Over the past twenty five years, virtually all of the 20^th century luxury brands in the retail industries have become universally available commodities. It used to be only the rich could afford them; now they are enjoyed by the masses. Visit the Miromar Outlet Mall off Corkscrew Road and you’ll find name clothing brands like Christian Dior and Nautica, luggage from Louis Vitton, Coach handbags and Movado watches.

What I find remarkable about this democratization of aristocratic symbols is that while the quality of goods steadily declines, the public still pays top dollar for the symbolism.   But I believe this trend is on its least legs and will be replaced by a move to “The Experience Economy” – what people want to buy are unique experiences and enhanced support.

While it’s nevertheless true that many people still feel special when adorned with luxury brands, take a close look at what they’re buying. In most cases, the materials and craftsmanship have fallen off dramatically. So how does the brand itself still possess great value? As long as the advertising, marketing and product placement keep the brand aloft, luxury profits continue to be made – for now. Eventually, of course, the inevitable commoditization trap will tighten.

Twenty years from now, Christian Dior dresses may be available at Wal-Mart’s everyday low prices. I therefore propose that “luxury” itself is moving into an entirely different realm, away from the consumption of goods, into the experience of being deeply supported in every area of life by unique processes.

Travel, for example, has become commoditized, but those selling unique experiences will continue to earn top dollar. I’m not going to pay top dollar to stay at a Motel 6, but I might to stay at the Intercontinental. Both offer me a king size bed, a bathroom and a sink. But at the Intercontinental I find myself in luxurious surroundings, where desk clerks and concierges go out of their way to help me, and the amenities are top notch. I feel special and supported when I stay at the Intercontinental.

A travel company by the name of Backroads offers unique bicycling, hiking and adventure sport experiences across the globe. Their trips aren’t inexpensive, but if you don’t book early you’ll likely not get your first choice destination. I’ve personally experienced several Backroads led trips, and can tell you that the support is second to none, leaving you feeling like a kid at camp. They have guides that meet your every need. All you do is show up and have a great time. At the end of the day after a bike tour through the mountains or a white water rafting excursion, they hand you the keys to your luxury hotel suite where your bags have already been waiting.

Why would anyone pay $5 for a cup of coffee? The people at Starbucks have successfully answered that question. They aren’t selling a cup of coffee; they’re selling a place to gather and talk, surf the internet for free and listen to great music. Starbucks isn’t competing with Denny’s. It’s creating a social experience.

Likewise with Barnes & Noble. You could borrow a book for free from the Lee County Public Library. But why have such a drab experience selecting your next good read when you can instead drink a double mocha latte while browsing with friends?

Remember looking for furniture at huge warehouses like Levitz? The salesman there was the guy who worked at Sears last week and changed jobs. Levitz is now bankrupt while Robb & Stuckey employs interior decorators to help make its customers homes look fabulous.

No time for shopping? Hire a personal shopper. Your kid isn’t doing well in school? Enroll junior at a Sylvan Learning Center where he’ll get his own personal tutor. Need help losing weight? Your local gym offers personal trainers.

The experience and support economy is in full bloom. Granted, the recent economic downturn has dented its progress. Rest assured, when the economy rebounds, you’ll likely see this trend continuing.

Those that recognize the demand in their own particular fields will capitalize. Those that don’t will be commoditized. It will be interesting to watch over the next decade.

©2008 Craig R. Hersch .Learn more at www.sbshlaw.com

That’s another byproduct of these get-togethers. Most friends and acquaintances know that I am an attorney. Once the requisite attorney jokes have made everyone belly-laugh, I am usually approached several times for free legal advice. Good tactic – don’t you think? Make fun of the lawyer, and then ask for his advice.

But I digress. The lady told the sad story about her father dying. He was in a second marriage, you see, and left his estate in trust providing income to the stepmother for the remainder of her life. The trustee of the trust could invade the principal, reducing the amount that the deceased’s children would one day receive, but only for the stepmother’s health.

This inebriated guest who was asking for my advice, wanted to know what “health” meant under the terms of her father’s trust.

I asked whether the trust defined the term “health” and she didn’t know. I learned that her questions stemmed from the fact that the stepmother wanted to purchase a unit at a lifetime care-assisted living facility. At this particular assisted living facility one must first make a nonrefundable six figure deposit, and then pay monthly maintenance fees. Upon the death of the stepmother, the deposit is lost forever. The trustee was wrestling with the issue whether such a large nonrefundable deposit was within the scope of “health” for purposes of invading the principal of the trust.

The question presented was actually a good one. If your trust or will provides for the ongoing support of a spouse or other loved one, and if the trustee may invade the trust for “health”, you would want to check whether “health” is defined. If it is defined, read the definition to see whether it fits within your intent.

Health certainly includes, for example, regular doctor visits and probably also covers co-payments for specialists, hospitals and regular procedures. Would it cover plastic surgery? What if that plastic surgery was necessary to reconstruct your loved one’s features following a harrowing car accident? What if instead the plastic surgery was to enhance her lips for attracting a new spouse following your death?

Should the surviving spouse have to consume his or her own resources before the trustee can invade the trust for “health” reasons? What if the surviving spouse is also the trustee? Does he or she have cover when making these decisions for him or herself?

There might be tangential items that are “health” related but not quite so directly. The payment of health insurance premiums comes to mind. Would the trustee be authorized to invade the principal for health insurance, knowing that if the health insurance bills weren’t paid then other health services would likely cost the trust more money?

How about rehabilitative services for a recovering addict? Psychological services? Knee replacements? The list is endless. The problem with trying to draft such a comprehensive definition of “health” is that no one can anticipate every contingency.

If your document doesn’t define “health” in detail, however, you may want to consider having your attorney draft additional language to more clearly state what your intent would be in a variety of different situations. This would give a future trustee clearer direction when having to make decisions that not only affect the spouse, but also the remaindermen beneficiaries.

So the next time you’re at a gathering, here’s a lawyer joke for your arsenal. You might want to make sure that you don’t need advice from the lawyer in the room before you recite it:

A doctor and a lawyer were attending a cocktail party when the doctor was approached by a man who asked advice on how to handle his ulcer. The doctor mumbled some medical advice, then turned to the lawyer and asked, “How do you handle the situation when you are asked for advice at a social function?”

“Just send a bill for your advice,” the lawyer counseled.

The next morning upon arriving at his office the doctor directed his nurse to issue the ulcer stricken man a $50 invoice.  That afternoon he received a $100 bill from the lawyer.

When most people think about their estate planning they consider how to protect and distribute their real estate, financial assets and tangible personal property. But as the Jerry Garcia example illustrates, there exists another type of asset in today’s modern economy – intellectual capital and intellectual property rights. If you have authored a book and collect ongoing royalties, trademarked a brand or process or patented an invention, then you have likely created valuable intellectual property that ought to be addressed in your estate planning documents.

The first item to consider with intellectual capital is its registration and protection. This is usually accomplished by having an attorney who specializes in intellectual property rights file the necessary paperwork to document your trademark, servicemark, patent or copyright. Once protected, you should advise your estate planning attorney that you own intellectual property. He can then coordinate your estate plan with your intellectual property attorney to ensure that this asset is properly funded into your revocable trust, family partnership or other estate planning vehicle.

In a typical revocable trust, you act as your own trustee during your lifetime. In the event of your incapacity, you typically name a disability trustee to act for you. You might consider naming an independent trustee to protect, preserve and distribute your intellectual property rights. This trustee might be separate from the trustee who is in charge of your investments. A financial advisor who is adept at maximizing the income and growth you realize off of your stocks, bonds and mutual funds probably has different attributes than the trustee you would choose to deal with a publishing company, the manufacturer of your invention or the marketing of your artwork.  

In the case of those who are famous, even the use of their name or image must be protected. Elvis Presley’s estate, for example, reaps millions annually. Longtime baseball broadcaster Harry Carey’s estate protects his name and image used in everything from restaurants to T-shirts. Famous Captiva resident and artist Robert Rauschenberg is in litigation with someone who allegedly rummaged through his trash in an effort to resell it as legitimate artwork.

The estate plan of someone who owns intellectual property rights might have a succession plan built in, much like those found in family businesses. The estate planning documents might call for the creation of a committee, similar to a board of directors, to ensure that the intellectual property maximizes its income and remains protected.

The protection of individual intellectual property rights should be run like a business. Consider that Fortune 500 companies spend billions of dollars protecting their intellectual property.  A legal assistant in my office has a son who is employed by the Abercrombie and Fitch clothing company to protect their intellectual capital. He often flies to China and other Asian countries in efforts to combat the manufacture, distribution and sale of knock-off clothing bearing the company’s name and logo.

Another issue that one’s estate plan must cover is how the intellectual property rights are to be valued upon one’s demise. There are various specialists who can so value the rights, as these are often based on expected income flows. These valuations often are important when the estate or trust must divide and distribute the assets upon the intellectual property owner’s death.

Estate tax laws, such as those associated with the marital deduction may come into play. If the intellectual capital rights are funded into a Marital Trust upon the owner’s demise, certain requirements must be satisfied under the tax laws to qualify for the marital deduction and therefore defer any estate tax until the surviving spouse’s death.

Further, the apportionment of taxes and expenses of the intellectual property owner’s estate can be important and should be addressed in the documents. The estate planning documents can address such important questions such as: Does the intellectual property bear its proportionate burden of the taxes and expenses associated with the death of the property owner? If so, from where does the money come from to pay those taxes and expenses if the income is erratic? Who is entitled to the income earned from the intellectual property? If the income is far more or far less than expected, does this change the distribution?

The documents might also dictate which parties are to benefit from the intellectual property rights. What happens upon the death of the income beneficiary? Is charity or a private foundation the ultimate beneficiary? If so, does the subtrust dealing with the intellectual property rights qualify for the federal estate tax charitable deduction?

There are a host of other important intellectual property rights to address. Make sure that your estate planning attorney is aware of any intellectual property that you may own so that your plan can adequately address them.

How about financial advisors? Years ago only the most wealthy had financial advisors. Who ever thought that so many of us, including the 9 to 5 working class would hold stock, bond and mutual fund investments? It was roughly thirty five years ago when Individual Retirement Accounts were first established. There was no such thing as a company 401(k) plan. Now it seems that financial advisory offices sit at every major intersection, not to mention the internet discount brokerage firms accessible from our laptop computers.

So many conveniences all of us take for granted did not even exist in the not too distant past. Air conditioners. Microwave ovens. Digital television offering hundreds of channels. Air travel. Automobiles with satellite radio and navigational systems. Remember as each was introduced they were only available to those with substantial financial means?

Which leads me to revocable living trusts. I often encounter people who believe that they don’t have enough assets to justify establishing a revocable living trust. Many mistakenly assume that if they don’t have more assets than what the current federal estate tax exemption amount might be, then they don’t need a trust. Whether a trust would benefit someone isn’t really a function of whether that person has federal estate tax planning issues.

Trusts are really a vehicle to accomplish many goals. Titling your assets inside of your revocable living trust avoids the probate process. For those of you who are regular readers of this column, you already understand that probate is the court (public) process wherein your last will is admitted to the probate court, your personal representative is appointed, your creditors and taxes are cleared and finally your estate is distributed to your beneficiaries. Whether or not you have a taxable estate, if you have assets in your name individually at the time of your death, you will have a probate.

At the same time, revocable trusts assist us during our lifetimes. In the event of our incapacity, our revocable trust names a successor trustee who can manage our assets and investments, buy or sell properties on our behalf, write our checks and pay our bills, and accomplish so many things that are otherwise difficult to do. Some folks believe that since they have a power of attorney they don’t need a trust, but my experience is that powers of attorney are problematic, as many banks and financial institutions simply won’t cooperate with the holder of the power, despite an update to the Florida statutes in 1996 designed to assist with this problem.

Revocable trusts can be used to ensure that only those we want to benefit from our estates following our death will benefit. They allow us to protect the inheritance we leave to our surviving spouse, children or grandchildren. We can include provisions that will ensure those we love won’t lose their inheritance if they divorce, become incapacitated themselves, have a business failure or experience a myriad of other setbacks.

In addition to all of that, revocable trusts can be used to accomplish significant estate and income tax planning for ourselves and for those we love.

A common question that I am asked is how much assets should one have before considering putting a revocable trust into place. I often answer that if one has more than three or four hundred thousand dollars of assets, then it is wise to consider a trust. The types of assets, where they are located, your marital situation, your health and a host of other factors affect this answer, so you should consult with competent estate planning counsel before acting. Considering that the current estate tax threshold is $2 million, you can see that one could have significantly less than the exemption amount and still benefit.

So like many other things today, trusts are not exclusively for the super wealthy, and in fact can offer many of us important benefits. Reflecting on how quickly the world has changed, I wonder what conveniences we will consider necessities only ten years hence, in 2018. Now that’s something to consider the next time you surf the internet on your cellular telephone.

Certainly there’s no way that my background as a tax and estate attorney could lead me to speak in bewildering terms! Take a simple term like “joint ownership”. Everyone for sure knows what that means, right?

Wrong.

Did you know that there are three different ways that you can own an asset or property jointly, and each different form of joint ownership has very different economic effect and consequence to the joint owners?

The three different forms include: joint tenancy with right of survivorship; tenancy by the entirety; and tenants in common.

When you mention joint ownership, most people think that you are talking about joint tenancy with rights of survivorship. When one owns property jointly with rights of survivorship, what this means is that both owners have an interest in the property or asset, and if one of the joint tenants dies the other takes the asset by operation of law.

For example, if I put a savings account in joint ownership with rights of survivorship with one of my daughters, upon my death she takes full rights and sole ownership of the property. This is true despite anything contrary in my will, such as an intention for my wife to take my account at my death.

While joint ownership with rights of survivorship avoids the probate process, it could also circumvent my intent and cause estate and gift tax problems. Consider that if I have a bank account with $100,000 in it. I place it in joint ownership with my daughter. I just made a gift of $50,000 to her under the gift tax laws. Since I can only gift my daughter $12,000 tax free in any given calendar year, I just made a taxable gift to her that would require the filing of a gift tax return.

Compare joint tenants with rights of survivorship to tenancy by the entirety. Both types of joint ownership pass to the surviving joint owner upon the first joint owner’s death. But tenancy by the entirety may only be owned between a husband and a wife. It is considered a “unity” of interest. In other words, rather than an undivided interest in the whole, the husband and wife are considered one unit. This type of ownership may also provide asset protection features. If one of the spouses has a judgment or creditor problem, the creditor generally cannot attach a property owned as tenants by the entirety unless both the husband and the wife are liable to that same creditor.

In Florida, when real property is titled as “husband and wife” it is presumed to be owned as tenants by the entirety. Sometimes a title agent will draft a deed that confuses by reading “husband and wife joint with rights of survivorship”. If tenancy by the entirety is intended, then a corrective deed may be in order.

Finally, we turn to tenants in common. Here each joint owner has an undivided interest, but unlike joint ownership with rights of survivorship or tenancy by the entirety, each co-owner can separately sell, transfer or bequeath his interest in the property.  If one of the joint owners dies, his share is subject to probate.

Often people may believe that they own property, assets or accounts jointly with rights of survivorship when in reality they own it as tenants in common. Perhaps a bank clerk filled out the form when the account was opened as tenants in common without asking or realizing the difference, or perhaps the financial institution presumes tenants in common unless the account owners direct otherwise.

In any event, if you believe that your account should not be subject to probate then you want to ensure that you do not have the account owned as tenants in common.

One final note – one should not use joint ownership as a probate avoidance technique in most circumstances. There are gift tax, estate tax and creditor issues too numerous to describe in this column. You should seek advice from competent estate planning counsel before relying on joint ownership for probate avoidance, tax planning or creditor protection.

So as you can see, something as innocuous as joint ownership can have very different effects. Take a look at your accounts, property records and deeds to ensure that how you believe you own something is really the way that your title reflects.

The danger, of course, is that one’s estate plan may serve as an “enabler” resulting in a continuing downward spiral along with the loss of any assets or property left to the dependent beneficiary. Obviously, one should not leave amounts or properties outright to someone that suffers from these issues.

The alternative to leaving amounts outright would include creating an ongoing trust for the dependent beneficiary. The continuing trust would provide how the money, assets or property are to be held and distributed for the beneficiary. Deciding to hold the assets and property in trust is only the beginning, however.

First, one must decide who the trustee would be. This trustee would act as the gatekeeper to the dependent beneficiary’s inheritance. Naming a sibling or other close family member as the sole trustee over this share is the surest way to breed animosity between the family members. It may be important to have a family member in a position of authority to provide the human element to the plan, but the dependent beneficiary is sure to plead with the gatekeeper for access to the funds. When the pleas fail, arguments or worse could follow.

In these situations it might prove helpful to name a corporate trustee (bank, brokerage firm or trust company) as a co-trustee with the relative or family member. The corporate trustee can take on the role of “bad cop” to ensure that the trust assets are protected and are used for the benefit of the dependent beneficiary, rather than as wasted assets fueling the bad habits.

Second, the terms of the trust may very well be drafted to include provisions requiring counseling, drug tests or other means to ensure that the dependent beneficiary remains “clean”. If the beneficiary fails the tests, then distributions may be suspended, although the trustee can continue to pay for health and rehabilitative care expenses. These provisions should be carefully drafted to give the trustee the maximum amount of discretion. Many dependent beneficiaries possess the uncanny ability to fool those around them into believing that they are reformed, so to protect them from themselves the trustee should have enough discretion to suspend distributions even if there isn’t obvious proof that the beneficiary has “fallen off the wagon.”

Clearly there are subjective decisions involved. The trustee will need safeguards and protection when making judgment calls. While drug tests may objectively indicate whether a beneficiary has been taking drugs, how does a trustee verify whether a gambling problem persists? Where’s the line between alcoholism and social drinking? The documents can provide backup in these situations by naming a committee that the trustee can poll. If the committee members believe that the beneficiary is not free of the problem, then the committee can make a nonbinding recommendation that distributions should be suspended.

A third consideration rests with various “what ifs”. What if the dependent beneficiary is clean for several years? Should they be entitled to shed the gatekeeper trustee or is the dependency likely to return leaving them vulnerable to losing the inheritance and living out their days in abject poverty? What if the dependent beneficiary has children of his or her own? Should the trustee have the ability to assist the children for their needs? If so, can the trustee invade or even exhaust the trust for these purposes?

Can the trustee make mortgage payments? What if the dependent beneficiary opens a home equity line indirectly using the mortgage payments to fuel the bad habits? Should the trustee therefore let the beneficiary’s home go into foreclosure? Must the trustee force the beneficiary to deed the home into the trust to prevent this end-around?

Should the dependent beneficiary have the legal right to accountings of his trust share? Under new Florida law, one can name a surrogate called a “designated representative” to receive information on behalf of the beneficiary. Otherwise the trustee has a legal duty to provide annual accountings to the beneficiary. Should the beneficiary be kept in the dark indefinitely as to how much his trust share contains?

What if the dependent beneficiary dies at a young age? The unfortunate reality is that dependent beneficiaries often have shorter life expectancies. What should happen to any unconsumed assets if early death occurs? If the previously mentioned committee members deciding whether to suspend distributions from the trust are the remainder beneficiaries to the dependent beneficiary’s share, is there not a conflict of interest evident?

Protecting those we love who have dependency problems is often a difficult exercise. If someone you care for falls into this category, take the time to think through these very serious issues.

“You know you can’t take that into the living room,” I scolded Gabi as she eyed the muffin, while longingly looking at the room with the television. A slight smile formed on her face, and out of the corner of her eye she looked my way while gingerly picking up the muffin. “You have to eat that while in the kitchen,” I continued, “so we won’t have crumbs on the carpet.”

Now with a large grin, Gabi opened her mouth wide and shoved the entire muffin in. With a big smile (and full mouth) she skipped into the room, satisfied that she had her cake and ate it, too. I just had to laugh.

It’s the human instinct, isn’t it? None of us like being told what we can and cannot do. We’ll look for a way to circumvent the rules whenever we can. Tax lawyers, especially, are keen on finding ways to maneuver through complex laws to benefit our clients.

But there is a difference between finding a legitimate loophole in the law and simply breaking the rules. Take the gift tax laws, for example. The tax code provides that we can gift up to $12,000 annually to any beneficiary. Gifts totaling above that amount during a calendar year to any particular beneficiary requires us to file a gift tax return, lowering our lifetime exemption amount, or if that amount has been consumed, actually paying gift tax.

More than just a few times a year, a client will tell me that he will want to transfer some large asset but not follow the rules. “I’ll just sell the lake house to my son for one dollar,” they’ll declare, thinking that they’ve outsmarted the IRS man.  I then break the bad news that the sale for a $1 is considered to be a gift to the extent that the transaction was less than what one would sell the home to a nonrelated person.

Another classic example of people believing that they can outsmart the tax man is with relation to giving collectibles, valuables or jewelry.  One client of mine told me that she wrote the names of her children on post-it notes and affixed those notes to the back of valuable artwork hanging in her home. “I told the kids that each of those paintings is theirs, so after I die they should come into the house and take the artwork off my wall.”

“The IRS doesn’t consider that a lifetime gift and the artwork will still be included in your estate,” I told her. You actually have to part with control over the artwork in order for it not to be counted as part of your estate.

“But how will they ever know?”

I ask whether she had the artwork insured. The IRS knows that folks try to get out of declaring these sorts of valuables on gift tax and estate tax returns, so they often ask for a copy of the decedent’s homeowner’s policy. The IRS knows to look for policy riders that cover valuables. If the rider is in place, they consider the insured asset yours whether you gave it away or not.

So are there legal loopholes? Sure there are. Some loopholes are even sanctioned by the tax code. Qualified personal residence trusts and charitable trusts come to mind.

Are there valid loopholes that the tax code doesn’t specifically authorize? Yep. Irrevocable life insurance trusts and certain family limited partnerships are both examples of loopholes the IRS doesn’t like but have found success. In the former, the IRS doesn’t much like the fact that you can qualify premium payments as gift tax free, but they have lost enough cases to acquiesce to that type of transaction. Family partnerships are a bit more problematic in that they are much closer to “the line”. It’s almost impossible for laymen to navigate partnerships successfully without the assistance of a qualified professional. Those willing to employ a good tax lawyer may find success with that technique.

So if you think that you have a sure fire way to fool the tax man, you should think again. Chances are, the bright idea you had to get around the tax law has been tried by a few thousand people before you. Unsuccessfully, I might add. So be careful out there. Ignorance of the law isn’t considered a valid excuse, and the IRS has heard more excuses than a fifth grade teacher when asking students why they haven’t turned in their homework.

As for Gabi? She’s a teenager now. Need I tell you whether she’s still trying to figure out ways to get around the rules?

“No,” a typical client will respond, “They can blow the money or do foolish things with it. I don’t think that the money means a whole lot when you weren’t the one who had to go out there and earn it.”

“So if you were Tiger Woods, and could only leave one of two ‘baskets’ to your heirs,” I continue, “would you rather leave them a basket that contains shiny trophies and millions of dollars, or would you prefer to leave them a basket that contains your golf swing and the mental toughness it requires to win major golf tournaments?”

“My golf swing and mental toughness, of course! With that they can make millions on their own and they would also understand the value of what they have accomplished!”

“What you are telling me, then,” I’ll paraphrase, “is that you would much rather leave your children and grandchildren your values, knowledge and experience - if you could do it - as opposed to all of your cash and assets.”

“Exactly!” they’ll reply, “But how do you leave that to someone in a will or trust?” 

That’s where a good estate plan can fit in. Most people think of estate planning as simply legal documents that divide and distribute your financial assets among your heirs. An estate plan that instead seeks to transfer wisdom, experience and values takes a multifaceted approach and occurs over a series of years. 

Something as ubiquitous as a revocable living trust, for example, requires careful thought as to whom will act as trustee over your financial world should you become incapacitated. Here, you can choose to name a family member and keep them in the dark until they are called upon to act, or you can choose to involve him or her with your trusted advisors now, while you are active and healthy and able to impart your knowledge and experience. 

You took a long time to earn and to build your estate. It came with hard work, dedication and a certain approach to saving and spending. You worked with a team of advisors over the years, including your attorney, accountant and financial advisor. In the best of circumstances it would be difficult for a family member to be suddenly thrust into a position of authority with these professionals that they may not know nor have any prior interactions with. 

Instead, how about creating separate trusts for your heirs now, while you are alive? You can fund them over time according to your ability, and have your heirs work with you and your advisors now, so that when the time comes for them to act for you, they have had years of experience. They can also benefit by learning how you approach real estate investments, the stock market, spending and saving for retirement. In essence, why not teach your heirs your golf swing now, as opposed to laying it all out in a legal manual for them to read once you become disabled or die.

If you have become a Florida resident and have not updated your estate planning documents, it is time to do so.

 ©2008 Craig R. Hersch .Learn more at www.sbshlaw.com

With the arrival of Revocable Living Trusts, it is even more important to ensure that your trust provisions are current. So today I will review what I find to be the twelve most common mistakes lurking in trusts and estate plans:

1.         Estate tax language is nonexistent or out of date. The federal estate tax laws change frequently and are likely to change again in the next few years. Does your trust include current provisions to minimize or eliminate the federal estate tax? If those provisions were drafted before 2001, they are likely out of date.

2.         Does your trust properly provide for the distribution of your Florida homestead? Florida homestead that is deeded to a trust with standard “marital” and “credit shelter” trust provisions may violate Florida’s descent and devise statutes, leading to unanticipated ownership and tax issues.

3.         Durable Powers of Attorney are out of date or not properly drafted. Do you have a current and properly drafted Durable Power of Attorney? Your revocable trust alone cannon solve all problems relating to the need for your signature. On many occasions a Durable Power of Attorney is the only method of acting for an incapacitated person. If your Durable Power of Attorney was drafted several years ago, or if you have moved to a different state since your last one was drafted, chances are it is not current.

4.         Do you have current Health Care Surrogates and Living Wills? The Terri Schiavo situation highlighted the need for current advance directives indicating what you would want to have happen for your care in the event you cannot direct the care due to incapacity.

5.         Do you have a plan to keep your legal documents and advance directives current? Powers of Attorney are notorious for being outdated and useless. You must have a system for making sure they are current.

6.         Do you have a system that will permit you to access your advance directives quickly during an unanticipated crisis? Invariably the health care surrogates and living wills are needed in an emergency and since they are not available, they are often replaced by an inferior version at the hospital.

7.         Does your trust provide an alternative to physician or court determination of your incompetency in order to remove you as trustee? Very often, a federal act known as HIPPA prevents doctors from making such a determination in writing. Consequently, court determination may be necessary.

8.         Does your trust provide for assistance to the Settlor while serving alone as Trustee, in the event a temporary emergency? A “silent partner” trustee may be made available to deal with trust issues that arise while you are hospitalized, ill or simply out of town. To that end, does your trust provide for assistance to the Settlor while serving alone as Trustee, in the event a temporary emergency evolves into a permanent disability, is a “disability trustee” named to provide for the needs of the disabled Settlor?

9.         Does your trust protect your surviving spouse’s interest from creditors and predators? Provisions should be included to allow the surviving spouse access to the deceased Settlor’s estate, while reducing the ability for the rest of the world to access the estate.

10.       Does your trust protect your estate in the event your surviving spouse remarries?  A deceased Settlor’s estate can be controlled and protected even if the surviving Settlor remarries.

11.       Does your trust protect your children’s and grandchildren’s inheritances from financial disasters, such as divorce, bankruptcy or lawsuits, or to minimize estate taxes for future generations? Without the proper provisions in your trust, a beneficiary’s inheritance can be accessed by creditors or inadvertently co-mingled with that beneficiary’s spouse and be subject to additional estate taxes.

12.       Does your estate plan properly maximize tax-deferred growth and protect retirement account assets for your children and future generations? With proper planning, you can ensure the maximum amount to your beneficiaries while protecting against the reach of a divorcing spouse or other predators.

 If any of the above items seems familiar, it is time for a visit to competent estate planning counsel.