Frequently Asked Questions
The Questions and Answers below will hopefully serve to provide you with useful information and guidance concerning Wills, Trusts, Advanced Directives and other items to be aware of in this arena.
The events of the past years have caused most people to take a closer look at their existing estate plans, if any, and what steps they should take in order to ensure their affairs are in order during life and in death.
What should I bring to an appointment?
Bring copies of your existing estate planning documents, if any.
A list of all your assets and liabilities to include the type of assets/debts, the amounts, and how the assets are owned (titled). If you have any accounts with beneficiary designations, you should at least have a comprehensive list of these accounts and who is the designated responsible party on the account.
All names, addresses, email addresses and phone numbers of the people you will name or have named in your documents. This includes people you want to inherit your estate and who you want to serve as your personal representative.
You should have the name or names of who you want to inherit your estate and how. Is this a gift outright to the person? Or held in trust? You should also think about alternate beneficiaries who would receive your estate if your primary beneficiaries do not survive you.
The person or persons you name to act as your personal representative or trustee? And who would be your second choice if the first people you name are unable to serve?
When should I change my Will?
You should change your will if circumstances in your life changed, You want to change the beneficiaries of your estate or how they receive what they will inherit, marriage, divorce, and death, then a Will must be changed, another reason is if there is a change in the tax laws.
When a Will is prepared, it is taking into consideration the circumstances of your life at that moment in time. The document should be flexible enough to deal with some changes in your life, which is why it is a good idea to include alternate beneficiaries or alternate personal representatives.
What if I die without a Will?
In Florida, we have an intestacy statute under Chapter 732 of the Florida Statutes that governs who will inherit your estate, and in what shares, if you die without a Will. This generally includes a spouse and/or children inheriting all or part of your estate. If you have neither, the statute can extend all the way out to grandparents, aunts, uncles, and cousins, depending on your familial situation. If you want to have control over who will inherit from your estate, then you should have a Will in place to ensure that your assets are distributed according to your wishes.
What is probate?
Probate is something that people are told to avoid at all costs, but it is not the “evil” thing that it is made out to be. This is a court-driven process that allows for transparency in the identification, transfer and ultimate distribution of assets and payment of liabilities in an estate. The type of probate required, and the cost involved, is dependent on the type and amount of assets within an estate.
How can I avoid probate?
Proper planning can assist in avoiding probate.Regardless of someone’s net worth, this is something that every person needs to thinkabout. A little bit of preemptive action can save your estate potentially thousands ofdollars – and your loved ones a lot of time, money, and stress. Things such as IRAs,401(k)s, life insurance policies, payable on death/transfer on death accounts,beneficiary designations, jointly titled assets and assets with rights of survivorship areassets that transfer outside of probate. However, there are still issues with these typesof assets that you should be aware of, such as making sure the beneficiary designations on your accounts are current and the potential tax effect of transferring certain assets. For example, the passage of the SECURE Act on January 1, 2020 drastically changed the “stretch” tax deferral of IRA and 401(k) accounts. Even if you believe you have managed to avoid probate, there are other issues you may come up against and you should be aware of the most efficient approach in dealing with these types of assets.
What works better? A Will or a Trust?
A lot of people have heard that they should have a Trust so that they can bypass the probate of their eventual estate; however, what many people do not realize is that much of what is accomplished through a Trust can be done through a Will. While a Trust can be used as a tool to create a complex estate plan that is in place for many years after the death of the decedent, the main difference between a Will and a Trust is the lifetime benefit to the person who creates the Trust, who is called a Settlor or Grantor. By creating a Trust, a person creates something like a corporation as a vessel to hold their assets – and this vessel may be used to avoid guardianships in the event of incapacity, illness, etc. The advantage here is that by having your assets in a Trust, if you reach a point in your life where you can no longer manage your assets, a successor trustee – someone you have designated in your trust document to take over in the event you can no longer act on your own behalf – effectively steps into your shoes. The successor trustee takes over the management of the trust assets and can assist in arranging for your care, which can generally be done without court involvement. This is instead of the guardianship process, which can involve people who are completely unknown to you and can be very expensive. If at all possible, you want to avoid a guardianship.
What other documents should I have?
Generally, we will prepare documents called Advanced Directives in addition to drafting a Will and Trust. These are documents that have lifetime benefits.
Designation of Healthcare Surrogate:
The easiest way to describe this document is that it is like a power of attorney for healthcare decisions. This document allows you to appoint someone to make healthcare decisions on your behalf in the event you cannot do so for yourself. This document also allows your healthcare surrogate to access your medical information. Many married couples are under the presumption that if something healthcare-related happens to his or her spouse that he or she will be fully apprised of the situation. That is not an absolute truth. HIPAA laws can prevent the dissemination of healthcare information – even to spouses. The best way to avoid this is to have a Designation of Healthcare Surrogate in place.
This is a document stating your wishes in the event you have a terminal condition from which you cannot recover. It dictates whether you desire to have, or desire to have withheld, life extending treatments, such as chemotherapy and surgery, when you are already terminally ill.
Designation of Preneed Guardian:
This document allows you to state your preference for the person to be appointed as your guardian in the event a court determines you do not have the capacity to manage your affairs. While this is also not an absolute, the Court will generally accept your preference rather than appointing a potentially unknown third party. This document may also be used to include your preference for the guardian of your child/children in the event something happens to you and there needs to be a legal guardian appointed to take care of your children.
Durable Power of Attorney:
This is by far the most powerful document in the group. It provides a wide-range of authority for a person to act on your behalf and can be a very useful tool for married persons or for adult children who help manage a parent’s affairs; however, it is not a document that we recommend entering into lightly. By appointing someone as your agent, or attorney-in-fact, you are giving him or her the ability to bankrupt you, to put it mildly. This is document gives a person the power to sign over the deed to your home, to empty the contents of your bank accounts, to sue on your behalf and depending on the type of Durable Power of Attorney you choose, that person could change your Will or Trust and gift your money to others. You do not have to be incapacitated for this document to go into effect. This is a legally useful document but should only be signed after serious consultation with your lawyer.
Florida Taxes & Federal Exemptions
The potential for federal gift and estate tax law changes is always present. Should any changes occur, you need to review your existing estate plan to ensure that you have the best plan in place.
How Do Florida Estate Taxes Work?
The federal estate tax is subject to a variety of vagaries that include the value of assets and the time period used to determine the value of those assets.
What Does That Mean for My Estate’s Federal Taxes?
The federal government has a staggered set of rules for determining the value of assets and what taxes are applicable during a particular year, so unfortunately, there is not much that is simple about estate taxes.
Essentially, you need a knowledgeable attorney to help you leverage your financial situation and your assets in order to manage your estate in the best way possible for you and your heirs.
Our firm has been helping South Florida families plan their estates for years, and we are prepared to help you do the same.