Changing Roles of Parents and Children- Planning for Incapacity of Parents

As a child, you see your parents as superheroes. They are the most amazing people you will ever meet. They take care of you when you are sick, pack your lunch (sometimes not the best meal), or act as your personal chauffer from one after school activity to the next.

In a blink of an eye, you are an adult, acting as a superhero for your own children. You begin to realize that your parents, who did everything for you, now require your help. They might forget to pay their bills or may make decisions where you ask yourself, “Why in the world did they agree to that?” Roles have been reversed and you are now parenting your parents. 

When a parent is unable to make his or her own decisions (even if they aren’t deemed incapacitated), a power of attorney is necessary.

In Florida, a power of attorney is used by Florida estate planning attorneys to help their clients plan for incapacity. A power of attorney allows you to name the person who can act on your behalf so that the court does not have to.  The person who signs the power of attorney is the “principal”. The person authorized to act on behalf of the principal is known as the “agent”. Without proper planning, if actions need to be taken by a person who has lost mental capacity, there is a court procedure called a “guardianship”.  Guardianship proceedings require an attorney to represent you in court. In Florida, a guardianship can be financially costly and emotionally draining.

Preparing a power of attorney in Florida will allow you to name the person who can act on your behalf so that the court does not have to make that decision.  A power of attorney can save you thousands of dollars by avoiding guardianship proceedings.

“When a parent is unable to make his or her own decisions (even if they aren’t deemed incapacitated), a power of attorney is necessary.”

There are a number of power of attorney options available in Florida.

General Power of Attorney:  Given for all purposes and not limited in scope. The agent under a general power of attorney can take any act that the principal could take.

Specific Power of Attorney:  Granted for a specific purpose. For example, the principal might authorize the agent to buy/sell real estate.

Durable Power of Attorney:  Contains specific language stating that the agent’s ability to act on behalf of the principal is not affected by the principal’s subsequent incapacity.

Health Care Power of Attorney (Health Care Surrogate):  Allows someone to make end-of-life or other medical decisions on behalf of the principal.

Well planned estate planning includes a power of attorney. If you live in Miami-Dade, Broward, or Palm Beach counties and have elder parents, you may want to discuss preparing a power of attorney. You can’t predict the future, but you can plan for it.

Contact an experienced estate planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

Women Don’t Understand the Need and Importance of Estate Planning

Women today are not only in charge of running the household, but a majority of them are highly educated with masters and doctorate degrees. Some own their own businesses and others manage and oversee businesses of others. However, women still fall victim to thinking their husbands will take care of financial and estate planning needs for the household. Usually, that’s not the case.

Potential concerns for a Fort Lauderdale, Florida married woman in her late 30’s:

Rachel, a married woman has 1 young child from her first marriage and 2 young children from her second marriage. She owns 50% of a local South Florida business recently appraised for several million dollars. Rachel is concerned about disputes with her business partner. To top it all, she is in the process of a divorce with her second husband.

At this time, Rachel has no will or trust in place. She is a woman, getting divorced, with children different marriages, a multi-million dollar business, an estate possibly  subject to estate taxation, and problems with a business partner. The urgency and need to consult with an estate planning/asset protection attorney is huge. She needs to start planning now to avoid losing all that she has worked for!

Consequences for Rachel not having a will or trust in place:

Under Florida law of intestacy (meaning no estate planning in place), Rachel’s ownership interest in the business would be divided as follows: ½ to her ex- husband and ½ divided equally among her 3 children. All other assets (besides business ownership) would be divided the same way.

Without a will or trust, the assets her minor children would inherit will be subject to court supervised guardianship. This includes additional expenses that would not be applied if proper estate planning were in place. There will be fees for the guardian, attorney for the guardian, and the court will have to approve all expenditures. Worst of all, all assets inherited by each child will be turned over to the child at age 18 to do with whatever they please. 

With proper planning, assets for minors can be placed in a trust and you can direct (from the grave), how and when the child will receive their assets. For example, you may want to give ¼ of the assets to the child when they enter college, give another ¼ to the child when they graduate, then give the remaining ½ when they turn 25 or 30 years of age. You hope that at that time they will be responsible with their inheritance.

With respect to Rachel, her children and ex-husband would become partners in the business. The court appointed guardian would become a new partner in the business with respect to her minor children’s interest.

“Without a will or trust, the assets her minor children would inherit will be subject to court supervised guardianship.”

Rachel currently has a life insurance policy. Life insurance is an extremely useful tool in estate planning to help properly provide for your children’s needs you’re your death. Rachel would have to make sure that it was payable upon her to death to her children and not to her ex-husband. If the beneficiary information is not updated and changed, an ex-spouse can receive a nice chunk of change upon your passing.  Pretty sure no one would want that to happen!

Furthermore, Rachel has no planning in place in case she was unable to make financial or medical decisions for herself.  If she were to get into an accident, and was unable to make an emergency medical decision, and she had a health care surrogate drafted, that person could act on her behalf for medical decisions. If,by chance, she falls into a vegetative state and does not wish for her life to be prolonged, she would need to prepare a living will that clearly outlines her final wishes.

Rachel’s action plan to prepare her estate accordingly:

(1) Review all of her beneficiary designations and change them to someone other then her ex-husband.

(2) Prepare a will that will identify who she wants to care for her minor children

(3) Look over her life insurance policy and meet with a representative to see if she has enough coverage to care for her children.

(4) Prepare a trust so her assets can avoid probate.

(5) Prepare a living will, healthcare surrogate, durable power of attorney

(6) Make sure she has a buy-sell agreement with her business partner

(7) Make sure she has a business continuity plan to provide for continuation of the business in the event of her death or disability

Contact an experienced estate planning/asset protection attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

Homeowners Association and Condominium Association Foreclosures in South Florida

If only we could be kids for life. Get paid a weekly allowance for completing a list of chores and then spend every penny at the mall on items we probably don’t need. Sadly, many grown-ups in South Florida do the exact same thing; however, they get their “weekly allowance” for going to work. They are no longer purchasing baseball cards, action figures, or anything at Toys R Us. They are now purchasing vehicles they can’t afford, big screen TVs, handbags and shoes. What hasn’t sunk in is that as an adult, family and household expenses (mortgage, HOA, healthcare, daycare, food) should be the #1 priority, and then all toys and vacations should be purchased next.  Although most would agree, many South Floridians live credit card rich. Sounds great, but what happens when reality sinks in and you decided to buy that big screen television to watch the Superbowl as opposed to paying your HOA dues? Beware; your house can be foreclosed on!

“The association has the right to foreclose regardless of whether you are current or not on your mortgage payments”

If you live in a house, townhouse or condominium that is part of a common interest community in Florida, you are responsible for paying dues and assessments to the homeowners association (HOA) or condominium association (COA). If you do not pay, the HOA or COA will get a lien on your property and foreclose. You might think, “Well I paid my mortgage payment, so nothing will happen to my property.” Wrong. The association has the right to foreclose regardless of whether you are current or not on your mortgage payments.

If you are in the Fort Lauderdale, Miami, or West Palm Beach area and are facing an HOA or COA foreclosure and/or want to offer a settlement to the HOA or COA to become current, contact The Hershey Law Firm, P.A. at (954) 303-9468. We can help protect you from any potential consequences of an HOA or COA foreclosure. 

Pay It Forward

Estate Planning benefits those that survive you, not you. Make sure you plan to help those that deserve to receive from you.

Estate planning is the ultimate “pay it forward” technique one human being can do for another. You can work your whole life and become extremely successful. You want to be able to share the fruits of your labor with those closest to you. Give to those that supported you through out your journey.

You want to make sure your spouse is taken care of when you are no longer here to do it in person. You want to make sure your children can achieve their goals and become successful members of society as well. 

“Estate planning +asset protection is a way to safely house your assets and make sure they grow over time and not have them taken away by creditors or the government.”

A parent leads by example. If you teach your children the joys of helping others, you are able to keep your family assets growing even after your passing for generations to come.  People often say, ‘the rich get richer’. That can be achieved with proper planning.   

In order to protect your assets, not only is estate planning necessary, you must diversify your assets as well. You will want to build a portfolio that will allow your assets to grow throughout your lifetime and continue after your passing.  It is highly recommended to try to make it as tax efficient as possible.

Estate planning +asset protection is a way to safely house your assets and make sure they grow over time and not have them taken away by creditors or the government.

You should seek the advice of an experienced estate planning attorney in Fort Lauderdale, Florida to help you properly plan for the future through creative estate planning and asset protection techniques. Contact the Hershey Law Firm, P.A. in Fort Lauderdale Florida at (954) 303-9468 to schedule your free consultation.

Money Just Hanging Around in Bank Accounts of the Deceased.

It’s a quiet Sunday morning. You wake up slowly without the help of an alarm clock. Your coffee is brewing and the smell of pumpkin spice is spreading throughout the house. You prepare your breakfast plate (eggs, waffles, parfait). You take your first sip of coffee and the taste of cloves, nutmeg, and cinnamon begin to calm your nerves. You begin to read the newspaper when all of a sudden your phone rings. The voice on the other end is speaking, but you don’t understand what they’re saying. You ask them to repeat themselves slowly, you are able to understand the words. Words you never thought you would hear. “I am sorry Rachel, but your father has passed away”. The coffee that just calmed your nerves is now flavorless. You were an only child and now both your parents have passed away. The thought of being alone has consumed you.

You prepare the funeral arrangements and try and trick yourself into thinking this isn’t happening. You think to yourself, my dad has no assets. He lived in a house that I owned and he had nothing. So instead of seeking the advice of a probate attorney after the funeral, you prepare yourself for a life alone without your father. 

“The probate process is necessary to pass ownership of the decedent’s probate assets to the decedent’s beneficiaries”

Four years go by and you meet with the family financial advisor. Your advisor says, “Did you know that your father had a checking account with $20,000?” You had no idea. You go to the bank the next day to get the money out of the account. Unfortunately the bank advises you, that you have no access to your father’s account. What do you do now?

Time to seek the guidance of an experienced probate attorney in Fort Lauderdale, Florida. 

Probate administration only applies to probate assets. In Florida, if an estate is valued under $75,000 or the decedent died over 2 years ago, the probate process is referred to as “Summary Administration”. If the deceased passed way without a will, it is  considered an “intestate summary administration” proceeding.   

The probate process is necessary to pass ownership of the decedent's probate assets to the decedent's beneficiaries. The Summary Administration process is much quicker then “Formal Administration”. It can be completed as soon as one week or up to a few months. “Formal Administration” can take up to 6 months or longer. 

In our scenario, Rachel will be able to file a Summary Administration because her father’s estate is valued under $75,000 and he passed away over 2 years ago. The fact that Rachel’s father passed away 4 years ago, creditor claims have been barred.  With the help of an experienced probate attorney in Fort Lauderdale, Florida, Rachel will be able to gain access to the funds in her father’s bank account. 

If you have a family member that has passed away and you have not sought the advice of a probate attorney, you may be a beneficiary to assets that are just sitting dormant.  Contact The Hershey Law Firm, P.A. in Fort Lauderdale, Florida at (954) 303-9468 to schedule your free consultation.

How does a loan modification affect my credit score?

Most people who attempt a loan modification are homeowners who are already delinquent on their payments. One missed mortgage payment will have a negative affect on your credit score. Whether or not a loan modification will affect your credit score depends on the kind of program you are being offered and how the lender reports the account.

Loan modifications, particularly those endorsed by the US Government, such as Home Affordable Modification Program (HAMP), may have no impact at all. These programs include loan-reporting requirements that result in the mortgage continuing to be reported as current and paid in full, if the requirements of the program are met by the homeowner.

“If the account is reported as anything other than “paid on time” and “in full” it will have a negative impact on your credit score.”

Other “loan modifications” could hurt your credit score because they are actually debt settlements. Three pieces of information associated with the loan modification affect your score:

(1)   Credit inquiry

(2)   Change to the loan balance

(3)   Changes to the term of the loan

If the account is reported as anything other than “paid on time” and "in full" it will have a negative impact on your credit score. If it is reported as a “new” loan, your score could still be affected by the inquiry, balance, and terms of the loan- along with the additional impact of a new “open date”. A new or recent open date typically indicates that it is new credit obligation, and as a result, can impact the score more than if the terms of the existing loan are simply changed.

Before entering a “loan modification” in Fort Lauderdale or Miami, be sure to have an experienced South Florida loan modification attorney carefully review the terms of the modification and understand how your payment history will be reported.

 For more information on how to protect yourself from the consequences of a loan        modification,  contact The Hershey Law Firm, P.A. at (954) 303-9468.

My Dog is Smarter Than Your Honor Student

You can not challenge the fact that families regard their 4-legged furry companion as a family member. There are “doggy spas” for dogs to relax and doggy day cares that pick up and drop of your dog in the morning and evening. After all, you want your dog to socialize during the day and not be sitting at home alone while you work.

If you live in Miami or Fort Lauderdale, it is safe to assume that you would want to take care of your animals when you pass away.  With the help of an estate planning attorney in South Florida you can do just that by preparing a Pet Trust.  Attorney Staci Hershey at The Hershey Law Firm, can help you with that. 

Under Florida Law Statute 736.0408 a Pet Trust is created to allow you to decide who will take care of your pet when you are no longer able to do so. The trustee will monitor the caretaker to ensure he or she provides the proper care. The caretaker will handle the day-to-day needs of your pet.

The trust should be funded with sufficient assets or property to care for your pet for its expected lifetime. You should take into consideration any medical conditions. Funds can be used for travel, food, vet care, insurance, toys, treats, pet sitting, recreational activities.

Under Florida law a pet is considered personal property and as such your pet must go through Florida probate just like a house or other personal assets.

Since probate is a long process it is important to create a document which provides for the care and needs of your pets. Most people prepare pet trusts for their dogs and cats but also for animals that may live 30 to 50 years after you pass away (turtles, birds). The trust is only allowed for named animals that exist at the time the Settlor is alive to be taken care of. Once the animals pass away, any remaining funds are distributed.

Joan Rivers once said, “Doggies are better companions than a husband because they didn’t leave the seat up!”

“Under Florida law a pet is considered personal property and as such your pet must go through Florida probate just like a house or other personal assets.”

If you wish to care for your pets and want to discuss the possibility of setting up a Pet Trust, call an experienced South Florida estate planning attorney.

Contact The Hershey Law Firm at (954) 303-9468 to schedule a free consultation to discuss your estate planning needs and concerns. 

First Is the Worst, Second Is the Best, Third is the One With…? Lien Priority in Foreclosure Actions

You are at the department store getting ready to walk into the checkout lane, when a pair of shiny sunglasses lined up near the checkout line catch your eye.  You spend the next 45 seconds debating whether you need a 3rd pair of sunglasses that you will eventually lose. You decide you don’t need them, look up, and see a line 5 people deep waiting to check out.  When you got there, there was no line. Although you were first, you will have to go to the back of the line. In this case, “first come, first served” does not apply.  

“Typically, the matter of priority comes up in foreclosure actions because if a senior lien holder forecloses, it wipes out any junior liens.”

The concept of “first come, first served” is very important when it comes to lien priority.  A lien is a claim on residential or commercial property for certain legal obligations of the owner. These obligations can vary, from unpaid charges for maintenance and improvements, to outstanding balances on mortgage loans and taxes.  A valid lien must be satisfied either by full payment of the obligation or by satisfaction when the property is sold.

Generally, lien priority is determined by the recording date of the lien. The general rule is first in time, first in priority. Some liens, such as property tax liens, have automatic superiority over essentially all prior liens. Typically, the matter of priority comes up in foreclosure actions because if a senior lien holder forecloses, it wipes out any junior liens. However, if a junior lien holder forecloses, its foreclosure is subject to the senior lien.

If you fail to make your homeowner’s association (HOA) payments, the HOA has the right to file a lien against the property. The HOA (lien) foreclosure will wipe out any liens recorded after it was recorded in the public records (possibly a second mortgage). All liens recorded prior to the HOA lien will survive.  Keep in mind the first mortgage will not be extinguished from an HOA foreclosure.

If you have stopped paying your HOA dues and are facing an HOA foreclosure in Miami-Dade, Broward, or Palm Beach County contact The Hershey Law Firm, P.A. at (954) 303-9468 to help protect you from any potential consequences. 

Back to School Blues……Your Child Is Now An Adult!

Your child has graduated from high school and the excitement of their first semester of college has begun. Like all parents, you worry about all the necessities. You hope your child will get along with their roommate. You hope they hang out with the right crowd and focus on their studies, although we all know there will be a decent amount of partying going on. You make sure you have bought them every possible item needed so they can survive in their dorm room. But, did you realize that your child is now 18 and an adult in the eyes of the law?

Once a child reaches 18, parents can no longer make health care or financial decisions for their children without legal authorization to do so.

If your child is injured or needs help with financial matters, a parent cannot speak with doctors or help the child with financial decisions without a power of attorney.  It is extremely important that once a child reaches the age of 18, a durable power of attorney and health care surrogate are prepared.

Below are documents that are important for you to discuss with your child prior to leaving for college, traveling overseas on a trip, or living locally.

Durable Power of Attorney:

Designate and authorize someone to legally act on your behalf in the event you become incapacitated.

This document may be effective from the moment your child signs it or you can specify that it be activated by a specific event. The problem with that approach, known as “springingpower” is that someone must decide when an individual has reached that state. Traditionally this requires a medical opinion, not suggested. 

Designation of Healthcare Surrogate:

This document will allow you to designate who will make medical decisions when you are unable to do so yourself. (ie. if you get into a car accident and are not conscious to decide whether you should have surgery)

HIPPA Release:

This document will allow doctors to talk with your agents and disclose your private information that would otherwise be restricted. (ie. medical records)

If you have a child that has turned 18, you should speak with an experienced South Florida estate planning attorney to prepare a “back-to-school” package including the above documents.    

“Once a child reaches 18, parents can no longer make health care or financial decisions for their children without legal authorization to do so.”

You should sit down with your child and discuss the necessity of appointing a representative to help them if they are ever injured or incapacitated.  Your child should realize that they are now legally an adult and will need to authorize a parent if they want their parent's help to make financial and medical decisions. 

Fore more information on successful South Florida estate planning, please contact The Hershey Law Firm, PA in Fort Lauderdale, Florida at (954) 303-9468 to schedule your free consultation.  

Am I Too Young To Think About Estate Planning?

What makes humans different from other animals is that we know we are going to die. That knowledge gives us the incentive to make the most of the time we have and prepare accordingly for when our time comes.

There is no way to know when we are going to die. Young people assume they will wake up every morning, whereas old people are surprised each morning they wake up.

No one can honestly say they “enjoy” talking about their final days on this earth. However, it is a conversation that should be held between a husband and wife.  If you are not married, it is a conversation you should have with close family members and friends.

Estate planning is more  important for younger families with minor children.  You need to pre-plan and protect your surviving spouse along with appointing a guardian for your children. For example, a wife is the bread winner and the husband is  a “stay at home dad”. If husband and wife do not plan for death, and the wife dies, now the husband will have to go back to work and possibly find alternative living arrangements.

There are number of vehicles used with estate planning to protect both your assets and your wishes at your time of death: 

Revocable Trust(living trust): Allows you to control and manage assets in your trust while you are alive.

Living Will and Healthcare Surrogate- Will allow you to designate who will make medical decisions when you are unable to do so yourself.

Assignment of Property: Assign your property into your trust (real and personal property) to protect your assets.

Durable Power of Attorney: Designate and authorize someone to legally act on your behalf in the event you become incapacitated.

Last Will and Testament: Used upon death to distribute property to beneficiaries, specify last wishes, and name guardians for minor children.

“There is no way to know when we are going to die. Young people assume they will wake up every morning, whereas old people are surprised each morning they wake up.”

With the expertise of a South Florida estate planning attorney, you can start the process of thinking about what is important to you and how you would like protect your family and assets for the future. 

Fore more information on successful South Florida estate planning, please contact The Hershey Law Firm, PA in Fort Lauderdale, Florida at (954) 303-9468 to schedule your free consultation.  

Are All Children Treated Equal?

You get married thinking, “til death do us part.” In reality, it’s until we get tired of each other and we have decided we don’t want to try to make it work. Today’s society thinks it is easier to walk away from difficult situations as opposed to work through them.  With that said, it is now very common to see blended families full of biological children and stepchildren.

Most parents want to make sure their children are taken care of when they pass away.  The question is: Are all children treated equal? The answer is no.  Without proper estate planning your stepchildren will not receive inheritance from your estate.

Florida’s probate laws do not treat stepchildren as a person’s legal heir, which means stepchildren do not have an automatic right to inherit from their stepparents. Your children may be the stepchildren of your spouse and, depending on whom lives longer, may be unintentionally disinherited.

In order to make sure your stepchildren are not overlooked, you need to specifically name them as a beneficiary in your trust.  If you state in a trust, “I leave 30 percent of my estate to my children”, you would only transfer assets to your biological children. This statement would include a stepchild only if they were legally adopted (at that point they would no longer be considered a stepchild)

“Since not all children are treated equally under Florida law, make sure you make it clear if you wish to take care of your stepchildren when you pass away.”

In Florida, a child is a person who is legally adopted or a biological child of the decedent. Any general statement found in a trust referring to children, will be assumed to mean only biological children unless otherwise stated.

If a person dies without a will or trust, their stepchildren will not receive any inheritance under Florida’s succession law.  Florida law states, if there is no spouse, the estate would first descend to the biological and adopted children of the decedent.  When there is no descendant, the property passes to the parents and if that is not possible, the property passes to the decedent’s siblings. If there are no heirs, the property goes to the state.

Since not all children are treated equally under Florida law, make sure you make it clear if you wish to take care of your stepchildren when you pass away. It is crucial that you have an experienced South Florida estate planning attorney draft your estate planning documents. An experienced attorney can ensure the intent of the trust, and that the named beneficiaries will be clear to the court upon your death.

Fore more information on successful South Florida estate planning, please contact The Hershey Law Firm, PA in Fort Lauderdale, Florida at (954) 303-9468 to schedule your free consultation.  

A Deficiency Judgment --No Big Deal…Said No One Ever!

So you’ve stopped paying your mortgage. You now have the fear that the bank will take your home. To top it all, there is a chance you may owe the bank money after they take your home from you.

If your house is sold in a foreclosure sale or a short sale, the property will be sold for less than what is owed to the bank. Since Florida is a recourse state, it allows lenders to seek deficiency judgments for unsatisfied debts. For instance, you owe $100,000 on your mortgage and the property is sold for $75,000. The lender/bank can obtain a deficiency judgment against you for $25,000, and you would be required to pay that money to the bank.

A deficiency judgment may be avoided if the borrower negotiated that the bank/lender will waive any rights to a deficiency, prior to a short sale.  If not, the borrower is still vulnerable to a deficiency judgment.

“Since Florida is a recourse state, it allows lenders to seek deficiency judgments for unsatisfied debts.”

The Florida Foreclosure Act

On June 7, 2013, Governor Rick Scott signed HB 87, The Florida Foreclosure Act into law. The act makes significant changes to how residential foreclosures and short sales must be conducted in Florida.

A major change to the process is the change in the Statute of Limitations (SOL) for bringing actions for deficiency judgments. A SOL is the time frame within which a person may bring a lawsuit. If a lawsuit is brought outside of that time period, the suit may be dismissed, as the claim is forever barred.

Before the Act was passed, the SOL allowed a party to bring an action for a deficiency judgment at any point up to five (5) years from the date of the certificate sale was issued by the Clerk of Court, following the foreclosure sale. Now, the time frame has decreased to one (1) year for deficiencies created by foreclosure sales and deed in lieu (not short sale).  Please note, this change is limited to actions commenced on or after July 1, 2013.

Benefit to Homeowners  Whose Actions Started Before July 1, 2013.

Although they are still subject to the old statute of five (5) years, there is a wrinkle. Any action put into motion before July 1, 2013 only remains valid until July 1, 2014.  For example, if the five (5) year time period will expire after July 1, 2014 under the old law, the new law shortens the lender’s right to pursue a deficiency judgment to July 1, 2014.

What about Short Sales?

The bill does not directly address the SOL, but it can be construed under the one (1) year threshold. Furthermore, if it is an owner occupied residential dwelling, the recoverable amount is limited to the difference between the remaining debt from the short sale and the fair market value of the property at the time of the sale.

If you are facing foreclosure ,consult with an experienced real estate attorney in South Florida to protect you from any potential consequences. Contact The Hershey Law Firm, P.A. at (954)303-9468 for your free consultation.