Estate Planning and Trusts Blog

A Health Care Surrogate’s Powers

Man in hospital bed needs a health care surrogate
A Health Care Surrogate makes medical decisions for you when you cannot.

Many people don’t really understand how a Florida Designation of Health Care Surrogate document works, so I thought I’d try to explain.

First, what we in Florida call a Designation of Health Care Surrogate, many other states call a Health Care Power of Attorney. It’s a legal document executed by a mentally competent adult (the “Principal”) which names one or more people to make health care decisions for her when she can’t (the “Surrogate” or “Agent”). When would she need her Surrogate to make such decisions for her? When she’s unconscious, heavily medicated, or not mentally competent at the time the decisions are needed.

Florida has a public policy when it comes to Health Care Surrogates – no Surrogate can override a decision made by a Principal who has mental capacity. In other words, a Principal capable of making informed medical decisions can veto her Surrogate. A physical disability, such as a vision or hearing impairment or loss, doesn’t negate that policy; if the Principal is conscious, can understand what’s going on, can make an informed decision, and can communicate that decision in some way (even by blinking her eyes), her decision controls. Always. But, if she chooses not to make the decision and instead defers to her Surrogate’s decision, that’s okay as long as her Health Care Surrogate document says it is.

Without a written Health Care Surrogate document, a Surrogate authorized under the Florida statute would only be consulted after a doctor decided the Principal lacked the capacity to make decisions. With the written document, the Principal has the option to defer to the Surrogate at any time – whether the doctor thinks she’s incapacitated or not.

That’s why the document usually says something along the lines of: “While I have decision-making capacity, my wishes are controlling…” That’s the default under Florida law – a doctor has to put down in writing that the Principal is unable to make informed decisions before the Surrogate has any power at all. But the Principal who is executing a Health Care Surrogate document has the option, by initialing in another area on the document, to allow her Surrogate to act immediately – without the need for a doctor to say the Principal can’t make decisions.

Every state has different policies and documents regarding health care decisions and Living Wills. In Florida, autonomy and independence take priority when it’s at all possible. So Health Care Surrogates serve in addition to the person who named them – they don’t replace them. Therefore, these documents work well only when everyone is playing nicely. In Florida, the only way for a Surrogate to completely control all medical decisions for a Principal is by petitioning a court for guardianship (voluntary or involuntary), which completely removes the legal right of the Principal to make her own medical decisions.

Other articles you may find interesting:

Why Unmarried Couples Need Estate Planning

Widowed? What Happens Next?

Naming a Child as Successor Trustee?

Children as successor trustees may fight
Naming a child as Successor Trustee isn’t always the best choice for family harmony.

So, you’re creating or changing a revocable living trust, and you tell your estate planning attorney that you wish to name your child as Successor Trustee.

Your Successor Trustee is the person who will step in to handle your trust assets when you become incapacitated or die. You have three children who all get along famously. Should you name one of them as your Successor Trustee?

No.

Okay, maybe that’s an overly-simplified answer. I’ll change it to “probably not.” Naming one of your children as Successor Trustee almost always results in conflict and may end up tearing your family apart.

One child as Successor Trustee

There are occasions when putting one child in charge of the money and property that their siblings will receive works out well and everyone stays friendly. Generally, in these cases the siblings

  • were all the product of the same long-term marriage,
  • were all very close before their parent’s death,
  • were all aware of the parent’s estate plan before the death,
  • were all similarly situated financially before the inheritance,
  • lived close enough to each other to split any sentimental items among themselves while all siblings were present,
  • pretty much equally shared the burden of care-taking for the deceased parent,
  • had no addiction or gambling problems in their families,
  • didn’t allow their spouses or adult children to have a say in the probate or trust administration process, and
  • the Successor Trustee’s only job was settling the estate and dividing up the assets equally for immediate outright distribution to all the siblings.

If this sounds like your situation, then naming your child as Successor Trustee may work out just fine.

Multiple children as Co-Successor Trustees

Some folks think naming all or a couple of their children as Co-Successor Trustees will prevent conflict. It won’t. In fact, it can even be worse than naming only one child as Successor Trustee because now two or more people have to agree on everything and sign all the necessary paperwork. Banks and financial institutions hate co-anythings because all it does is slow down any process and open the door for conflicts and lawsuits.

So what’s the solution?

Name a disinterested party. Someone who has no skin in the game. Someone who has no close personal relationships with any one child and will not be inheriting anything from you. It can be a friend, your sibling, your accountant or estate planning attorney, or other professional fiduciary. If your trust will last more than a few years, consider naming a bank or trust company.

What was that? You don’t want to pay someone to manage your trust? Seriously? You’d rather tear your family apart and have litigation attorneys receive the bulk of your children’s inheritance? You can certainly make that choice.

Whatever you decide to do, TALK TO YOUR FAMILY! Explain why you’re naming one child as Successor Trustee, or leaving more money to the caretaker child, or appointing a disinterested party, or disinheriting a child or grandchild. If you’re not comfortable doing it by yourself, ask your estate planning attorney to help you arrange a family meeting in person or by teleconference. It’s not an easy conversation, but it just may keep your family together after you’re gone.

Financial Advisors Try to Prevent Financial Exploitation

Financial advisors try to prevent financial exploitation
Financial advisors try to prevent scammers and even family members from stealing their senior clients’ money.

The next time you see your financial advisor, you may be asked to provide a trusted point of contact, such as a relative or friend, for the advisor to call if he has a reasonable belief that you might be a victim of financial exploitation.

Kiplinger’s recent article, “New Rules Battle Financial Scams, Elder Abuse” says that your adviser could place a temporary hold on a suspicious disbursement request from you, so your money is protected until the concern is investigated. When money leaves an account, it’s hard to get it back.

Changes include several new laws that protect seniors and their money. For older adults, financial exploitation is a growing problem. One in five older Americans are the victim of financial exploitation each year, resulting in the loss of $3 billion annually.

Mild cognitive impairment can result in older adults not seeing red flags for fraud, says Michael Pieciak, president of the North American Securities Administrators Association (NASAA), which represents state securities regulators. The ability to judge risk may be diminished. He noted that social isolation plays a part, with vulnerable seniors home during the day and apt to answer the phone when a fraudster calls.

Federal and state lawmakers, along with the financial services industry, have initiated new rules to help safeguard seniors and their assets. The idea is that financial institutions and professionals are on the front lines when it comes to spotting elder financial abuse. The changes are designed to protect seniors and to shield financial professionals from liability for reporting possible exploitation.

Congress passed the Senior Safe Act in 2018. This law protects financial services professionals from being sued over privacy and other violations for reporting suspected elder financial abuse to law enforcement, provided they’ve been trained. If a bank teller notices that a senior seems confused about withdrawing money or is making puzzling transactions, the teller could tell a superior, who could contact authorities, if necessary.

Nineteen states have enacted some version of a NASAA model act that provides registered investment advisers and broker-dealers with guidance on telling a trusted point of contact and putting a temporary hold on a client’s account to investigate financial fraud.

Reference: Kiplinger (April 3, 2019) “New Rules Battle Financial Scams, Elder Abuse”

Using a Power of Attorney for a Parent

power of attorney
A Power of Attorney is the most important estate planning document your parent should have.

Does your parent have a Power of Attorney? Do you have a copy?

Imagine that your perfectly fine, aging-well parent has had a minor stroke and is no longer able to manage her financial or legal affairs. Your parent has been living independently, waving off offers of help or even having someone come in to clean for years. It seemed as if it would go on that way forever. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”?

After the health crisis is over, it’s time to get busy. Open the door to the home and start looking. Where’s the original Will? Where are the bank statements and where’s the information about Social Security benefits? When you start making calls or going online, you may run into a bigger problem than figuring out where the papers are kept – no one will talk with you. You are not legally authorized, even though you are a direct descendant.

This happens all the time.

Statistically speaking, it is extremely likely that your parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Most people have no idea what their parent’s financial situation is. They don’t know where and how Dad keeps his financial and legal records or what they would need to do to help him in an emergency.

It’s not that difficult to fix, but you and your healthy parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents executed – especially a Power of Attorney.

A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent, if they are unable to do so. It must be properly prepared in accordance with your state’s laws.  It allows you to pay bills and make decisions on behalf of a loved one while they are alive. Without it, you’ll need to go to court to be appointed as legal guardian. That takes time and is much more expensive than having a POA created and properly executed.

If you’ve downloaded a Power of Attorney and are hoping it works, be warned: chances are good it won’t. Many financial institutions are very picky about the POAs they’ll accept, and most generic forms won’t have many of the special provisions estate planning and elder law attorneys know need to be included to allow you to have certain powers in place to help your parent.

If your parent has a POA in place, and you have to step in, then it’s time to get organized. You’ll need to go through your parent’s important papers, setting up a system so you’ll be able to see what bills need to be paid and how many bank accounts or investment accounts exist.

Next, it’s time to consolidate. If your parent was a child of the Depression, chances are she has money in many different places. This gave her a sense of security but it’ll give you a headache! Consolidate multiple CDs, bank accounts, and investment accounts into one institution. Have Social Security and any pension checks deposited into one account.

If you need help, don’t hesitate to ask for it. The stress of organizing a loved one’s home, caring for him or her, and managing the winding down of a home can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.

Reference: Daily Times (April 9, 2019) “Senior Life: What a nightmare! Untangling a loved one’s finances”

IRS Scams: What You Need to Know

IRS scams
IRS scams are carried out by con artists who prey on the elderly.

IRS scams seem to be getting more common. The other day I spoke with a sweet elderly client who had received a voicemail message from a man who claimed he was from the IRS. He told her they’d be issuing a warrant for her arrest if she didn’t call them back immediately. Of course, that frightened her and she called the number he left. Luckily, she was a bit wary and when the person on the other end told her to buy some Google Play gift cards as payment, she was pretty sure it was a scam and hung up. But she called me for reassurance that she’d done the right thing (she had).

The creepy thing is that while I was on the phone reassuring my client, my paralegal received a recorded IRS scam message on her cell phone! And I seem to get at least one recorded voicemail per month claiming there’s a warrant out for my arrest due to nonpayment of taxes.

It’s almost an epidemic. You get a phone call or robotic-sounding message from someone who says he is from the Internal Revenue Service (IRS). He says that you owe money for taxes and that the authorities will come and arrest you unless you wire money or buy prepaid debit cards, Google Play gift cards, or iTunes gift cards immediately. Of course, the caller isn’t with the IRS. He’s a thief.

These IRS scam artists target older Americans  – even those in nursing homes – and bilk them out of millions of dollars a year. Here’s what you need to know about these IRS scams…

The government has hard numbers only for the people who reported the theft to the Treasury Inspector General for Tax Administration (TIGTA), so the total scope of the crimes is likely much larger than the numbers make it appear. Since late 2013, more than 15,000 people have reported losses totaling nearly $75,000,000 to these illegal IRS scams. The average amount stolen is nearly $5,000 per victim, but at least one person lost more than $500,000, and at least one other person committed suicide after realizing he had been conned.

Thankfully, the word is getting out about these IRS scams, and would-be victims are reporting the impersonators. More than 2,500,000 people have contacted TIGTA to report suspicious calls from people claiming to be with the IRS.

What to Do If You Get a Suspicious Phone Call

If you get a phone call from someone who claims to be an IRS employee, just hang up. TIGTA agents advise that you not engage with the person at all. Don’t try to pull a prank on him or blow an air horn into the phone. Just get off the phone immediately.

Why just hang up? Apparently there have been several instances where the IRS scammers got angry at the people they were trying to victimize and took revenge. They called the police and gave false reports of violent criminal activity, such as reporting an armed home invasion happening at the person’s house. This dangerous, illegal act is known as “swatting,” named for the SWAT teams that respond to the alleged threat, sometimes with deadly force.

So, hang up immediately and report the IRS scam. If you didn’t fall for the scheme, report the call on the TIGTA website: www.tigta.gov. If you did fall prey to the con artists, then call the TIGTA hotline (800-366-4484).

What to Do If You Might Owe Back Taxes

The IRS contacts people by mail about delinquent taxes. They do not start the process by telephoning taxpayers and threatening them with arrest, jail, or forfeiture of their homes. If you are worried about whether you really do owe any taxes, the best thing to do is to go to the IRS website, www.irs.gov, and see if you owe any back taxes. If you do, the IRS will work with you and set up a payment plan. They won’t tell you to go to Walmart to buy prepaid debit cards.

Keep yourself safe from financial predators, including IRS scam artists, by using some common sense. Don’t anger them, but also don’t ignore the situation if you actually do owe taxes. Interest and penalties can add up quickly. You’ll sleep much better at night if you get a payment plan in place and know what to expect.

Your state’s regulations might be different from the general law of this article, so it would be a good idea to talk with an elder law attorney in your area.

References:

AARP. “Meet the Lawman Who Went After IRS Imposters.” (accessed April 11, 2019) https://www.aarp.org/money/scams-fraud/info-2019/timothy-camus-interview.html

 

Widowed? What Happens Next?

A new widow
Newly widowed? It can feel as if you’re in the middle of a tsunami of decisions; take it slowly and accept help.

Becoming a widow or widower after decades of marriage is crushing enough, but then comes a tsunami of decisions about finances and tasks that demand attention, when you are least able to manage it. Even highly successful business owners can find themselves overwhelmed, says The New York Times in the article “You’re a Widow, Now What?”

Most couples tend to divide up tasks, where one handles investments and the other pays the bills.  However, moving from a team effort to a solo one is not easy. For one widow, the task was made even harder by the fact that her husband opted to keep his portfolio in paper certificates, which he kept in his desk. His widow had to hire a financial advisor and a bookkeeper, and it took nearly a year to determine the value of nearly 120 certificates. That was just one of many issues.

She had to settle the affairs of the estate, deal with insurance companies, banks and credit cards that had to be cancelled. Her husband was also a partner in a business, which added another layer of complexity.

She decided to approach the chaos, as if it were a business. She worked on it six to eight hours a day for many months, starting with organizing all the paperwork. That meant a filing system. A grief therapist advised the widow to get up, get dressed as if she was going to work and to make sure she ate regular meals. This often falls by the wayside, when the structure of a life is gone.

This widow opened a consulting business to advise other widows on handling the practical aspects of settling an estate and also wrote a book about it.

A spouse’s death is one of the most emotionally wrenching events in a person’s life. Statistically, women live longer than men, so they are more likely to lose a spouse and have to get their financial lives organized under duress. The loss of a key breadwinner’s income can be a big blow to a widow who has never lived on her own. The tasks come fast and furious, in a terribly emotional time.

You’ll likely be very vulnerable after the death of your long-time spouse. Hold off on any big decisions (like moving, quitting a job, selling the house) and attack your to-do list in stages. Some of a widow’s first tasks will be contacting the Social Security administration, calling the life insurance company, and paying important bills, like utilities and property insurance premiums. If your husband was working, contact his employer for any unpaid salary, accrued vacation days, group life insurance, and retirement plan benefits.

Next, contact an estate planning attorney to make sure your own estate plan is in order. Name your adult children, trusted family members, or friends as agents for your financial and health care power of attorney, and consider creating a revocable living trust. Update your beneficiaries on life insurance and annuity policies. If probate is needed for your spouse’s estate, the estate planning attorney can advise you (many handle probates) or refer you to another lawyer.

Deciding how to take the proceeds from any life insurance policies depends upon your immediate cash needs and whether you can earn more from the payout by investing the lump sum. Make this decision part of your overall financial strategy – ideally with a trusted financial advisor.

Determining a Social Security claiming strategy as a widow comes next. You may be able to increase your benefit, depending on your age and income level. If you wait until your full retirement, you can claim the full survivor benefit, which is 100% of the spouse’s benefit. If you claim it before that time, the amount will be permanently reduced. If you and your spouse are at least 70 at his death, you may benefit by switching to a survivor benefit if your benefit is smaller than his. Your financial advisor or the Social Security office can help you crunch the numbers.

It’ll be quite a while before you feel like you’re on solid ground. If you were working when your spouse died, consider continuing to work to keep yourself out and about in a familiar world. Anything you can do to maintain your old life, like staying in the family home, if finances permit, will help as you go through the grief process.

Reference: The New York Times (April 11, 2019) “You’re a Widow, Now What?”

Pet Trust FAQs: For the Love of Fluffy

Pet trusts are a tool for pet parents
Pet trusts can ensure your fur baby is cared for according to your wishes when you’re not around.

I love when I hand someone a business card, and after scanning it briefly, she looks up with a puzzled look and asks, “Pet trusts? What’s a pet trust?”

Many people have never heard of a pet trust – or they may have only a vague recollection of NY hotel heiress, Leona Helmsley, leaving her dog, Trouble, millions of dollars. So today I’ll answer some of the questions I get about pet trusts.

What exactly is a pet trust? A pet trust is basically an agreement between the pet parent (grantor), a future pet parent (caretaker) , and a future money handler (trustee). The agreement specifies how and when the trustee will pay the caretaker for caring for the pet. To ensure there are no misunderstandings, this type of agreement is put in writing – generally as a standalone legal document, but sometimes it’s incorporated in a Will or a Revocable Living Trust.

Sounds complicated. Can’t I just leave some money and my pet to my son/mother/nephew/friend in my Will? Yes. Under the law, your beloved Fluffy is just property – like your xbox – and you can leave her to anyone you want. You can also leave your money to anyone you want.

Then why would I need a pet trust? You might not need a pet trust if all the stars are aligned just right. If your daughter loves Fluffy, is able to take her when you die, and has plenty of money, everything could end happily ever after. But, sadly, life rarely works that way.

What could go wrong? Lots.

  • Legally, just because you left Fluffy and some money to your daughter, there’s nothing to stop her from taking the cash and dropping Fluffy off at a local shelter on her way to the bank. Even if you write something in your Will saying she only gets the money if she keeps Fluffy, there’s no one who can enforce that. Your Personal Representative (Executor) is responsible for distributing your stuff and once it’s distributed, his job is done.
  • What if, when you die, your daughter is living in a condo that doesn’t allow pets?
  • What if she has a child that’s allergic to cats?
  • What if she has a new husband who hates cats?
  • What if Fluffy is showing the first signs of kidney disease when you die and your daughter can’t afford the special food and other treatments?
  • What if your daughter won’t tolerate accidents and hairballs on her spotless white carpets?

The list goes on.

Okay. I really love my pet, so maybe a pet trust is a good idea. Can I find one online? Probably. You can find almost anything online today. But using a form pet trust will provide very limited options and may not provide any more protection that leaving money and your pet to someone in your Will.

So, you’re saying I should have a lawyer create my pet trust? Yes. An estate planning attorney that has experience drafting all different types of pet trusts will be able to create the trust that’s just right for your particular situation.

Wait! You mean there are different kinds of pet trusts? Yes. Everyone’s situation is different, and I’ve never created two pets trusts that were exactly the same. These are not “find and replace” documents – each one has to be exquisitely tailored. One client may want to leave enough money so his trustee can buy a house for his six dogs and their caretaker. Another may leave her cats and all her assets to a no-kill rescue shelter that has a lifetime care program. Yet another may leave her horse to her child, but will have her trustee reimburse the child regularly for the horse’s expenses. Pet trusts are as unique as you are.

How much money should I leave for the care of my pet? That’s a difficult question to answer. You should leave enough money to pay for the ordinary and some of the extraordinary expenses your pet may incur over its lifetime. That answer can be wildly different depending on whether your pet is a dog or a horse or a parrot. Even different breeds can have different medical needs – German Shepherds may have hip problems, Maine Coons may be more prone to kidney disease, etc. Food costs for a St. Bernard or Great Dane are much greater than those of a Chihuahua. As a rule of thumb for a dog, plan on leaving at least $5,000- $10,000 per dog; somewhat less for cats or parrots, and much more for horses. A small life insurance policy naming your pet trust as the beneficiary may be an economical way to provide the funds for your pet’s care.

What if I don’t know anyone who will take my pet when I die? That’s a fairly common scenario today, but you do have options. We’re blessed to have so many wonderful rescues and shelters in Southwest Florida. Some rescues will keep your pet forever, while others will actively search for a new forever home for your pet. Several local organizations have programs you can enroll your pet in while you’re alive, and thus you can be assured that Harley and Princess will be cared for the way you wish. I also work with a non-profit organization, Animal Care Trust USA, which will act as trustee of your pet trust and, depending on your wishes and resources, place your pets in a forever home, a sanctuary (especially for senior pets, horses, etc.), or even find someone to care for your pets in your own home!

Pet trusts sound like a lot of work for the lawyer. Are they expensive? They can be, but most of the time they’re a very modest investment for loving pet parents who wants to make sure their pet is taken care of properly if they become disabled or die. As I mentioned earlier, while it’s best to create a standalone pet trust, some people choose to incorporate pet trusts into their estate planning documents – which is usually more cost effective. Once I understand what is needed, I quote a price for the entire package – which would include the pet trust.

If you plan ahead, you can have some control over what happens to your fur baby in the future. If you just hope for the best, Buddy and Smokey will just end up with other abandoned pets. If you love your pet, at least talk with a pet trust lawyer to see if adding a pet trust to your estate plan would be right for you and your baby.

Tom Petty’s Heirs Battle Over His Estate

Tom Petty's Wildflowers album
Tom Petty’s Wildflowers album is part of the estate dispute.

Rocker Tom Petty was wise enough to execute a revocable living trust before his unexpected death in 2017, but his heirs are now arguing over some of the wording in the trust.

Tom Petty’s widow and sole successor trustee of his trust, Dana York Petty, planned to include unreleased tracks from her late husband’s celebrated 1994 solo album, Wildflowers, as part of a 25th anniversary edition box set.

However, Tom’s daughters Adria and Annakim, his children from a previous marriage, have blocked the release, according to iHeartRadio’s article, “Tom Petty’s Widow, Daughters Battling Over His Estate.”

Dana says the daughters are interfering with her ability to manage Tom’s legacy. She’s reportedly requested that a judge name a day-to-day manager for the estate.

Adria argues that she and her sister were promised an equal share of control in their father’s estate, according to his will. She says her father’s “artistic property” was supposed to be placed into a separate company to be jointly administered by the three women. However, Dana disagrees with Adria’s interpretation of the term “equal representation.”

Annakim seems to reference the battle in a recent Instagram post. She displayed a photo of her father with the caption, “We don’t sell out. No Vampires 2019.”

A subsequent reply in the comments section mentions Petty’s will.

Wildflowers was initially designed to be a double album, with Petty completing more than 25 songs in the initial sessions. However, he was convinced by his record label to take some some songs off for the final version.

Throughout the years, a few of the extra songs were released on various collections. However, Tom never relinquished his idea of releasing the set as a double LP.

Petty was reportedly planning a Wildflowers tour, before his death in October of 2017, to showcase all the leftover material.

Reference: iHeartRadio (April 3, 2019) “Tom Petty’s Widow, Daughters Battling Over His Estate”

Other articles that may interest you:

Are No-Contest Clauses Valid In Florida?

Prince’s Estate Battle Drags On

Review and Update Your Beneficiary Designations

update your beneficiary designations
Review and update your beneficiary designations regularly to avoid conflict.

Did you forget to review and update your beneficiary designations after a divorce? Your ex will be delighted!

Many people don’t understand that their Will doesn’t control who inherits all of their assets when they die.  Instead, many assets will pass by beneficiary designations, says Kiplinger in the article “Beneficiary Designations: 5 Critical Mistakes to Avoid.”

The beneficiary designation is the form that you fill out when opening many different types of financial accounts. You select a primary beneficiary and, in most cases, a contingent beneficiary, who will inherit the asset when you die.

Typical accounts with beneficiary designations are retirement accounts (including 401(k)s, 403(b)s, IRAs, and SEPs), life insurance, and annuities. Many financial institutions also allow you to name beneficiaries on non-retirement accounts;  these are most commonly set up as Transfer on Death (TOD) or Pay on Death (POD) accounts.

It’s easy to name a beneficiary and be confident that your loved one will receive the asset without having to wait for probate or estate administration to be completed. However, there are some problems that can occur and mistakes can get expensive.

Here are some mistakes you can avoid if you review and update your beneficiary designations regularly:

Failing to name a beneficiary. It’s hard to say whether people just forget to fill out the forms or they don’t realize they have the option to name a beneficiary. Either way, not naming a beneficiary becomes a problem for your survivors. Each company has its own rules about what happens to the assets when you die without naming a beneficiary. Life insurance proceeds are typically paid to your probate estate, so your family will need to go to court and probate your estate.

When it comes to retirement benefits, your spouse will most likely receive the assets. However, if you aren’t married, your retirement account will be paid to your probate estate. Not only does that mean your family will need to go to court to probate your estate, but taxes will be levied on the asset. When an estate is the beneficiary of a retirement account, all the assets must be paid out of the account within five years from the date of death. This accelerates tax payments that would otherwise be deferred over many years.

Neglecting special family considerations. You may discover when you review and update your beneficiary designations that there are members of your family who are not well-equipped to receive or manage an inheritance. A family member with special needs who receives an inheritance is likely to lose needed government benefits due to the windfall. Therefore, your planning should include a SNT — Special Needs Trust.

Also, minors cannot legally claim an inheritance, so a court-appointed person will claim and manage their money until they turn 18. This is known as a conservatorship or guardianship. Conservatorships and guardianships are costly to establish – and the money comes directly out of the assets meant for the minor. The conservator or guardian must also make an annual accounting to the court. The conservator or guardian may also need to file a surety bond with the court, which is an additional expense.

Additionally, if you follow this course of action, your beneficiary may have access to a large sum of money at age 18.  That may not be a good idea, regardless of how responsible they might be. A better way to prepare for this situation is to create a trust.  The trustee you name would be in charge of the money for a period of time that you can determine based on the personality and situation of each of your beneficiaries.

Using an incorrect beneficiary name. This happens quite frequently. There may be several people in a family with the same name. However, one is Senior and another is Junior. Or they may have a different middle name, which was omitted. A beneficiary may also have changed her name through marriage, divorce, etc. Not only can using the wrong name cause delays, but it can lead to litigation – especially if both people believe they were the intended recipient.

Failing to update beneficiaries. Just as your will must change when life changes occur, so must your beneficiaries. It’s that simple, unless you really wanted to give your ex a windfall.

Failing to review and update your beneficiary designations with your estate planning attorney. Beneficiary designations are part of your overall estate plan and financial plan. For instance, if you are leaving a large insurance policy to one family member, it may impact how the rest of your assets are distributed.

Take the time to review your beneficiary designations, just as you review your estate plan. You have the power to determine how your assets are distributed, so don’t leave that to someone else.

Reference: Kiplinger (April 5, 2019) “Beneficiary Designations: 5 Critical Mistakes to Avoid”

Medical Marijuana and Gun Laws: One Toke Over the Line

Medical marijuana and gun laws are mutually exclusive.
Medical marijuana and gun laws are mutually exclusive. You have to choose one or the other.

Medical marijuana and gun laws don’t play well together.

Medical marijuana has been legal in Florida for a while. First we had a statute that allowed terminally ill people to use a non-smoked, low-THC form of Mary Jane. Then on November 8, 2016, Florida voters approved a constitutional amendment (effective July 1, 2017) that extended the use of medical marijuana to people with “debilitating illnesses,” such as glaucoma, HIV, AIDS, PTSD, ALS, Crohn’s disease, Parkinson’s disease, multiple sclerosis, and other illnesses and conditions. That’s a lot of people who are now able to use medical marijuana to ease their symptoms.

In addition, some Florida cities such as Miami Beach and Tampa, have decriminalized the possession of a small amount of illegal weed, making it a civil offense rather than a criminal offense.

But what few people are talking about is how using recreational or medical marijuana and gun laws affect each other.

Florida can pass all the pro-marijuana laws it wants, but pot’s still a Schedule I controlled substance under Federal law – and Federal law trumps state law when it comes to drugs. And guns.

So, I’ll make this easy for you. Marijuana use = no gun possession. Period. End of discussion. It doesn’t matter what the state says. And here’s why…

The federal law governing who can and cannot possess and own firearms (18 U.S.C. § 922(g)(3)) prohibits possession or ownership by a person who is “… an unlawful user of or addicted to any controlled substance (as defined in section 802 of the Controlled Substances Act (21 U.S.C. 802)).” We’re talking about the unlawful user here – which means either 1) the user of an illegal controlled drug, or 2) the wrongful user of a legal controlled drug (i.e. taking legal drugs prescribed for someone else).

The Controlled Substances Act (1970) divides drugs into five Schedules depending on the drug’s perceived usefulness for medical reasons and its addictiveness. Marijuana is a Schedule I controlled substance – along with heroin, LSD, peyote, mescaline, etc. All Schedule I drugs are illegal to prescribe and use under federal law. (Doctors who write prescriptions for these drugs can lose their DEA license; so, in states where medical marijuana is allowed, they generally merely “recommend” it instead).

So, if you use medical marijuana, you are automatically an unlawful user of a controlled substance and cannot possess, use, buy, sell, gift, or otherwise transfer firearms. You are now a prohibited person under federal law (18 U.S.C. § 922(g)(3). The mere possession of a firearm by a prohibited person is a crime, and you MUST disclose your illegal drug use on ATF Form 4473 when you buy, sell, or otherwise transfer a gun through a FFL. Failure to disclose your use of marijuana (medical or otherwise) is a federal felony. In a private transaction, if the seller knows or has reasonable cause to believe the buyer uses marijuana (medical or otherwise) the transaction cannot be completed without both parties committing a felony (18 U.S.C 922(d)).

Additionally:

  • If you own an NFA weapon in your individual name, such as a silencer or SBR, it becomes contraband as soon as that recommendation letter, medical marijuana card, or ticket for illegal pot possession is issued.
  • If you own an NFA weapon in a gun trust, you can no longer be a trustee or lifetime beneficiary of that trust (you might be able to be a death beneficiary of someone else’s gun trust if appropriate language is added to the trust to prevent possession by a prohibited person).
  • As a prohibited person, you cannot have control of any firearms if you’re the personal representative (executor) or trustee of someone else estate or trust – which means you can’t legally sell the guns.
  • If your spouse or child is taking medical marijuana, he or she cannot have access to any of your weapons or know your safe combination. All your estate planning documents should be reviewed to ensure that any such prohibited persons are removed from certain roles or additional language is added to prevent an accidental felonies.

I know some of you are reading this and thinking, “This is just stupid. People who need medical marijuana won’t care about their gun rights.” Some may not, but some may. This won’t affect just terminally ill people any more.

Or you might be thinking, “I’ve smoked/I know people who have smoked pot for years and I/they still own guns. No one’s going to catch me.” Maybe, maybe not. I’m just educating you on the law – following it or breaking it is always your choice. Do you know for sure that state-issued medical marijuana cards or tickets for pot possession won’t ever be submitted to the NICS background check system? Do you trust your government to protect your individual Second Amendment rights? Are you aware of what’s been happening to the right to self-defense for certain veterans and the disabled?

Here’s the letter the ATF sent to all FFLs back in 2011 when states first started “legalizing” medical marijuana. Pretty cut and dried, and no newer guidance has been issued. The fact is that until ganja is removed from Schedule I, it’s an illegal drug under federal law.

If you’re a Florida gun owner and anyone in your immediate family is unfortunate enough to need medical marijuana, please be sure to plan ahead before obtaining that card.

If you’re wondering how medical marijuana affects your Florida concealed carry license, see this article.