Posts Tagged ‘Revocable Trust’

Why is my Will so long?

Saturday, April 14th, 2012

My clients know that I love brevity.  I think that if you can say something in one sentence of 10-12 words, that’s great. In fact, if that 10 word sentence can be cut to six, then count me in.  After all, why do you need to stretch it out one thought to 20 sentences?

Lawyers are often accused of writing something to death and usually doing so in some foreign language that no one can understand.  I think that can happen for any number of reasons,  some of which are of no consequence.  However, from my experience, extended drafting usually comes from a problem that was revealed in a past document or court case that lawyers read about.

Let me share an example:

Several years ago, I was handling a trust administration dispute in which a simple phrase was at issue.  The wording used in the trust boilerplate was ambiguous; this instrument was drafted many years earlier by another attorney.   The language appeared to require a distribution of the trust principal to the beneficiary, but some boilerplate in the back of the document loosely suggested that the trust could retain the funds in trust.  I represented the trustee who saw it one way, while the beneficiary saw it another.  In this instance, the beneficiary had substance abuse problems, and the trustee wanted to hold funds back in trust.

After settling the dispute following eight months of arguing and legal fees, I soon realized that this “ambiguous” language was very common in Tampa trust documents, including my own!  I immediately took that six word phrase and expanded on it so that we created clarity for future Florida trust instruments.   Six words became forty-two words, but I believe that those additional words will help to eliminate these types of disputes.

This issue is presented all of the time, which causes a lawyer to expand/revise/rewrite language in a Will or Trust until it becomes an epic novel.   My suggestion the next time you get a draft from an attorney is simple:  read the draft, make notes throughout (including your questions), and then ask your attorney to explain the draft in whatever detail you feel is important.  Do not forget that those documents, however long that they may be, represent your wishes and not your attorney’s.  You deserve to understand every bit of it.

FSA Deadline approaching

Wednesday, March 14th, 2012

If your company uses an FSA (or Flexible Spending Account), your deadline to claim reimbursements for 2011 is quickly approaching.  FSAs allow employees to use pretax dollars to cover out-of-pocket medical expenses and buy qualifying medical supplies.   The catch is that any funds not claimed by an employee by a predetermined deadline (typically March 31 through May 31, depending on the employer’s plan documents) are forfeited. FSAs should not be confused by HSAs, which are very popular.  With FSAs, your employer administers the plan, holding your FSA withholding in one of its accounts.  FSAs are used when insurance deductibles are low.  HSAs, on the other hand, are administered by third parties and allow you to have your money in a special HSA account that is portable between employers.  Funds in HSAs are not forfeited at the end of a year and can “roll over” to future years.  HSAs are only allowed when plans are “high deductible plans”, meaning that deductibles are at least $1,200 for individuals and $2,400 for families. FSA users typically have until March 15 of the following year to make purchases using the previous year’s FSA dollars. For example, if you had withheld $1,000 in 2011 to cover FSA approved expenses, you could claim reimbursement of those funds for purchases/expenses made through March 15, 2012.  If you have not fully recovered your FSA dollars from 2011, then you may want to purchase qualifying medical supplies, such as eyeglasses, bandages, contact-lens solution and certain types of sunblock.  Ask your employer for a list of what your FSA covers and see IRS publications 502 and 969 for more details.

Payroll Tax Cut Extended!

Friday, February 24th, 2012

Congress gave all wage earners a short-lived 2012 reprieve by temporarily extending the 2% payroll tax cut though February of 2012.

The payroll tax, often referred to as FICA on your paycheck, has historically been 6.2%. This is the tax that funds the Social Security Administration. For 2011, as an economic stimulus measure, Congress temporarily reduced the rate to 4.2%. They also provided self-employed individuals with a corresponding two percentage point reduction by lowering the Social Security portion of the SE tax from 12.4% to 10.4%.

Congress had previously extended this 2% tax cut and now has decided to continue this reduction in payroll tax through the end of 2012.