Areas of Law |
(Click on any term below to display its definition.)
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TAXATION |
Income |
The return in money from one’s business, labor, or capital invested: gains, profits, salary, wages, etc. The true increase in amount of wealth which comes to a person during a stated period of time. That which comes in or is received from any business, or investment of capital, without references to outgoing expenditures. Under the federal tax law, taxable income is gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity’s tax liability. |
Gift |
A voluntary transfer of property to another made gratuitously and without consideration. Essential requisites of “gift” are capacity of donor, intention of donor to make gift, completed delivery to or for donee, and acceptance of gift by donee. In tax law, a payment is a gift if it is made without conditions, from detached and disinterested generosity, out of affection, respect, charity or like impulses, and not from the constraining force of any moral or legal duty or from the incentive of anticipated benefits of an economic nature. As defined in IRC §2503, a taxable gift is the gift that is subject to the unified transfer tax. Thus, a taxable gift has been adjusted by the annual exclusion and other appropriate deductions. |
Estate |
The degree, quantity, nature, and extent of interest which a person has in real and personal property. As defined in IRC §2051, the taxable estate is the gross estate of a decedent reduced by the deductions allowed by §2053 through §2057 (e.g. administration expenses, marital, charitable and ESOP deductions). The taxable estate is the amount that is subject to the unified transfer tax at death. When used in connection with probate proceedings, the term encompasses totality of assets and liabilities of decedent, including all manner of property, real and personal, choate or inchoate, corporeal or incorporeal. |
Controversy with the I.R.S. |
Defending taxpayer(s) against the IRS from penalties (civil or criminal), deficiency notices, assessments, etc. |
Appeals |
The function of the IRS that independently considers issues raised by the examiners upon the request of a taxpayer. |
Litigation |
Our firm represents clients before the United States Tax Court, United States District Courts and Circuit Courts of Appeals, particularly the Eleventh Circuit. |
Transfer Pricing |
The I.R.S. is authorized (under IRC §482) to distribute, apportion, or allocate gross income, deductions, credits or allowances among two or more organizations, trades, or businesses owned or controlled by the same interests in order to prevent tax evasion or to reflect the true taxable income of any of those entities. This prevents the shifting of income and deductions among related taxpayers to minimize taxes. Our firm represents taxpayers in such issues. |
Appellate |
The courts above the trial court level. In Tax Court, it is the Circuit Courts of Appeal. |
International |
BUSINESS SUCCESSION PLANNING |
Corporate (Organization) |
The incorporation of entities under the Florida Corporate Statute. |
Corporate (Reorganization) |
Includes mergers between two or more corporations, recapitalization of a single corporation, or the division of a single corporation, which may qualify as tax free. |
Partnerships General |
A 'partnership' includes a syndicate, group, pool, joint venture or other unincorporated organization through, or by means of which, any business, financial operation or venture is carried on if it is not, within the meaning of the Code, a corporation, trust, or estate. IRC §761(a). For tax purposes, a partnership is a business, with two or more members, that has elected, or defaulted to, partnership classification under “check-the-box” entity classification regulations. In Florida, to organize a general partnership, no filing with the state is required, and therefore, can be created inadvertently. All members of a general partnership can participate in management and decision making. However, each partner is personally liable for partnership obligations and each must contribute to the payment of the debts of the entity upon its dissolution. |
Partnerships (Limited) |
A limited partnership is composed of one or more general partners and one or more limited partners. It differs from a general partnership in two basic ways: (1) a limited partnership is created under specific statutory authority; and (2) the liability of the limited partner for partnership debts is generally limited to the capital that he or she contributes to the partnership. |
Limited Liability Company (LLC) |
An LLC is a non-corporate entity providing its owners with limited liability, pass-through income tax benefits and a flexible management structure. It is considered a hybrid between a corporation and a partnership, with elements of each. Depending upon the structure selected by the members, it may closely resemble and operate as a corporation, a general partnership or a limited partnership. In all instances under Florida Statute 608.422 of the Florida Limited Liability Company Act, members can participate (or not participate) in management without assuming personal liability for the debts or obligations of the LLC. |
ESTATE PLANNING |
Wills |
A will is an instrument by which a person makes a disposition of his or her real and personal property, to take effect after his or her death, and which by its own nature is revocable during the maker’s lifetime. In Florida (as in nearly all states), a person who has attained the age of 18 or who is an emancipated minor has the right and power to make a will. In addition, six formal requirements must be satisfied in order to validly execute a will in Florida. |
Trusts |
A legal entity created by a grantor for the benefit of designated beneficiaries under the laws of the state and the valid trust instrument. It is a fiduciary relationship in which a person (called the trustee) is the holder of legal title to specific property, subject to an equitable obligation to keep, manage, safeguard, invest and administer the property for the benefit of another who holds equitable title to the property (called the designated beneficiaries) In Florida, a trust may be created for any purpose which is not illegal and which is not against public policy. There are many different types of trusts, but the two most frequently used trusts are: (1) private express trusts, which have one or more ascertainable persons as beneficiaries; and (2) charitable trusts, which are for a purpose that is classified as charitable (e.g. the advancement of religion, science, and education, and the promotion of health) and cannot be for the benefit of identifiable individuals. For federal tax purposes, the charity must be classified as a charitable organization under the IRC §501(c)(3) to receive tax exempt treatment. |
Living Wills |
A document which governs the withholding or withdrawal of life-sustaining treatment from an individual in the event of an incurable or irreversible condition that will cause death within a relatively short time, and when such person is no longer able to make decisions regarding his or her medical treatment. Living wills are permitted by statute in Florida. |
Health Care Surrogates |
The name given to a person who is substituted, designated or appointed to act for another in the event, it is determined under Florida law, that an individual becomes incapacitated and unable to make health care decisions or to provide informed consent for medical treatment and surgical and diagnostic procedures. |
Durable Power of Attorney |
Exists when a person executes a power of attorney which will become or remain effective in the event he or she should later become disabled or incapacitated. Uniform Probate Code §5-501. A Power of Attorney is an instrument in writing whereby one person, as principal, appoints another as his or her agent and confers authority to perform certain specified acts or kinds of acts on behalf of the principal with the same powers and to the same effect as the principal might do if personally present. |
QTIP’s |
Qualified Terminal Interest Property. A type of marital deduction bequest in which the surviving spouse receives all of the income for life but is not given a general power of appointment. Property qualifies for marital deduction as a QTIP only to the extent that the executor so elects on the Federal estate tax return. IRC §2056 (b)(7)(B). |
QDOT’s |
Qualified Domestic Trust. No marital deduction is allowed when the surviving spouse is not a United States citizen, unless the property passes (or is treated as passing) to the spouse in a QDOT. A QDOT requires that at least 1 trustee of the trust be an individual citizen of the United States or a domestic corporation. It provides that no distribution (other than a distribution of income) may be made from the trust unless the trustee has the right to withhold from such distribution the tax imposed on such distribution. |
SCIN’s |
Self-Canceling Installment Note. It is an installment note which contains a provision under which the buyer’s obligation to pay automatically ceases in the event a specified person, called the measuring or reference life (usually the seller), dies before the end of the term of the note. An installment note is a promissory note (evidence of debt) usually issued in conjunction with the sale of property where at least one payment is to be received by the payee after the close of the taxable year in which the note was issued. |
CRAT’s |
Charitable Remainder Annuity Trust. This is a trust which must pay the non-charitable income beneficiary or beneficiaries a sum certain annually, or more frequently, if desired, which is not less than 5% nor more than 50% of the initial net fair market value of all property placed in the trust as finally determined for federal tax purposes and a charity is named as the remainder beneficiary. IRC §664(d)(1) and a charity is the remainder beneficiary. |
CRUT’s |
A Charitable Remainder Unitrust. This is a trust which must pay to the non-charitable income beneficiary or beneficiaries a fixed percentage annually, or more frequently, if desired, which is not less than 5% nor more than 50% of the initial net fair market value of all property placed in the trust as finally determined for federal tax purposes. IRC § 664(d)(2), and a charity is the remainder beneficiary. |
QPRT’s |
Qualified Personal Residence Trust. This is an irrevocable trust, similar in concept to a Grantor Retained Annuity Trust (GRAT), and is a method of shifting the value of the family residence out of one’s estate, for the purpose of lowering the ultimate estate tax. The residence is placed into a QPRT for the future benefit of the children. The value today of this remainder interest is a taxable gift. The Grantor accepts some gift tax liability now, to save more on estate tax later. What is retained here by the Grantor is not income, but the right to live in the house for a term of years. If the Grantor outlives that term of the QPRT, the value of the house - plus any property appreciation since it was transferred to the QPRT- passes to the children with no additional estate tax. If the Grantor does not survive the term of the QPRT it has no tax effect. |
CLAT’s |
Charitable Lead Annuity Trust. This is a custom designed and individually managed trust that enables a person (the grantor) to give a fixed annual amount to a charitable organization recognized under IRC §501(3)(c) for either a fixed term of years or the life of one or more individuals. Upon conclusion of the measuring term, the trust terminates and, according to the terms of trust instrument, distributes its remaining assets (called the remainder interest) back to the grantor or to one or more individuals specified in the Trust Agreement. |
CLUT’s |
Charitable Lead UniTrust. This type of trust is similar to the Charitable Lead Annuity Trust, with the same purpose. The difference is that the trust pays the charity a fixed percentage of the FMV of the trust property. |
PROBATE, TRUST & GUARDIANSHIP ADMINISTRATION |
Probate |
The probate process refers to the proceeding in which an instrument is judicially determined to be the duly executed last will of the decedent (or, if there is no will, the proceeding in which the decedent’s heirs are judicially determined.). At the probate proceeding, a personal representative (PR) is appointed to carry out the estate administration. Under the Florida Probate Code, the PR’s authority to act on behalf of the estate is evidenced by letters of administration issued by the probate court. The PR is charged with the duty of marshalling the decedent’s assets, giving notice to creditors and paying valid claims, filing the decedent’s final income tax return and an estate tax return (if required), taking whatever other steps are necessary to wind up the decedent’s affairs, and distributing the remaining assets according to the decedent’s will or the intestacy statutes. One of the main functions of the probate process is the title-clearing function, by which the ownership rights of the decedent ‘s successors (whether by will or intestate succession) are judicially established. |
Summary Administration |
Summary Administration is available when the value of the entire estate subject to administration in Florida, less the value of property exempt from the claims of creditors, does not exceed $75,000.00 or the decedent has been dead for more than two years. In a testate estate, where the decedent died leaving a will, it is also required that the will not direct formal administration. |
Formal Administration |
The term used for the probate process of an estate that does not qualify for Summary Administration. |
Probate Litigation |
Probate litigation is a manner of resolving disputed claims to a decedent’s estate through the judicial process. It uses formal procedures prescribed by law to obtain information about such claims for the ultimate purpose of having a judge determine the merit of the claim on the basis of evidence received at a trial. |
Will and Probate Contests |
Sometimes interested persons disagree about whether a will submitted to the court is in fact the true will of the decedent. Sometimes a court will rule a will unenforceable because it was signed by a testator who did not have capacity to understand the significance of the document, or because he or she was defrauded or unduly influenced to sign it. In order to stop such a will from being honored by the court, an interested party must follow certain procedures to gain the opportunity to provide evidence to the court that the will should not be enforced. |
Probate Appeals |
When a contested matter is decided by a judge in a probate proceeding, the outcome can generally be challenged through an appeal to a higher court. Such a challenge requires the filing of formal legal memoranda, and in some cases oral argument, before a panel of appellate judges who will review what transpired before the lower court and judge whether the lower court properly applied the law to the facts. |
Trust Administration |
Trust Administration refers to the process in which the trustee is responsible for distributing the assets of the trust to the named beneficiaries or managing the trust pursuant to the trust agreement. The Florida statutes contain extensive provisions concerning the trustee’s powers, duties, and liabilities in managing and distributing the trust estate. Thus, these statutes under Chapter 737 of the Florida Probate Code, serve as the “charter of administration” of a trust, in the absence of any provisions in the trust instrument altering, modifying, enlarging or reducing the trustee’s powers. If the trust provides nothing about administration, the statutory provisions automatically apply. However, the grantor (the creator of the trust) has wide discretion in drafting the trust’s provisions. |
Form 706, U.S. Estate Tax Return |
This type of return is required to be filed when a person dies leaving a taxable estate. A tax is imposed on the right to transfer property by death, and thus, an estate tax is levied on the decedent’s estate and not on the heir(s) receiving the property. The estate tax is based on the value of the entire estate (the gross estate) determined at the date of decedent’s death less certain deductions. This return must be filed nine months after the decedent’s death unless an extension is granted. |
Guardianship Administration |
If a person has become incapacitated and has not effectively planned to appoint someone to manage his or her financial affairs through a durable power of attorney or a trust, then a guardianship may be the only way to deal with their assets. Guardianships are court proceedings. A guardian is appointed by a judge to manage the affairs of an incapacitated person. Guardianship Administration involves filing annual accountings and seeking court approval of certain types of expenditures out of the guardianship assets. |
Contested Guardianships |
Sometimes family members disagree who should manage the affairs of an incapacitated relative. Sometimes a person is threatened by a family member as being incapacitated when he or she is not, or at least believes such is the case. Situations like this make for a contested guardianship because a court has to resolve: (1) whether the individual is incapacitated and, (2) if so, to what extent, and (3) who should be appointed as guardian to manage that person’s affairs. Such disputes require hearings, a trial, and ultimately a resolution by the court. Contested guardianships can also involve other matters such as the removal of a guardian or other action to challenge the conduct of a guardian. |
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LITIGATION |
Business |
Real Estate |
Securities Fraud |