1. MUTUAL FUNDS 101

With recent stock market volatility, it is more important than ever to understand your mutual fund investments. Mutual funds invest in everything from highly speculative "junk bonds" to short term United States Treasury bills. Take the time to do the following:

Read the financial statements and information sent to you by your mutual fund company to understand the nature of your mutual fund investment. If, for example, your mutual fund invests in U.S. stocks, read the names of the companies your mutual fund owns. Do you want to own a part of the companies listed?

Never assume that all mutual funds are the same. Mutual funds differ greatly.

Determine whether your mutual fund is making investments that are consistent with your risk preference. For example, U.S. Treasury bills are less risky than stocks.

Find out how much your mutual fund charges each year as investment fees. Mutual funds sometimes charge as much as two percent a year of the principal amount of your investment! Some mutual fund companies charge less than one-third percent (.33%) per year of the account value as an investment fee.

High management fees can definitely hurt the return on a mutual fund over a long period of time. Look at the charts of fees in your mutual funds prospectus.

Ask your investment adviser whether or not he receives a commission or "load" for selling or buying mutual fund shares. Often, mutual funds will pay a five percent commission to a broker who steers customers to that fund. Is it really in your best interest to buy a mutual fund in order to get a five percent commission for a salesman?

If you don't understand what you own, ask questions before it's too late.

2. ESTATE PLANNING TIPS

Fisher's Law Office has over sixteen years experience with probate and estates. Consider these tips when you prepare your estate plan.

1. Make sure that your bank account and mutual funds and brokerage accounts are titled the way you wish for them to be titled. If you intend for money to go through your Last Will & Testament, never put another person's name on the account with you. Never assume a joint account holder will give money to your heirs after your death.

2. If you are married with children, do not title your house in your name only. Under the Florida Constitution, if you die with your house titled in your name and you have a spouse or minor children, then your house passes in a special way. Your wife receives a "life estate" and the children receive a "remainder" interest.

Under this scenario, the spouse cannot sell the house because she only has a "life estate" in the house and not full ownership. To avoid this, title the home into joint names. This rule may differ for spouses who are in second marriages or in situations where a person wants their spouse to have a life estate with a remainder interest to their children.

3. Although the Florida legislature thought they were doing a favor to gifting personal property, the actual impact has been to totally confuse and complicate the probate of most people's estates. The problem is that items listed on a separate writing must be distributed to the people named in the separate writing. If the item has a small value or if the person is difficult to locate or will not cooperate with the estate process , it drives up costs of the estate tremendously. Therefore, be very cautious about listing people as recipients of items in separate writing clauses attached to Wills.

4. Make a list of what you own. Many personal representatives spend years trying to locate assets. Make sure that you prepare a list of what you own and leave it near your Will.

5. Get rid of out-of-state property and small interests in items like trusts, partnerships and corporations. If you have a small interest in a piece of real estate in another State or country, get rid of it. You are only creating huge problems for the personal representative in valuing and gathering the assets for distribution to your loved ones after your death. For example, real property in other states is subject to "ancillary probate" in the other state. Such a probate is expensive. If you truly love your heirs, you will make your estate simple and try to sell off or give away interests in far flung properties or in entities that have dubious value such as closely held corporations. Interests in trusts are also a nightmare for personal representatives to deal with. Remember the saying "KISS" - Keep it simple stupid.

6. Write a Last Will and Testament. Fisher's Law Office has encountered numerous estate situations in which individuals with sophisticated financial backgrounds failed to write a Will.

Although it's true that Florida Statutes Chapter 732 provides a way of distributing property for those who die "intestate" - without a Will, most people would be horrified to learn how the Florida legislature has decided to distribute their property. For example, if you die with a total of $40,000.00, your surviving spouse will receive the first $20,000.00 and the balance will be split equally between your spouse and your child.

If your child is under age eighteen, he cannot inherit more than $5,000.00 without having a guardianship opened up for him.

In our example, it would be much simpler for the decedent to have willed everything to his spouse and thereby eliminate the need to create a guardianship to give his child $10,000.00. There are numerous other examples of why writing a Will can make your estate simpler and more efficient to probate and will carry out your actual intent.

7. If you have investments, always keep them in a brokerage or "street account". Fisher's Law Office has encountered situations in which a personal representative has trouble locating stock certificates after a decedent's death. It is also harder to sell individual stock certificates than shares in a brokerage "street account".

Therefore, always hold stock in "street accounts" with your stockbroker. This will make it much easier for your heirs to make distribution to your loved ones upon your death.

8. Consider giving away property before you die. Because of the time and effort involved in distributing assets to loved ones, it often takes several months after your death for your loved ones to receive the money and property you intended for them to have. Wouldn't it be simpler to see the joy in their faces when you give them property during your life? Unless you are ill or need the money for a stay in a nursing home or some other purpose, you may consider a careful plan of gifting to your loved ones to legally diminish the size of your estate. It is also possible to give away tangible personal property to loved ones prior to death.

9. If any that has increased in value. This property is usually best left in your estate. See a tax professional before giving away appreciated property of any kind.

If you are entering a nursing home within 3 to 5 years, you should never convey your home. The medicaid "look back" rules punish people for making gifts and then entering a nursing home. See a professional for details.

If you give away more than $10,000.00, you need to file a U.S. federal gift tax return-Form 706.

10. Think carefully about who you want to act as your personal representative. Is the person responsible? Can they maintain a bank account? Do they return telephone calls? If you cannot immediately answer these questions with a "yes" answer, then don't choose the person as personal representative. On the other hand, if you have no one else in the world to use as a personal representative, don't hesitate to use close relatives over strangers especially if the close relative is the sole or main heir to the estate. Most personal representatives will do a better job if they are named as an heir to the estate.

Legal warning: Be cautious about naming out of State personal representatives - see us for details.

11. Consider requiring your personal representative to post a fidelity bond on their performance. Most standard Wills waive the requirement of a personal representative to post a bond. If you have any doubts at all about the honesty of the personal representative you have chosen, you should not choose them. As an additional insurance policy, however, you may want to consider requiring the personal representative to post a bond. This will give greater assurance that your loved ones will receive the money you have given them in your Last Will and Testament.

12. If you have a new child, write a new Will. Under a quirk in the Florida Statutes dealing with "after born heirs", any child born after your will is written is considered an "intestate heir". Since Florida's intestate law provides for substantial amounts to be given to intestate heir children, you may want to rewrite your Will after having a child. Otherwise, some children may inherit more than others.

13. If you have no relatives, you definitely need a Will because otherwise, your property will go to the State under Florida's "escheat" statute.

14. Where is your Will? If it's in a safety deposit box, does your personal representative have a key and permission with the bank to access the box?

15. If at all possible, die without any debts. It will make probating your estate more simple. On the other hand, if you feel your life slipping away and you have no money or items of value, run up your debts and let someone else (the creditors) worry about it!

3. PRICELESS GEMS OF KNOWLEDGE IN THE FIELD OF DIVORCE

Be warned about divorce in Florida . The laws have changed dramatically in the last 18 months and anyone in a domestic situation should immediately seek the counsel of a competent attorney. Here are a few gems of advice to those in domestic difficulty:

1. If you receive a notice of a foreign divorc-International Application recognizes other nations' divorce and custody orders if reasonable notice and a chance to be heard were given to all affected persons. Therefore, never ignore court documents that you receive.

2. If you fall behind on your child support, you could be reported to a credit reporting bureau. However, the same law requires the State to give fifteen days written notice of their intention to report you to a credit bureau.

3. Here are some examples of child support for varying income levels under Florida Statute 61.30:

4. Florida Statute 61.30(17) states that in a paternity case or a divorce case, the court has the discretion to award retroactive child support for as long as the parents have lived apart up to two years.

5. Florida Statute 61.075 is known as Florida's "equitable distribution" statute. The statute states that all property acquired by either party during the course of the marriage is subject to equitable distribution. These marital assets should be equally distributed unless there is justification for an unequal distribution based on numerous factors listed in the statute. These include length of marriage, need for children to have a place to live, whether a closely held business should be left with the spouse who owns that business and, lastly, whether a spouse has intentionally dissipated or wasted marital assets within two years of filing the petition for divorce.

6. Florida Statute 61.076 requires that all vested pension rights and retirement funds acquired during a marriage should be equitably distributed. Spouses are entitled, as a general rule, to a portion of the other spouse's retirement plan.

7. Florida Statute 61.08 allows the court to order alimony depending on a list of factors that include:

The standard of living established during the marriage.

The duration of the marriage.

The age and physical and mental condition of parties.

The financial resources of earibution of each party to the marriage.

IF YOU HAVE A QUESTION ABOUT DIVORCE OR PATERNITY, CALL FISHER'S LAW OFFICE.