tax on the sale of the property.

Successor Trustee The person or institution named in the trust agreement who will assume control of the trust if the original trustee dies, resigns, or becomes unable or unwilling to act. In sporting terms, it is like someone who sits on the bench and comes out to play only if the regular can't continue. There can be several layers of back-up trustees that take over in the order you designate.

Tax basis The owner's cost of an asset for income and estate tax purposes as determined under the Internal Revenue Code and IRS regulations.

Tenants in common A form of asset ownership in which two or more persons have an undivided interest in the asset, where the ownership shares are not required to be equal, and where ownership interests can be inherited.

Tenancy-by-the-Entirety Ownership of property only available between husband and wife. Each owns an undivided interest in the property which will pass with right of survivorship to the survivor. Creditors of just one of the spouses can not reach the property for claims. If the properties divorce it ceases to be tenancy by the entireties. While it is tenancy by the entireties joint action is needed to sell it.

Uniform Gifts To Minors Act A method to hold property for the benefit of a minor, which is similar to a trust but the rules are governed by state law and the child has to receive the property upon becoming an adult.

Unified Credit amount also known as the Applicable Exclusion amount is an amount of assets that can pass without imposition of an estate tax or gift tax on the transfer. The estate tax now has an applicable exclusion of $1.5 million that can pass upon death if there have not been prior taxable gifts or this amount subtracted from the amount of prior taxable gifts. $1 million in taxable assets may be gifted during one¿s lifetime (in addition to annual exclusion amounts and other non taxable or otherwise exempt amounts such as payment of educational or medical expenses directly to the provider for a child) The estate tax exemption amount will remain $1.5 million next year then rise to $2 million until 2009 when it is $3.5 million for a year. In 2010 the estate tax is repealed and there will be no estate tax although under current law it returns to $1 million.

Witness A will requires two witnesses and a notary. Each witness must be in the presence of each other, the notary and the testator at the time the time that the testator signs the will, the notary acknowledges it and the other witness signs the document. Unless the witnesses are personally known to the notary they should provide identification such as a Florida Drivers license.

401(k) Plan
A qualified profit sharing or stock bonus plan under which plan participants have an option to put money into the plan or receive the same amount as taxable cash compensation. Amounts contributed to the plan are not taxable to the participants until withdrawn. Generally funded entirely or in part through salary reductions elected by employees. Salary reductions are subject to an annual limit.

403(b) Plan A tax-deferred annuity retirement plan available to employees of public schools and certain nonprofit organizations.

 ProbateandEstatePlanning.com  Florida Probate and Estates Law Website

Broward County Florida Probate Attorney   Wills & Estate Administration Law 954 920-2886

Probate Attorney help with Palm Beach County Probate 561 948-8906 

Florida Probate Administration and Estate Administration Law Help outside Broward or Palm Beach County 866 561-1499 for Florida Probate and Inheritance Law.

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Probate and Estate Planning Broward County 954 920-2886

Florida Probate Law elsewhere toll free 866 561 1499

Probate Attorney help with Florida Probate Administration in Florida Probate Courts including Broward Probate Court and Palm Beach County Probate Court and some other Florida Probate courts.     

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Broward County Probate, Wills, Trusts & Inheritance Law Firm 954 920-2886

Broward County cities are: Coconut Creek, Cooper City, Coral Springs, Dania Beach Davie, Deerfield Beach Deerfield Beach,  Fort Lauderdale, Hallandale Beach, Hillsboro Beach, Hollywood, Lighthouse Point, Miramar, Parkland, Pembroke Pines, Plantation,  Tamarac, Weston, Wilton Manors.

Palm Beach County Probate and Inheritance Law 561 948-8906

Boca Raton, Boynton Beach, Delray Beach, Greenacres, Highland Beach, Hypoluxo, Juno Beach,  Jupiter, Lake Park, Lake Worth Lantana, Ocean Ridge, Palm Beach, Palm Beach Gardens, Royal Palm Beach, Wellington, West Palm Beach

Miami Dade County:  Wills and Trusts

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