Florida Wills & Trusts

June 2008 Technical Update

Note: A ‘technical’ update is distinguished from a regular product update in that it makes non-substantive changes to the program, as well as adds Technical Notes detailing fixes to issues left over from a prior update or requested by customers. We have planned for a substantive update later in the year.

Updated Product Features

‘Neutral H/W Pronouns’ Question For Edited Mirror Documents No Longer Pre-Answered

While Lawgic already provides an automated way to create mirror documents for each spouse by simply changing the answer to Question 18 (Client Identity/Gender), this question enables you to create mirror wills or trusts if you plan on heavily editing the document for the first spouse by using placeholders in the document. When you start a ‘new’ answer file, this question is no longer pre-answered (previously the user had to go to the question independently) although the default is still set to ‘No.’ We recommend you review Question Help at this question which details how to use this powerful feature. Question 83 (Neutral H/W Pronouns).

Some Questions No Longer Pre-Answered or Overwritten for Disclaimer Will

We had previously preanswered (question not presented) or overwritten (question not presented and could not be changed by user) certain questions in the Simple and Disclaimer Wills. This was done to simplify those documents and avoid unnecessarily long drafting sessions in which too many questions were presented. We have had interesting feedback from users who prefer to have more choices in these documents. By customer request, the following questions will no longer be pre-answered for the Disclaimer Will:

Question 85 (Refer to Trustee(s) As)

Question 580 (Special Trusts)

Question 610 (Age for Standby Trust)

Question 613 (Ind Trustee Distributions)

Question 971 (Incl. Adopted Away Grandchildren)

The following questions will no longer be overwritten for the Disclaimer Will:

Question 606 (Optional Provisions)

Question 879 (Expenses and Taxes)

Question 905 (Fiduciary Powers Included)

Question 929 (Special Business Provisions)

State Death Tax Provision for Property in Other States Eliminated

With more states decoupling from the federal estate tax, and only a few states allowing a state-only QTIP election, Question 288 (State Gap: Other States) as well as the following related provisions addressing state estate tax in states outside Florida have been eliminated:

a. If select ‘Preresiduary gift’ at Question 284 (Tax Formula for Marital Gift):

“State Death Tax. If the gifts described in paragraph <*> above cause a state death tax (either an inheritance or an estate tax) in a state other than Florida, the Trustees shall increase this gift by that amount which, if qualifying for the marital deduction, would reduce state death taxes to the lowest possible sum."

b. In the ‘Gift to Family Trust’ provision if select ‘Residuary gift’ at Question 284 (Tax Formula for Marital Gift):

"If the gifts described in this paragraph cause a state death tax (either an inheritance or an estate tax) in a state other than Florida, the Trustees shall reduce this gift by that amount which, if qualifying for the marital deduction, would reduce state death taxes to the lowest possible sum."

The potential for shifting large amounts of assets for very small tax gains prompted the elimination of this approach. When drafting for clients holding significant non-Florida assets which may be subject

to state estate tax in that other state, however, the planner may need to customize the marital formula provisions to address the tax laws of that other state. Deleted old Question 288 (State Gap: Other States).

Power of Appointment Definitions Revised

The powers of appointment definitions in the Miscellaneous Provisions article have been revised to give more comfort that a special power of appointment does not include prohibited appointees. The structural change necessary to do this caused a minor modification to the general power of appointment definition as follows:

"A general power of appointment granted to a person is one that can be exercised in favor of any one or more of the following: that person or his or her estate, his or her creditors, or the creditors of his or her estate."

The special power of appointment definition has been changed from:

"A special power of appointment is any power that is not a general power.”

to the following:

"A special power of appointment is any power that is not a general power; it may be exercisable in favor of a specified class or, if no class is specified, in favor of any person or entity (other than the appointees specified in subsection (a) above."

See Progress at Question 973 (Review: Miscellaneous Provisions).

Location of ‘Search’ Feature Menu Item Changed

The new Search feature introduced last year that allows you to search the Navigator, Answers, Law & Strategy, Notes, Question Help, and Progress is now a menu item and is no longer under the ‘Questions’ menu.

Technical Notes

Question 70 (Disinherit Whom?): Fixes issue where ‘male’ children other than those of current marriage were not appearing as answer choices.

Question 193 (Grantor Power of Appointment): When doing a GRAT if ‘Yes’ is selected at Question 193, the word “special” is added to describe more clearly the intended power of appointment:

“If I die during the Annuity Term, the Trustees shall distribute the portion of the Trust Remainder includable in my federal gross estate for estate tax purposes, without regard to the application of this Section <*>, as I appoint to any person or entity by a testamentary special power of appointment.”

Question 298 (QTIP: Include Clayton Clause?): In LAW & STRATEGY changed the word "reluctant" to "unlikely" and added the following as next to last sentence:

"One way to preserve the § 2013 credit without using a mandatory income provision is to give the surviving spouse the right to withdraw 5% of the trust fund annually."

Question 736 (Advisors or Committee): In the first sentence of the ‘Trust Advisors’ provision added the words "after my death" to precede "or disability" to fix typo from:

"Trust Advisors. I appoint my wife and Jane Doe to serve or disability as advisor to the Trustees ("Trust Advisor")."

to:

"Trust Advisors. I appoint my wife and Jane Doe to serve after my death or disability as advisor to the Trustees ("Trust Advisor")."

Question 742 (Advisor Powers): Removed duplicative "Power to Direct the Exercise of Any Fiduciary Powers” text.

Question 782 (Review: Provisions Governing Trustees): In “Provisions Governing Trustees” article:

a. in ‘Multiple Trustees’ provision: Fixed the heading sections so that the ‘Authority,’ ‘Delegation,’ and ‘Dissents’ headings are now subheadings under the ‘Multiple Trustees’ subsection.

b. in “Powers of Successor Trustee” provision: Removed the extra word "the" in the following phrase:

"...ceasing to serve for any reason has the duties and powers necessary to the protect the Trust Estate until it is delivered to a successor..."

Question 819 (Use Designated Representative): Answer choices are now dynamic depending on answers to children questions.

Question 820 (Specify Son) and Question 821 (Specify Daughter): Fixes incorrect children names appearing as answer choices, i.e. male children names at Question 821 and female children names at Question 820.

Question 832 (Review: Designated Representative): Suppression changed so that question will not get asked if Designated Representative questions are suppressed.

Question 905 (Fiduciary Powers Included): Deleted extra word "bond" from following sentence in the 'Indirect Distributions' provision in the Fiduciary Powers article:

"(ii) managing the amount as a separate fund bond on that person's behalf, subject to his or her continuing right to withdraw that amount;"

Question 948 (Review: Savings Clause): If select both answer choices at Question 947 (Judicial Modification), citations in Perpetuities Provision changed from §737.4031(2) to §736.04115 and from §737.4032(6) to §736.0412.

Question 956 (Review Applicable Law Trust Situs): Suppression changed so that question will not get asked if Trust Situs questions are suppressed.

Question 1337 (Documents Included): When you select ‘Designation of Preneed Guardian’ following summary is now included in the ‘Sending Letter’:

"Designation of Preneed Guardian. The Declaration Naming Preneed Guardian nominates the person of your choice in case you are ever in need of a court-appointed guardian. Although it is not binding on the court, by suggesting to the court your preference for a guardian in this manner, your family may avoid some of the administrative burden within a court proceeding to determine a guardian."

Applicable Law Provision: The following text will now be inserted in the Miscellaneous Provisions article if the Applicable Law/Trust Situs questions are suppressed (thus reinstating this failsafe language if the longer article is not used):

“Applicable Law. All matters involving the validity and interpretation of this Trust are to be governed by Florida law. Subject to the provisions of this Trust, all matters involving the administration of a trust are to be governed by the laws of the jurisdiction in which the trust has its principal place of administration.”

Note: The 2nd sentence beginning with “Subject to the provisions….” only gets added if ‘Standby Trust’ at Question 606 (Optional Provisions) is selected.

If any trust is created (e.g. marital, bypass, children, descendants, GST, grandchildren) then the longer ‘Applicable Law: Trust Situs’ article will be used rather than this one.

Certificate of Trust: Changed "Exhibit" to "Schedule" to be consistent with the language of the attachment. If an additional "schedule" is added—e.g., to list successor trustees—the word processor should number the Schedules (A and B) automatically:

“The powers of the Trustee are as shown on the attached Schedule A.”

Grandchild’s Trust and Trust for Minors: Fixed signature line so ‘Signed in the presence of:” is on the appropriate line.

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To view those questions that are new in this update, or whose Law & Strategy, choices, or default answers have changed, use the "Up_Jun08" flag file. From inside Lawgic, open any existing answer file; on the Flags menu, click Open Flags, select the appropriate Title (click OK), and next select the "Up_Jun08" flag file (and click OK). To view all flagged questions, click Expand All on the Answers menu and scroll the Navigator. Flagged questions will be indicated with bold text.

Please continue to send us your suggestions on existing or new products. Contact our Technical Support Department at 1-877-2-LAWGIC (252-9442) or e-mail us at support@lawgic.com.