Estate and Business Planning Legal Blog

While the probate process is usually quite simple and straightforward in New York, that is not the case in Florida.  What is probate and why does probate become necessary?  When a person passes away, there needs to be a legal mechanism for transferring assets from the deceased person to the deceased person's heirs.  Usually, that mechanism is through the use of a last will and testament, which then gets filed with the Court and the Court looks to see if the will was properly prepared and executed.  Of course, probate can often be avoided by transferring one's assets to a revocable living trust, and/or by having beneficiaries on one's accounts.  There are many reasons why the trust and beneficiary designations may not be the best choice.

Regardless of the type of business one has, some type of contract is usually required for one's dealings with customers, suppliers, and the like.

Clients often ask me, when they are moving to the State of Florida, or considering such a move, whether the wills which they have prepared in New York need to redone.  Assuming the wills were properly drafted and executed in accordance with New York law, then the wills are valid in Florida, and in any other state for that matter.  While the execution requirements are more stringent in Florida, there is absolutely no need to redo one's New York wills, but one should be aware that when the time comes to probate the will, if that occurs in Florida, then the Court will request an affidavit from a New York attorney, stating that the will was executed properly in accordance with New York law.

While one's New York wills are valid for Florida purposes, probate is an entirely different issue.  If a former New York resident dies as a resident of the State of Florida, the law requires that the probate of the will occur in Florida.

As with corporations, when two or more people form a partnership or limited liability company, it is imperative that they enter into a partnership agreement, setting forth some very essential elements of their relationship.  Doing so will go a long way toward avoiding confrontations down the road.

One important item to include in a partnership agreement is the expectation of the time and effort expected to be contributed by each partner.  It is also extremely helpful to include a description of the duties each person will undertake and be responsible for. For example, it could be stated that each partner is expected to contribute 30 hours each week to the affairs of the partnership and is prohibited from engaging in other work activities outside the partnership.
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Clients often think that putting their children's names on their savings accounts, brokerage accounts, real estate and other assets, will accomplish tax savings and protect the assets in the event they need long-term health care.  Nothing could be further from the truth.  While putting a child's name as a joint owner on an asset does avoid probate, the better option would be to name the child a beneficiary, which also serves the purpose of avoiding probate.

First, most assets are only protected for long-term health care/nursing home costs if the parents' names are removed entirely from the account or property.  Removing one's name completely, as owner, has adverse gift tax consequences, subjects one to the five-year look back for medicaid, and also means you lose total control over the assets.
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The Tax Cut and Jobs Act passed by Congress and signed into law at the end of 2017 contains some very significant changes to the federal estate and gift tax laws. For one, the unified credit for estate and gift tax–the amount you can give cumulatively during your lifetime or which you can leave at your death without incurring an estate tax–was doubled.  The increased, inflation-adjusted exemption amounts to approximately $11.2 million for an individual, or a combined $22.4 million for a married couple, and are effective for estates of decedents dying, and gifts made, after December 31, 2017.
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Clients are often and understandably confused about the differences between irrevocable trusts and revocable living trusts, and the consequences they each have for asset protection, estate planning and taxes.

Those who advocate living trusts commonly lead people to believe that these trusts will reduce estate taxes and protect one’s assets in the event long-term health care is needed. While living trusts serve the purpose of avoiding probate, they do not protect your assets. Since you maintain control over the assets in your revocable trust, they are still considered available to pay for your health care needs.  Similarly, unless a living trust creates certain types of irrevocable subtrusts, it does not reduce one’s taxable estate since the person creating the trust maintains complete control.
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It is now permissible, in the State of New York, to have beneficiaries listed on brokerage and investments accounts, regardless of whether or not they are retirement accounts.  The designation is commonly referred to as a TOD, or transfer on death, designation.  With savings, checking and money market accounts held with banks, one is also permitted to list beneficiaries, with those usually referred to as “in trust for” accounts. 

The primary advantage of having TOD or “in trust for “ designations on one’s accounts is that one avoids probate, at least with respect to these accounts.  Joint ownership of accounts accomplishes the same purpose, but is more dangerous because the intended beneficiary immediately becomes a joint owner.
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It is quite common for parents and grandparents to want to leave money to a person under the age of eighteen (18) years old (a “minor”).  Since a person younger than 18 can not legally inherit money, having a minor as a beneficiary on one’s accounts, regardless of how small in value the accounts may be, is quite problematic. 

Leaving money to a minor necessarily requires that the child’s parents (or some other adult) will need to petition a court to be appointed the minor’s legal guardian for purposes of accessing the funds left to the minor.  Needless to say, the court process will be a lengthy and expensive one.  Clients often list a minor child or grandchild as a beneficiary on their retirement account, annuity, or life insurance policy, intending to avoid probate and make it easy for the minor to collect the account, not realizing that doing so will make matters worse.
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Clients often think it a waste of time and money to retain an attorney to represent them in connection with leasing space, whether it be space in an office, a warehouse, or an entire building. More often than not, however, an attorney can obtain important concessions for the tenant, many of them monetary in nature.  For example, real estate tax escalation clauses and annual rent increases can prove onerous and can often be negotiated, thus saving the client money.

It is also extremely important for a client to understand fully the implications of some important, yet typical clauses which are contained in a commercial lease.  For example, if the landlord will not permit an assignment or sublet of the space, it is extremely important to know that, in the event there is a business downturn and one needs to cut costs.

As everyone is probably aware, part of the tax reform proposal before Congress is the repeal of the federal estate tax.  Clearly, it is not known if the estate tax repeal will in fact happen, but if it does, it will occur gradually.  What does one do in the interim?

Clients should not postpone their estate planning or even undo any estate planning they have already undertaken, on the assumption that the estate tax repeal will occur.  For one thing, if one passes away before the tax is repealed, assuming it is, then one's heirs may wind up paying a very sizable estate tax, which might have been avoided with proper planning.

Moreover, most states have their own estate or inheritance tax, sometimes referred to as a death tax.