Home' Island Sun : ISN 010518 Contents ISLAND SUN - JANUARY 5, 2018
The other morning, at 2:30 a.m . local time, I watched
my cousin’s son’s Bar Mitzvah at the Western Wall in
Jerusalem via a live Facebook stream. An extremely
moving service, he chanted from the Torah in front of the
holiest site to the Jewish people. The rabbi set up a small
table on which he placed the Torah scrolls, covered by a
tallit (prayer shawl) until it was time to read the day’s parsha
(weekly reading of the Torah portion).
In the background I could hear other Bar Mitzvah
ceremonies going on concurrently. I figured that it would be
difficult to concentrate enough to chant a Torah portion with
the cacophony that surrounded the young man, but he did an exemplary job.
Technology is amazing, isn’t it? A few years ago, the only way that I could have
“ been there” would be to hope for a national news service’s live satellite feed.
Today, with nothing more than a Smartphone and a WiFi connection, I enjoyed
sharing the family’s celebration.
But technology sometimes embeds a false sense of security.
Since this is an estate planning column, I’ll focus here on instances I’ve seen
when a self-made estate plan went bad. Legalzoom, Rocketlawyer and other
services provide inexpensive and convenient means to create wills, durable powers
of attorney, health care surrogates and even trusts. These web-based document
preparation services lead the user through a series of questions similar to the
online tax preparation programs, resulting in the estate plan.
While self-prepared, web-based documents might be fine and appropriate for
someone with a very modest estate and a very straightforward financial and family
situation, for others it can lead to unintended and even adverse consequences. You
may be familiar with a computer programmer’s common lament “Garbage In –
Garbage Out,” meaning that if you don’t know the consequences of the answers to
the program’s prompts, you won’t get a proper result.
Florida law is rife with peculiar specifics. Take, for example, the law surrounding
the devise of your homestead. If you are survived by a spouse or a minor child,
Florida law declares a bequest of your homestead to a testamentary (after-death)
trust as invalid. This is true even if that testamentary trust benefits the surviving
spouse. I see this commonly with trusts that are not only web-based, but those that
were prepared by an attorney in a northern state but have not been updated.
Recently I read a self-prepared, web-based will that directed for a $2,000/
month distribution to a surviving spouse for the rest of her life. The problem was
that the document did not carve out amounts from which to generate the income,
nor did it provide for the correct administrative provisions necessary to carry out
the decedent’s intent. Without the “carve out,” it was impossible to determine how
much to distribute to the other beneficiaries. That estate plan ended up in court,
with the beneficiaries fighting it out over what the decedent would have wanted.
You can bet the farm that the attorney’s fees spent on fighting out the
ambiguity far exceeded what it would have cost to have a qualified estate planning
attorney prepare the plan.
In yet another web-prepared plan, I noticed that the decedent named five
individuals to all serve concurrently as the personal representative (executor) under
the will as well as the trustee of the trust. The document did not indicate whether
a unanimous consent to conduct trust business was necessary or whether a simple
The banks and financial service firms where the accounts were located were
rightly afraid for their own liability. What happened if one of the trustees directed
for a distribution, but another objected? What happened next was inevitable.
The banks and financial services firms sent the matter up to their in-house legal
department, resulting in frozen accounts for several months. The family had to
pay out of pocket not only for legal fees to rectify the situation, but had to pay bills
until the accounts became available for use again.
The new tax act recently signed into law by President Trump pushes the federal
estate tax threshold to amounts where only the wealthiest will have to plan to
minimize or avoid the tax. It’s likely that with the threshold so high, many will be
lured into creating inexpensive web-based plans.
But there are many other traps found in this law for the unwary when planning
one’s estate. Income taxes will continue to be an issue in almost everyone’s estate.
Everything from taking advantage of the increase in the step-up in tax cost basis
at one’s passing to qualified retirement account (IRA, 401(k)) issues to protect the
inheritance, defer the income tax as long as possible and achieve tax deferred
growth will remain huge issues to anyone with any degree of net worth.
I’ll be exploring those issues in greater detail, including the effects of the new
tax act, in upcoming columns.
©2018 Craig R. Hersch. Learn more at www.sbshlaw.com.
Limits Of Technology
by Craig R. Hersch, Florida Bar Board Certified
Wills, Trusts & Estates Attorney; CPA
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