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Jesse Holbert Little

Jesse Little’s Answers

3 total

  • What exactly is a disclaimer trust

    My fathers will states a disclaimer trust will be set up is this required or can the trust just be skipped by the pr and the lawyer??

    Jesse’s Answer

    Typically, a "disclaimer trust" is a trust established in a Will or Revocable Trust which provides that a trust (the "Disclaimer Trust") is funded only if a designated person (usually the surviving spouse of a Decedent) files a proper disclaimer within nine (9) months of the Decedent’s death. The terms of the Disclaimer Trust are typically similar to those contained in a Credit Shelter Trust.

    Disclaimer Trusts became popular after the 2001 Tax Act was passed because of the uncertainty created by the temporary nature of the Federal Estate Tax Law. There are several important variables that come into play in estate planning. The principal variables important at the time of the first spouse’s death include: the value of the estate, the age of the surviving spouse, the health of the surviving spouse and the status of the federal and state estate tax laws. The theory behind the Disclaimer Trust technique is that all of the above variables can be diagnosed at the time of the first spouse’s death, and the surviving spouse can make an informed decision at that time whether or not to fund the Disclaimer Trust.

    A surviving spouse should seek tax advice when deciding whether to make this important decision.

    The actual Disclaimer must meet certain legal and filing requirements and the person disclaiming must not accept any benefits from the assets disclaimed before filing the Disclaimer. It is important to consult with an experienced estate planning attorney soon after the death of the first spouse to see if a Disclaimer is advisable.

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  • If I put my adult son as joint on my bank account, will he have to pay tax on that money when I die

    If I put my adult son as joint on my bank account, will he have to pay tax on that money when I die?

    Jesse’s Answer

    Joint ownership of assets with family members other than a spouse can create tax liabilities and other problems that should be understood before entering into such arrangements.

    The rules governing joint ownership of bank accounts with family members other than a spouse are complicated and somewhat dependent on individual state laws (which should be examined closely by you or your attorney), but potential Federal tax liabilities generally fall into three categories: gift, income, and estate taxes. Note that joint ownership of bank accounts is often treated differently than joint ownership of other types of assets.

    Gift Taxes:

    IRS regulations provide that if the contributor to the joint account can gain access to the entire balance without the consent of the other joint tenant to whom an interest is transferred, the account is revocable. In this instance, a gift would occur only when the noncontributing joint tenant withdraws funds. However, in some states, the law provides the noncontributing joint tenant with an inalienable, or vested one-half interest in the bank account. In these states, a gift can occur immediately upon transferring a joint interest to another person.

    In the even that the transfer of the joint interest results in a gift, the IRS allows an exclusion that currently permits an individual to give, tax free, up to $13,000 each year to any number of individuals. The exclusion is $26,000 when giving jointly with a spouse. Gifts in excess of the annual exclusion use up part of a $1 million lifetime gift tax exemption ($2 million for married couples giving jointly). If an individual's remaining gift tax exemption covers the gift, no gift tax is due.

    Income Taxes:

    Generally, if the transfer of the joint interest in the bank account is treated as a gift, the recipient of the gift, for income tax purposes, is considered the owner of the portion donated. Therefore, any income or capital gain from the jointly held asset must be divided among the owners in proportion to the interest they are considered to own under state law.

    As with any gift of property, the shifting of post-gift income and appreciation to the recipient can have advantages or disadvantages, depending on the tax bracket involved. If, for example, a recipient child is in a lower tax bracket than the parent, less income tax would be due on the child's portion of the income.

    Estate Taxes:

    When one of the joint tenants dies in a non-spousal joint tenancy, the decedent's estate would include the proportionate share of the value of the property (in this case, the value of the bank account) that is based on the portion of the original purchase price furnished by that joint tenant. This will occur regardless of whether placing a child's name a joint tenancy account resulted in a taxable gift. Although appropriate credit will be given for any gift tax paid or gift tax exemptions that were utilized when the joint tenancy was created, all the appreciation in the account will still be included in decedent's estate. Thus, if a parent owns an account outright and adds a child as a joint tenant later, 100 percent of the property's value will be included in the parent's taxable estate if the parent dies first. As a result, the basis of the entire property would be increased to fair market value at the date of death.

    Finally, note that adding a family member as a joint tenant to an asset can also nullify a will or revocable trust by altering the distribution pattern specified by the instrument. The will or revocable trust would be nullify a will or revocable trust because, under the joint tenancy form of ownership, the asset is no longer controlled by the will or trust.

    Therefore, before putting an asset in a joint tenancy with a child, you should carefully consider the potential Federal tax and estate distribution consequences and discuss them with a legal or tax adviser.

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  • At what age can a minor choose their guardian in Florida?

    The grandparents have custody but it is a very bad enviorment. Recently the child contacted child services because she was bruised by the grandfather. I am the aunt and have a stable and loving home. She has always been like a daughter to my hu...

    Jesse’s Answer

    Under Florida law, a minor does not, generally, have the ability to choose to choose his or her guardian. However, there may be several options available.

    A circuit court has jurisdiction to emancipate a minor age 16 or older residing in this state upon a petition filed by the minor's natural or legal guardian or, if there is none, by a guardian ad litem. The petition would include a statement of the minor's character, habits, education, income, and mental capacity for business, and an explanation of how the needs of the minor with respect to food, shelter, clothing, medical care, and other necessities will be met and a statement of why the minor should be emancipated. If your niece were emancipated, whe would be free to live wherever she wants, including with you. Based on the situation you described, and assuming your niece is at least 16 years of age, this may or may not be a viable option.

    If emancipation is not a viable option, you could hire an attorney to petition the court to name you guardian. Under Florida law, you may petition the court for guardianship of a minor if you are at least age 18 and have no felony convictions. The court would consider the best interests of your niece in determining whether to appoint you guardian. Some of the factors that would weigh in the court's decision would include, but not be limited to, (i) your relationship to your niece, (ii) your educational, professional or business experience ,(iii) your capacity to manage the finances involved, (iv) your ability to meet the requirements of the law and the
    unique needs of your niece, and (v) the wishes expressed by your niece as to whom shall be appointed guardian. Note that the court may be inclined to appoint separate guardians for the person and for the property of your niece.

    Your best course of action would probably be to discuss this matter with a qualified Florida lawyer who is experienced with Florida guardianship law. Many lawyers will provide an initial consultation at no charge.

    Good luck

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