If you are asking your spouse to waive his rights to an elective share of your probate property by signing a prenuptial or postnuptial agreement, the validity of that waiver depends on several factors. At the very least, you must have entered into a valid written premarital or postnuptial agreement. A binding agreement requires that your spouse waive his inheritance rights voluntarily and without any fraud or duress. In other words, you cannot force him to sign an agreement by threatening him. You must also provide a full disclosure of your financial wealth before you attempt to have him sign away his rights to receive a portion of your inheritance. However, the financial disclosure may only be required if your spouse signs a postnuptial agreement – not a prenuptial agreement. Providing your prospective spouse a full financial disclosure may be in your best interest to avoid subsequent attempts to invalidate your prenuptial agreement. Each of you should also have separate attorneys representing your financial interests, and most courts agree that one attorney cannot represent both of you because of conflicts of interest.

Many spouses enter into prenuptial agreements if they amassed a significant amount of wealth before marriage. This often happens with second marriages or marriages that occur with older couples. To keep property separate, it may be a good idea to speak with an attorney regarding the benefits of drafting a prenuptial or postnuptial agreement to protect your separate assets.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

In light of the Florida Probate Code’s statute establishing elective share rights for surviving spouses, is there a way to legally disinherit your spouse? We discussed that without a properly drafted and valid prenuptial or postnuptial agreement, you cannot disinherit your spouse. You can disinherit your spouse if she freely waives her right to receive an elective share by entering into a nuptial agreement. To disclaim her statutory 30 percent mandatory inheritance, your spouse must freely enter into a prenuptial agreement. In some cases, your spouse can waive her elective share rights after marriage by entering into a valid postnuptial agreement. State laws govern the essential elements of binding marital agreements.

In Florida, the Florida Statutes Chapter 732 governs the elective share rights for surviving spouses and their rights to community or marital property. Generally, a spouse’s elective share includes community or marital property and separate property. Fully explaining the marital property rights that spouses have requires more than a 300-or 400-word article or blog.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

The Florida Probate Code is Title XLII, Chapters 731 through 735 of the 2011 Florida Statutes. Pursuant to the Florida Probate Code, a surviving spouse has a legal right to receive an elective share of her deceased spouse’s probate estate at his death. By electing to receive her statutory share, she disclaims her interest in his will in favor of her elective share. Florida law sets a surviving spouse’s elective share at 30 percent of the decedent’s estate.

Thus, a wife who survives her husband has a legal right to disclaim her interest created by his will in favor of her 30 percent elective share. By creating the elective share statute, the Florida Legislature prohibits spouses from entirely disinheriting their surviving spouses. To prevent one spouse from having to rely on the state for monetary assistance and to prevent that spouse from becoming destitute and impoverished, the Florida Legislature allows a surviving spouse to choose an elective share. In some situations, spouses can disinherit one another with proper estate planning, which includes having to draft validly created prenuptial or postnuptial agreements. Although the Florida Legislature does not advocate divorce, it recognized the practical need for some spouses to protect their separate assets.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Personal representatives and executors have serious legal responsibilities to pay creditors, gather assets, pay federal and any state taxes, distribute probate property to heirs and to wind up probate affairs. Under Florida law, a decedent who dies intestate or without a written will is subject to a judicial appointment of a personal representative. If you are the surviving spouse of a decedent who died intestate, you have a legal right to ask a probate court to appoint you as the personal representative of your spouse’s estate. If a decedent dies intestate and was unmarried at the time of death, the surviving heirs and legal beneficiaries have rights to appoint personal representatives by majority vote.

Personal representatives and their attorneys may receive reasonable compensation for their services. Furthermore, all other professionals involved in probate can receive fair compensation for their services. Personal representatives have legal rights to select their own attorneys to help them understand their legal responsibilities of administering wills. If you are a personal representative, and the decedent died testate or with a written will, he may have drafted a written provision in his will requiring you to select a specific attorney to help manage your fiduciary duties. However, you do not have a legal obligation to comply with the testamentary selection of counsel. Instead, you can disregard the mandate and select your own attorney. Your chosen attorney is your personal attorney who does not serve as the general estate attorney for other beneficiaries. You can contact our office, and we can serve as your personal attorney and provide you with valuable advice regarding your duties as a personal representative.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

If you die with a written will in Florida, you die testate, and your will dictates who inherits your property. If you die without a will, your state’s intestacy laws govern the disposition of your probate property. The Florida Statutes provide an order of priority establishing who has a right to receive your property when a decedent dies without a written will.

A personal representative or named executor will file your will in the circuit court of the county where you lived when you died. The court assigns a circuit court judge who will supervise the probate process. A circuit court judge will also make a preliminary determination as to the validity of your will and whether your will is authentic. If the circuit court judge determines that your will is valid and authentic, he will then approve your designated or selected executor or personal representative. A judge must find that your executor or personal representative is legally competent and able to comply with your testamentary dispositions.

If the circuit court judge approves your designation, he will issue “letters of administration.” The chosen personal representative must be at least 18 years old and be a close relative or a Florida resident. Other than individual appointments, decedents may also appoint banks and trust companies to serve as their personal representatives. Close relatives are not required to live in Florida to serve as personal representatives. If you are not a Florida resident, and you are not the decedent’s close relative, you cannot serve as his personal representative. If your heirs cannot agree on a designated personal representative, the circuit court will conduct a hearing to choose a representative and appoint one after the hearing.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

The word “probate” is often associated with estates. But not every asset that passes to your estate is a probate asset. Only assets owned in your sole name at death — or assets co-owned with others where they do not automatically assume your share of ownership — are considered probate assets.

For instance, if you own 100% of your house alone, then your house is a probate asset. If, however, you co-own the house with your wife as joint tenants, then your wife automatically assumes 100% ownership upon your death; the house never passes through your probate estate. (However, when the second spouse dies, the house becomes a probate asset for his or her estate.) Similarly, if you have a joint bank account with survivorship provisions, the co-owner of the account will simply assume full ownership upon your death.

Life insurance policies commonly do not pass as probate assets because they are payable to a beneficiary, such as a spouse or child, rather than your estate. This is why it is often inadvisable to make insurance policies or other annuities — such as an IRA — payable to your estate.

In determining the best way to manage and title your assets, you should consult with an experienced estate planning attorney who can help maximize the financial and tax benefits of your estate planning.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Did you know that a minor child can have a Roth IRA? Of course, the child can only contribute as much as he has earned in any given year (up to $5,000), but in a recent Forbes article, William Baldwin suggests using a Roth as a strategy for building wealth for your children. Here’s a summary:

If you have a child who is old enough to work, strike this deal: for every dollar your child earns, you’ll contribute a dollar to his Roth IRA. Your child gets to spend his  earned funds as he normally would. Money going into a Roth IRA is not tax-deductible, but this likely won’t make a practical difference, because most teenagers don’t have enough income to pay income tax anyway. The true benefit of a Roth is that future withdrawals, including withdrawals of interest earned on account contributions, are completely tax-free as long as your child heeds applicable IRS rules.

So, if your child waits until after he reaches age 59 ½ to take money out of the account, there will be no taxes and he’ll get the benefit of many decades’ worth of growth. Of course, Baldwin points out, you’ll want to be aware of the effect this plan will have on your child’s ability to qualify for college financial aid; and, this is not a great move for parents who are not already fully funding their own retirement accounts.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

A 529 plan is a tax-free account established for the express purpose of paying the expenses of higher education for a child, a grandchild, or another family member.

Money invested in a 529 plan grows tax-free, and the account can be used to pay for “qualified” higher education expenses, including books, tuition, fees, and supplies.  What counts as “higher education”? College, graduate school, or an approved vocational school all qualify.

You can contribute up to $13,000 per year to each beneficiary’s 529 plan without paying gift tax or triggering gift tax reporting requirements. If you’re married, you and your spouse can contribute up to $26,000 per year per beneficiary.

There are some significant drawbacks that accompany 529 plans, including:

• Plans can impose high management fees.
• A different plan is offered by each state, and the rules and requirements can vary a great deal from state to state. You’re not limited to using your state’s plan, so you’ll want to carefully research your options.
• Each state’s plan has its own rules as to which investment options are available, and these investment options can be limited.
• Money withdrawn from a 529 plan for any purpose other than paying for a beneficiary’s higher education expenses will result in taxes and penalties.

Before investing in a 529 plan, you’ll likely want to get the advice of an experienced advisor. It’s important to be aware of the advantages and disadvantages of the various plans, and it’s also important to be aware of other options for investing toward a loved one’s education.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Do you know the old saying, “don’t put all your eggs in one basket”? If so, then you’ve had your first lesson in asset allocation and diversification.

Asset Allocation and Diversification

When it comes to investing, you have important decisions to make about dividing your investment dollars.

Diversification is deciding to hold more than one type of investment, such as buying stock in several different companies, so you minimize your risk of losing all your money if one of your investments goes bad.

Asset allocation is a diversification strategy that goes one step further. With asset allocation, you don’t just buy a variety of one type of investment, you purchase investments that span several categories. This minimizes your risk of losing it all when one investment fails, plus it helps you meet your financial goals because not only are you balancing risks, you’re also balancing potential rates of return.

Three Categories of Investments

There are three main categories of investments:

1. Cash: This category includes CD’s, savings accounts, money market accounts, money market funds and treasury bills. Cash and cash-equivalent investments are by far your safest option (many are even federally-guaranteed), but they also bring the lowest rate of return.
2. Bonds: Bonds tend to occupy the middle ground between cash and stocks. They are generally more stable and less risky than stocks. By the same token, they tend to offer a lower rate of return than stocks.
3. Stocks: The stock market offers the highest level of risk as well as the highest potential rates of return for any of the three categories of investments. Especially in the short-term, stocks tend to be volatile investment vehicles, and watching your stocks day-to-day can be a bit of a roller coaster ride. As a long-term investment, though, stocks on the whole have historically done well.

Allocating Assets Depends on Your Goals

Selecting a mix of investments depends on your financial goals, the length of time you want to invest before achieving your goals, and your tolerance for risk.

So, if your financial goal is saving for retirement, which is several decades away, you may choose to initially shift the balance of your investment portfolio toward higher-risk stocks, on the theory that you can ride out any volatility in the market in favor of long-term gains. Then, as you get closer to retirement age, you’ll likely want to re-allocate your assets in favor of a heavier mix of bonds, to provide more stability and predictability in your portfolio as you near your goal.

Carefully allocating your assets can help you give you peace of mind as you work toward your financial goals.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

We all know how regular mortgages work: you borrow money from a bank to purchase or refinance your home, and you pay the bank back, with interest, in installments over a certain period of time.

What about reverse mortgages, though? They’re not the best choice for everyone (you have to be above a certain age to even qualify), but for some seniors, they’re the difference between poverty and survival. Here are the basics:

• With a reverse mortgage, the bank loans you money on the equity in your home, but you don’t have to pay it back during the term of the loan. Essentially, instead of you paying the bank, the bank pays you. This is true until you (or your spouse, if he or she is also a borrower) no longer use the home as your primary residence.
• There are no financial qualification requirements, although you do have to be at least 62 years old to have a reverse mortgage. Also, depending on the type of reverse mortgage you choose, you might have to attend a loan counseling session.
• You can choose how to receive the proceeds of your reverse mortgage. You can be paid in one lump sum or every month, or you can have your loan proceeds in the form of a line of credit.
• When you take out a reverse mortgage, any other loans secured by your home are paid out of the reverse mortgage proceeds.

If you’re considering a reverse mortgage, you’d be wise to learn as much as you can before settling on a loan. Just like shopping for a traditional mortgage, you’ll want to know all the details of your loan and you’ll want to shop for the best terms. A financial advisor with reverse mortgage experience can help you decide whether a reverse mortgage is right for you.

Robert J. Kulas, P.A. Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.