Never Go Out Without an Umbrella

Many retirees figure that once they move past the stage in their lives where they were raising children, they can scale back on many of the expenses that they’ve been carrying for many years. Life insurance might not seem so important once you accumulate some savings and have enough for your own retirement and that of your spouse, if she or he survives you. Often retirees will downsize their homes to save on those carrying costs, including high homeowner’s insurance rates.

But there’s one insurance policy that retirees (and even people still in the middle of their working careers) shouldn’t scrimp on: umbrella insurance policies.

For those of you unfamiliar with this concept, umbrella insurance policies cover beyond what your homeowners and automobile policies cover. The typical highest liability coverage that standard automobile policies cover is in ranges of 300/500/100, which translates to $300,000 of bodily injury per person, $500,000 of bodily injury per accident and $100,000 of property damage.

Yet, what if you are involved in a terrible automobile accident and cause permanent injury to someone? Even though those liability protections seem like a lot of money, they are probably insufficient to protect you from catastrophic accidents. While you may believe that you are unlikely to experience such an occurrence, consider what liability you may have if you were to run into a surgeon and cause him permanent loss of the use of his hand. It doesn’t take a death to create significant liability.

If you were involved in an accident where your liability exceeded your coverage, then the insurance company might just settle the claim for their policy limits and let you handle the rest. This may also mean that you would have to incur significant defense attorney costs as well as subject your hard-earned net worth to the possible reaches of the claimant.

This is where umbrella liability protection kicks in. An umbrella policy will cover you for liability in excess of your car, homeowner’s, boat and other liability policies up to the umbrella limit. Typically, one can purchase umbrella policies totaling $1 million, $2 million or even $5 million of coverage. Unless you have a claims history, the cost of the coverage is relatively inexpensive. It might be a few hundred dollars annually or perhaps a little more if you want the higher coverage amounts.

While there is no requirement that you purchase the umbrella policy from the same carrier that underwrites your other insurance, I would suggest that you use the same carrier as the one that you have for your automobile policy. You don’t want to have a situation where the insurance carriers argue over who is liable for what, including your attorney defense costs. Since an incident involving your automobile is the most likely to create large legality problems, having that carrier underwrite the umbrella policy is probably your best choice, even if the umbrella is slightly more expensive.

No matter who you choose to underwrite your umbrella policy, you should ensure that your other coverage meet the umbrella’s stated requirements. In other words, once I purchase an umbrella policy, I usually can’t drop my automobile coverage limits to the state minimum.  Usually the umbrella policy requires that I maintain at least a 300/500/100 threshold on my automobile policy. Similar requirements may apply to my homeowner’s and boat coverage as well.

The final tidbit to know about umbrella coverage is the “uninsured motorist” or “UM” rider addition. While the standard umbrella pays someone that you may be liable to for negligence, the UM coverage pays you if someone injures you but doesn’t carry sufficient coverage of their own.  Many motorists in Florida carry the bare minimum of coverage, and if they cause you significant injury and if they have little or no assets (personal injury attorneys call these individuals “judgment proof” since even if you get a large judgment against them there is little or nothing to collect against) then you can’t get compensated for your losses. That is, unless you carry UM coverage on your umbrella. Then you can go against your own policy to the extent that the person who injures you is uninsured or underinsured. Most underwriters will only sell up to $1 million of UM coverage, and that will typically add several hundred dollars to the premium, but I believe it is well worth it.

So don’t give up that umbrella policy if you have any degree of net worth. If you have already dropped your umbrella coverage, or if you don’t have it, please consider speaking about it with your liability insurance carrier.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.


Back-Up Your Brain

Like many professional offices, ours has gone electronic and mostly paperless – at least as much as an attorneys’ office can actually go paperless.  So from time to time, a client will ask me whether and how we back-up our data and systems.

Thankfully, I can assure my clients that we have up-to-date, sophisticated off-site back-up systems.

But then I ask them the same question.  “How do you back up your data?”

I’m not asking, by the way, whether they have their computer data backed up. Instead, my inquiry is directed at what’s inside of their brain. By that I’m referring to the wealth of information that the client may have in their head, but that no one else knows – possibly not even their spouse.

What kind of data you ask? Think about all of the day to day decisions that you make regarding your legal, tax and financial matters.

What is your investment strategy? Where are the accounts? Which account is used to pay which bills?  Are electronic banking accounts used? What are the usernames and passwords? When you need to pay big-ticket items, such as real estate taxes, or for major repairs, what money do you tap?

When do you typically take your Required Minimum Distribution (RMD) from your IRA every year? Is it at the end of the year? Who calculates it? If there are multiple IRA and 401(k) accounts, is the RMD taken proportionately, or do you typically tap one of the accounts and leave the others intact?

Are there any financial dealings between you and your adult children? Are those arrangements written down? Where are they kept? Do they involve ledgers? Are those ledgers up to date? Who keeps them up to date?

Are there annual gifts being made for health or education?  Are those expected to continue? Are there life insurance premiums due? Are those premiums paid to a life insurance trust that requires Crummey notices that must be sent to the trust beneficiaries? Who is responsible for that?

The list goes on and on.

Since handling the finances of the house is so second nature to some, and because they have been doing so their entire adult lives, they don’t think that any of this is extraordinary. They don’t appreciate that someone coming in with no understanding of what they have done over the course of many years would have a difficult learning curve to understand what has transpired in the past, and what has to happen in the near term to keep things running smoothly.

And in most cases, there is no back-up.  All of this information is stored in the brain – but if that brain should have a traumatic event like a stroke, or worse, death, all of the loved ones who are affected by these daily decisions somehow have to reconstruct the data.

Believe me, it isn’t easy.

So if any of this sounds familiar, what should you do?  The first thing, of course, is to write down as much of the information and keep it in a safe place. Today’s technology offers a variety of solutions for backing up personal information securely.  Digital vaults for passwords and forms are freely available on the Internet.

Secondly, instruct those around you about the most important legal, tax and financial matters you deal with on a daily, monthly or yearly basis, and then have your loved one participate with you in carrying out some of these tasks. That way, should your loved one be confronted with having to pick things up should you be unable to act, it all won’t seem so foreign.

In other words, do your best to back up the data that sits between your ears. Thereafter, be sure to perform periodic back-ups since the data tends to change over time.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Home Is Where Rover Lives

Many who own residences both here in Florida and in some northern states often consider claiming Florida residency to save on taxes, among other benefits. Becoming a Florida resident is quite easy; escaping the clutches of your former state’s taxing authority is another matter.

Many states impose their own rules to determine whether you remain a resident, even if you changed your voter registration, driver’s license and performed a host of other activities. For a complete list of what you should do to become a Florida resident, check out Appendix B to my latest book The Florida Residency & Estate Planning Guide, available by calling my office or on

This brings me to the Matter of Blatt, which is a New York state court case. As you may be aware, New York taxes are quite high. In Blatt the New York State Department of Taxation and Finance considers an individual to retain New York residency if he or she continues to “hold [items] ‘near and dear’ to his or her heart, or those items which have significant sentimental value, such as: family heirlooms, works of art, collections of books, stamps and coins and those other personal items which enhance the quality of lifestyle [in New York].”

Factors considered also include retaining a home, the location of business activity, the location of family ties, the location of social and community ties and formal declarations of domicile. But here the court was asked to consider other items that were ‘near and dear’ to the taxpayer.

In this case, the taxpayer’s most important possession was his dog.  Mr. Blatt moved to Dallas, Texas, another state with lower taxes than New York. The Division of Tax Appeals concluded that the significance of the taxpayer’s moving his dog to Dallas was reflected in an email to his friend in which he said that “the Dog is the final step that I haven’t been able to come to grips with until now. So, Big D is my new home.”

Moving Rover was therefore a significant factor in the New York State Tax Court’s decision in releasing the tax assessment and agreeing that Mr. Blatt was a Texas resident and not a New York resident.

The lessons to be learned in this ruling are significant.  If you claim Florida residency, for example, but retain your stamp collections, family heirlooms, works of art and other significant tangible personal property in your northern residence, there’s the chance that a northern state taxing authority uses those facts against you should an issue arise as to your residency for tax purposes.

In other words, just because you’ve registered to vote and obtained a driver’s license in Florida doesn’t seal the deal. I’m wondering what significance this decision would have on those who travel with their pets? I’ve spent a significant amount of time traveling recently and can tell you that there were about as many pooches on some of my flights as there were screaming babies and young children. Such is life in the skies these days.

As a side note—what’s up with all of these “Emotional Support Dog” vests? Those seem real fishy to me honestly. I love my dog, and he certainly serves as emotional support from time to time, but to get some kind of special treatment flying with him would seem like I’m gaming the system. Just saying.

So the bottom line is watch where you leave Rover. If his home is in another taxing jurisdiction, he may be costing you more than dog food and vet bills.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.


A new client, Theresa, who recently relocated from a northern state, brought me her trust as she wanted me to review it for applicability to Florida law. She dropped it off before her appointment so I could be prepared for our initial appointment together. I opened up the binder and started reading.


It took me three readings to figure out what Theresa’s intent might be. My suspicions were that if it took a board certified wills, trusts & estates attorney with almost thirty years of experience three attempts to figure out the language of the trust, Theresa probably had no idea what it said either.

I’m not trying to knock Theresa, by the way. Theresa is a very smart and accomplished woman. Even so, her field of expertise is not tax or trust law, and that’s why I assumed Theresa didn’t know what her trust said.

So when Theresa sat down in my conference room, I started to ask her some questions. Who did she want to run her financial affairs in the event she became incapacitated? Was there anyone else that she was supporting financially who might need continued assistance in the event of her incapacity?

Did she want someone different to be responsible for her business than the person who she wanted to be responsible for handling her investment assets? Did she want the person responsible for running her business to be able to purchase the business from Theresa’s estate in the event of Theresa’s incapacity or death? If so, how was the business supposed to be valued? Who decides what the terms of the sale would be?

The questions went on and on.

I’m not necessarily criticizing the attorney who drafted this trust – although I felt he could have done a much better job. There were just way too many ambiguities in the document – open holes that left too much up to chance. When I sat down with Theresa and started to ask her questions about what she wanted, the answers that she gave me didn’t coincide with what I read in her document.

There were many possibilities why this was the case. First, Theresa may not have expressed her intent clearly to her prior attorney. Maybe her prior attorney didn’t ask Theresa the questions that I was asking, which may have prompted completely different responses leading to a completely different answer. Perhaps Theresa forgot what she told her prior attorney and her intent changed.

This isn’t the first time that I’ve listened to a client express her intent, and when I read the client’s document the written words didn’t match what I heard.  It’s very important for clients to read through their legal documents, and, if they don’t understand the main points, to ask their attorney questions until they do understand.

When I send drafts to clients, we often include a brief summary of the trust along with a flowchart that describes what happens during incapacity or their passing. I know of other attorneys who also send flowcharts. Some people operate better with visual graphics than with words. I’ve found that when you combine a flowchart with a summary of the trust, more often than not people will understand what the trust is supposed to do.

Oftentimes clients, when asking questions, will start off the question with an apology. “I’m sorry to ask so many questions but….”

Don’t apologize! Ask your questions! That’s what you’re paying the attorney for! Make sure that the document your attorney drafted is consistent with your intent! If you don’t feel that you understand the basics of your document, then you need to ask more questions.

With that said, there will always be some provisions that you will never understand. Formula provisions that divide your estate into exempt and non-exempt tax shares come to mind. They are extremely complex and fraught with legalese. I don’t draft those types of provisions to satisfy a sadistic urge, (although others may disagree) – it’s just that if you don’t express that language correctly you could run into IRS or other legal difficulties.

But even with those types of provisions you should understand the generality of what is happening.

Do take the time to read through your estate planning document drafts when you receive them. Don’t be afraid to ask questions to make sure that the documents are consistent with your intent. Finally, do review your documents periodically to make sure that the intent you expressed before remains your intent today.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Should You Rescue a Child By Bringing Him into the Family Business?

You may be surprised to learn that more than 90% of American businesses are family businesses, according to Entrepreneur Magazine. The term “family business” is defined as a non-publicly traded business that contains two or more family members.

It’s not unusual for a patriarch or matriarch to dream of one day including one or more adult children in the family business, especially if it’s successful. Many consider the business their legacy and are quite proud of it. Bringing in the next generation might be considered a logical step to solidify that legacy. Many of us know of family businesses that thrive for generations.

But there are many psychological, economical and relationship issues to consider when bringing loved ones into the fold. Is your adult child well-suited for the role that you expect her to play? What exactly is that role? Will she start from the bottom and work her way up, or will she immediately work from the executive suite? What is her educational and work experience to date? How will other key employees receive her? How has your relationship with that adult child been over the years? Can it survive working together?

Anecdotally, I’ve seen several instances of a child being forced into a role that he isn’t suited for. Dad, for example, might be great at sales, but Son might be better working in operations. When counseling family businesses, I usually suggest that all parties take certain aptitude and profile tests such as Strengthsfinder and Kolbe. Both provide valuable insight into a person’s proclivities.

Yet another issue to think through is who will train and mentor the young family member. Not only is it tough to mentor anyone, nonetheless your own flesh and blood, but you need to honestly assess your patience and tolerance as well as your adult child’s disposition and capabilities.  Perhaps another person in the organization is better suited for this role? Are they willing to do it? Do they see your family member as a threat?

Sometimes the family business is used as a life preserver for a drowning family member. Drama often ensues when the family business is used in this manner.

Perhaps the child was fired from several jobs or has been unemployed for a while.  The parents might believe that by creating a position inside of the family business the child will find a niche and thrive. This rarely happens. There’s usually a reason why Son or Daughter was fired from prior positions, and those reasons are likely to not only persist but also intensify in the steaming caldron of a family business.

I recently met with a client who owned a successful multi-million dollar operation that he took over from his father. “I thought one of my three children would one day run the shop,” he confided, “but none were really equipped to do so. I brought them all in at one time or the other, but when I did they started at the bottom and had to work their way on up to the top. None of them worked out. So eventually I sold the business.”

This client’s story is quite common. Success magazine recently published a report indicating that fewer than 15% of family businesses survive to the third generation. That statistic is important to note if you are the patriarch relying on future income of the business for your retirement.

Those family businesses that employ non-family members must be cautious as well. Long-term employees who are critical to the business’ successes may look askance at the youngster who hasn’t paid her dues but receives many privileges. This can create disharmony which can lead to the loss of those key employees. Consequently, it’s usually a good idea to communicate with those that matter, soliciting their input.

Non-family owners complicate matters as well. Here the ownership interests might be governed by shareholder or partnership agreements. Assuming that nepotism is not prohibited, bringing on a competent family member on one side might encourage other shareholders to ask the business to employ their own family members who may not be right for the role. Business owners would be wise to keep that Pandora’s Box closed.

As you can see, there are many issues to address prior to asking a loved one to join you in your business. Being intentional and thinking through the myriad of issues will assist in arriving at the best outcome, whether that result is bringing your son or daughter into the business or deciding against it.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

Deeds, Warranties and Title Policies

Many don’t completely understand the different types of deeds that might be used when transferring real property. This includes the effect of a deed on the grantor as well as the grantee.

I’ve seen several instances where do-it-yourselfers have used quitclaim deeds improperly, not realizing the consequences of the decision. This is common, for example, with transfers to revocable living trusts. Sometimes a quitclaim deed is appropriate, but other times it’s not. Allow me to examine this issue today more thoroughly.

Title companies, for example, use quitclaim deeds quite frequently for intra-family transfers. Before signing a document that has not been prepared by or reviewed by an attorney, consider doing so. An attorney may or may not charge any more than a title company, but will better understand the legal ramifications of the proposed type of deed. Generally speaking, there are three different types: general warranty deed, special warranty deed and quitclaim deed.

In a general warranty deed, the grantor covenants that she has the ability to transfer the property, which is free from all claims and liens existing both during her ownership and before such time. The “warranty” refers to a guarantee on the condition of the property’s title. When used in conjunction with a title insurance policy, the grantee’s ownership interest is secured. The grantee has legal recourse against the title policy insurer against future claims on the property made by those having an interest prior to the transfer.

A special warranty deed is one in which the grantor only warrants or guarantees the title against defects in clear title that may have arisen during the period of her ownership of the property.

Unlike warranty deeds and special warranty deeds, quitclaim deeds do not contain any covenants or warranties, including whether the grantor owns any interest in the property at all. A quitclaim deed simply states that the grantor conveys whatever interest she has in the property to the grantee.

Consider an example where Dorothy purchases a property from Sophia. Dorothy obtains an owner’s title insurance policy that insures that the property is free of prior liens. The typical title insurance policy is not assignable, does not continue coverage for the transferor after these transfers (except for deed warranties) and does not include a transferee in its definition of “insured.”

Assume that Dorothy then conveys the property for consideration to an LLC, which she and several partners use to improve homes and resell them. Unbeknownst to Dorothy, Sophia has previously granted a mortgage to Blanche. After Sophia sells to Dorothy, but does not pay off Blanche’s lien, Blanche commences foreclosure proceedings.

This example is unusual in the sense that a normal title search should reveal the mortgage. The mortgage would be listed as an exception to the title policy and would have to be satisfied at closing. But for purposes of this example assume that the mortgage existed but was not previously discovered.

Upon notice of Blanche’s foreclosure proceedings, Dorothy and her LLC make a claim on the title insurance policy. Title policies usually contain a “Continuation of Coverage” provision stating, “the coverage shall continue in force in favor of an insured, but only so long as the insured shall have liability by reason of covenants of warranties in any transfer of the title.” Thus, the only way the policy that was issued to Dorothy provides any coverage for the LLC protecting it against loss resulting from Blanche’s foreclosure is if Dorothy retained liability when she transferred her property to her LLC.

If Dorothy transferred the property via quitclaim deed, she could have no liability to her LLC because a quitclaim deed does not contain any covenants or warranties. A quitclaim deed is the surest way to ensure that Dorothy’s title insurance coverage does not extend to a subsequent grantee. Quitclaim deeds, therefore, sometimes serve to sever the chain of responsibility that the title insurer has to the subsequent owners.

Do we achieve a different result with a special warranty deed? A special warranty deed provides warranties against defects that arose during Dorothy’s ownership of the property. Since Dorothy had nothing to do with Sophia’s mortgage to Blanche, she has made no warranties to the LLC about the mortgage. Thus, insurance coverage would not likely extend to the claim.

What if Dorothy conveyed under a general warranty deed? Here Dorothy covenants and warrants to the LLC that there are no prior liens against the property, before or after Dorothy held title. When Blanche commences foreclosure, the LLC has a claim against Dorothy for breach of warranty, and Dorothy can file a claim on her insurance policy for indemnification.

If one therefore intends to transfer property without obtaining a new policy of title insurance, one should carefully consider the type of deed to use, the risks attendant to the covenants and warranties in the actual deed used, and the language in any available title insurance policy.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

The Third Rail

I recently visited New York, Boston and Chicago, and in each location I used public transportation to move about, including the subway and light rail systems. Like many, I enjoy the convenience of subways as a cost-effective way to get to where I’m going without the hassle of finding a parking space or dealing with traffic.

As one stands on the platform waiting for the train, one notices signs warning not to jump down onto the tracks or to come into contact with the “third rail” which is a reference to the high voltage conductor used to power the system. Coming into contact with the third rail could result in death.

The third rail analogy also applies to politics, warning politicians not to tinker too much with entitlement programs like social security and Medicare or they run the risk of putting an end to their political career.

With all of the uncertainty surrounding the estate tax, many delay completing their estate planning for fear that the plan will become outdated in short order. Unfortunately, putting off plans because of tax law uncertainty is like playing with the subway’s third rail.

A client I’ll refer to as “Allen” visited with me not too long ago, but decided against pursuing his estate plan because “the laws are too uncertain at this point.” I’ve been practicing estate planning law since 1989 and can tell you that there’s never been a time in those 28 years that the laws weren’t uncertain. Yes, they may be somewhat stable for a year or two (or even three), but that’s about the end of the shelf-life given the American political system and climate.

The mistake is that many let the “tax tail wag the dog.” In other words, they make plans based on the tax outcome rather than on the economic or family dynamic outcome desired. Certainly the tax effect of any plan should be considered. My point is that the attorney and client should first discuss what the client’s overarching goals are.

Is the primary goal to provide for your surviving spouse no matter how much he consumes the estate for his retirement and eventual end-of-life care? Or is the goal to preserve that Captiva cottage for future generations? Do you expect to withdraw the entire IRA balance over the course of your lifetime or would you like it to eventually fund your grandchildren’s college educations? Do you hope to provide an endowment to your church, alma mater or for research against dreaded diseases? Are you fearful that leaving too much to your children could deflate their ambition or instill an entitlement attitude?

All of these and more are excellent questions to begin an estate planning discussion. Once you have answered these questions, then it makes sense to look for the most economic, financial and tax advantageous method to accomplish these goals.

Take, for example, traditional IRA and 401(k) plans. As everyone realizes, withdrawals from those plans results in taxable income to the recipient. When considering the bundles of assets that a client possesses and to whom they wish to leave bequests, it makes sense to satisfy charitable bequests with amounts that would otherwise be taxable. This is how a good estate planning attorney can use the tax law to maximize the inheritance for all your recipients.

When you consider that all the variables may change not only with the tax law – but also with your own economic circumstances – then you realize that it’s possible to create a plan that satisfies your intent and can be adjusted as warranted.

Waiting until the tax law settles down to finalize an estate plan is akin to dancing on the third rail. If you should fall ill or pass away before your plans are finalized, that’s the real tragedy. Unfortunately, Allen’s family learned that the hard way. We had drafts of his trust sitting in our office when he passed away.

Don’t let that happen to you.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.

I Didn’t Say You Were Beautiful

It’s amazing to me how the written word is often misconstrued. I believe this happens exceedingly frequently in email communications. Too many people fire off emails believing that their thoughts and words will be correctly interpreted when, in fact, it would be better to phone the recipient and actually speak to him. Emails often don’t properly convey nuance and inflection.

Cameron Herold, an entrepreneur, business developer and consultant succinctly points this out in his book, Meetings Suck. He asks his reader to consider the different meanings of the written sentence “I didn’t say you were beautiful.”

“You can interpret that [sentence] six different ways depending upon which word you emphasize,” Herold rightfully states. To see what he means, read that sentence aloud six times, emphasizing a different word each time.

This brings me to discuss a well-written estate plan. I sometimes encounter wills and trusts obviously drafted by a layman who didn’t understand the different legal meanings that certain words and phrases can have. State statutes, court cases and even IRS rulings can result in unintended consequences.

Take, for example, a phrase I recently read in someone’s self-drafted trust: “Upon my death I direct my personal representative to sell my home and to divide the proceeds among my children.” It seems like a straight-forward direction doesn’t it?

Consider that Florida homestead is protected from the deceased’s creditors under our laws. If John dies with hundreds of thousands of dollars of unsecured credit card debt and all that he owns at his death is his Florida homestead, which happens to be unencumbered by a mortgage, then that homestead can be distributed to his heirs at law free and clear of his creditors, unless the homestead is directed to be sold, in which case the creditors are first in line to the sales proceeds.

John, not knowing this, caused an adverse consequence to his beneficiaries. Had he simply bequeathed the home to his children, they could have inherited the home free of his creditors, then sold the home and divided the proceeds without incident.

What about a sentence in a trust that says, “I direct my trustee to distribute such income and assets necessary to take care of my wife for the rest of her life. What remains at her death shall be distributed to my children.” This seems clear doesn’t it? From what source is this income and are the assets derived? Would your opinion of this sentence change if you knew that the wife is not the mother of the deceased’s children, and that she has more than $5 million of her own assets at her disposal? Should the trustee first consider her assets and income in determining what is “necessary to take care of my wife for the rest of her life?”

How about a trust provision that states, “I give $10,000 to the Southwest Florida Church of Christ for mission development, unless Joe Smith is no longer a missionary with that church.” Assume that at the time of the decedent’s death Joe Smith is a missionary and the trust makes the distribution. You may be surprised to learn that the trust does not receive a charitable tax deduction because preconditions imposed on charitable bequests disqualify the deduction under our tax laws.

Take that same bequest and now assume that achieving the tax deduction is not important but that Joe Smith is no longer a field missionary. Assume further that Smith has taken a year off of field work to direct other missionaries from Fort Myers. Should the trust make the distribution?

Here’s another one I recently read – “My trustee shall distribute the income to my son, Doug, so long as he is not on drugs.” Assume that Doug is on prescription medication, but not illegal drugs. Should the trustee make the distribution? Would your opinion change if the parent who created the trust doesn’t believe in modern medicine but instead used holistic methods her entire life? Forget that scenario, but what if under a physician’s care Doug is taking the prescription drug methadone which is frequently used to treat heroin addiction?

I’m sure you now realize the importance not only of clear drafting, but also how a simple phrase could result in serious consequences if the drafter is unaware of legal precedent associated with that phrase or how an ambiguous direction could cause problems. These errors aren’t limited to laymen. Some attorneys who draft wills and trusts, but who aren’t entirely familiar with all of the state, federal and tax laws could also easily make mistakes.

Once you die, you are no longer around to offer further interpretation of your legal documents. Therefore, choose your legal counsel wisely. As for emails, pick up the phone every now and then too.

The Sheppard Law Firm has its main in Fort Myers and also in Naples by appointment.

© 2017 Craig R. Hersch. Originally published in the Sanibel Island Sun.