Florida Estate Planning

Overview of Estate Planning

If you pass away without a will, your assets may be distributed  in ways you never contemplated. Unnecessary time and expense may be required in administrating your estate if proper planning has not been conducted during your lifetime. Large estates may realize considerable tax savings with proper estate planning. If you are interested in creating an estate plan, our firm can provide wills, trusts, tax planning, powers of attorney, health care surrogate forms, living wills and pre-need guardianship elections.

What is Estate Planning

A. What is Estate Planning?

Estate planning includes planning for not only the transfer of your assets upon death but also your continued care in old age. An effective estate plan should include three steps: 1) creating a plan to provide for your comfortable care until death, 2) arranging for the transfer of your assets to the beneficiaries of your choosing at the time of your death, and 3) saving as much estate and gift tax as possible.

B. Why would I want an Estate Plan?

If you die without a legal will and have taken no other estate planning steps, assets in your sole name will be distributed pursuant to Florida law. Those distributions may not be made to the persons you intended. Furthermore, as you grow older, you may have to rely more and more upon friends and loved ones for your care. You may even loose the capacity to make legal decisions regarding your care or the transfer of your assets. By stating your desires now, you are giving clear directions to your family and loved ones regarding your future care and the distribution of your estate. This will avoid potential turmoil and delays down the road. 

Planning for Incapacity

All proper estate planning should include a plan for incapacity. None of us wish to lose our independence or become unable to care for ourselves. However, that is a real possibility of aging. Proper planning can help to avoid prolonged and expensive guardianship proceedings should you or a loved one become incapacitated and can ensure that the persons of your choosing provide for your care. As a part of every estate plan, we will review our clients' wishes in taking steps to provide for future care.

Some of the tools utilized in this area of estate planning include: Durable Power of Attorney, Designation of Health Care Surrogate, Living Will,  Intervivos Trust and Declaration Naming Preneed Guardian.

Distributing Your Assets

A. Joint Title with Rights of Survivorship.

A critical part of formulating any estate plan is the proper titling of your assets. Assets that are titled (such as real estate, investment accounts, CDs, or bank accounts) may be placed in joint name with another so that they pass to that person automatically upon your death. Such assets are said to pass by operation of law and typically will not pass through the probate process on the first death of an account holder. This not only saves probate expenses, but can also simplify the administration of your estate. Titling assets jointly, however, does have some drawbacks, the most significant of which is that you may loose control of the asset during your lifetime. Depending upon how a joint title is created, the other account or asset holder may be required to consent to any subsequent transfer or sale of the asset. Thus, you may have problems if you later wish to transfer the asset to a different beneficiary or sell the asset. Furthermore, the joint asset owner may be subject to unintended tax liabilities or other expenses created by virtue of holding partial ownership in the asset.

A thorough review of your assets should be made to determine the current title to all of your assets so that there are no unexpected transfers upon your death. If necessary, asset titles should be restructures to meet your estate planning objectives and to avoid undesired transfers upon death. 

B. Passing Assets Pursuant to a Will.

Upon your death, any assets titled in your sole name will become part of your probate estate. These assets will be distributed to the beneficiaries set forth in your will through the probate process. While passing assets through the probate process does take time, it does not require you to  retitle any of your assets to a trust (see below) while alive and thus offers the most flexible and simple estate planning document available. 

C. Passing Assets Pursuant to a Revocable Living Trust.

In utilizing a revocable living trust, assets must be retitled to the trustee named in the trust instrument (usually yourself initially). Because the assets are now owned by a trustee, they are not titled in your sole name and thus do not pass through the probate process at death. As the trust is revocable, it is transparent while you're alive. Thus, you may change the terms of the trust, may remove or add beneficiaries, may sell or gift assets out of the trust or may revoke the trust entirely. Upon your death, the trust becomes irrevocable and the assets held by the trustee are distributed pursuant to the directions set forth in the trust instrument generally without the need for a probate administration. 

A revocable living trust is a useful estate planning tool. However, it is not appropriate in all situations. A revocable living trust requires more effort to set up effectively as your assets must be re-titled to the trustee. If you have a large number of separately titled assets, this can be a burdensome and time consuming process. 

In addition, note that there are no tax advantages to creating a revocable living trust. Effective tax planning may be done with either a trust or will. For further discussion of the benefits of a living trust versus a will, see Section V, below.

Some of the tools that may be used to distribute your assets: Re-titling assets, Last Will and Testament, Personal Property Memorandum, Revocable Living Trust, Irrevocable Trusts.

Tax Planning

Every citizen of the United States is given a unified credit against estate and gift tax. In 2000, that unified credit amounts to Six Hundred and Seventy Five Thousand Dollars ($675,000) worth of assets that may be passed without triggering federal estate tax. This credit is scheduled to increase over the upcoming years until reaching One Million Dollars ($1,000,000) in 2006. Therefore, if your  gross estate (all of your assets, including joint or partial interests in property and life insurance) totals less than the unified credit in effect at the time you die, you will not owe federal estate tax.

If, however, you have assets in excess of the unified credit at the time of your death, more than fifty percent of your estate could end up going to the Internal Revenue Service. Proper estate tax planning involves analyzing your current financial portfolio and taking steps to save as much estate tax as legally possible. The Federal Government has provided estate planning professionals with several tools to minimize estate taxes. Married couples may take advantage of marital transfers (generally, transfers between spouses are not taxable) in order to utilize both spouses' unified credits. In addition, gifting programs may be implemented now in order to reduce the size of your estate prior to death.

Proper tax planning can mean the preservation of hundreds of thousands or even millions of dollars for beneficiaries and family. The decision on how far you want to go to save estate tax is yours. As with all of our planning services, our most important objective is what YOU want to do with your estate. Should you retain our services, we will discuss all of the options available to minimize estate taxes given your financial situation. We will not "sell" you aggressive tax avoidance products unless you desire them. The choice is yours. 

Some of the tools that may be used in tax planning: Last Will and Testament, Revocable Living Trust, Gifting, Qualified Residence Trusts, Irrevocable Gifting Trusts, Irrevocable Life Insurance Trusts, Charitable Giving, Charitable Trusts.

Avoiding Probate, Is it Worth It?

As noted above, assets in your sole name are subject to probate. Assets may avoid probate if they are not titled in your sole name at the time of your death. This may be accomplished by creating joint titles with rights of survivorship or by moving your assets to a revocable living trust. Because of the disadvantages of joint title setups (see Section III, above), this method should not be relied upon without careful consideration. Assets not in joint title may pass pursuant to your will or living trust, but which is right for you? 

Popular opinion generally holds that probate is a thing to be avoided at all costs.  Many times, professionals use the specter of expensive probate proceedings to scare clients and customers into creating complicated estate plans in order to generate higher fees. Below, I have attempted to set forth the pros and cons of probate utilizing a will versus probate avoidance using a revocable living trust in an unbiased manner. Once you have reviewed this information, you will be in a better position to decide if probate avoidance is worth it.  

A. Cost.

Many believe a living trust offers great savings over a probate administration. Depending upon your particular situation, the savings may not be as great as popularly believed.

Probate costs money. Attorney's fees for probate services generally range around three percent of the total value of the probate estate. In addition, court costs and other expenses are due for filing fees and publication costs (about $300 depending upon the county). However, the administration of a revocable living trust can be nearly as costly. A nonprofessional trustee (not a bank or trust company) will likely need the advice of an attorney in order to properly administer a revocable trust. A professional trustee will charge trustee's fees. Despite this, however, the general costs of administrating a trust will be less than the costs of administrating a probate estate.

Yet, a living trust typically is typically more expensive to create than a will. In order to effectively use a living trust to avoid probate, all of your assets must be re-titled to the trust. If you have a large number of titled assets, this can be a time consuming and costly process. The savings of trust administration over probate are reduced by the higher start-up costs required to create an effective living trust plan.

Winner:    Trust (not by much)

B. Time Required for Distributions.

Your beneficiaries will surely appreciate a speedy and efficient transfer of your assets. So which is faster, probate or trust? Probating an estate takes time, anywhere from  six months to several years depending upon complexity. Florida courts have become more and more congested in recent years further slowing the probate process.

Trusts on the other hand are administered without the supervision of the court and generally may be administered more quickly than a probate estate. However, the time savings may not always be significant. Many of the delays that slow down a probate administration can also slow down a trust administration. These include waiting for tax clearances, paying creditors and completing asset transfer documentation. In most cases, however, a revocable trust has an edge in getting your assets to your beneficiaries more quickly.

Winner:     Trust

C. Protection of Your Assets and Beneficiaries.

A third factor to consider when comparing probate and trust administrations is the protections afforded to your beneficiaries. Probate administration offers a number of advantages over trusts in ensuring that your wishes are carried out after your death. The same court supervision and statutory requirements that slow down a probate administration also ensure that your assets are properly distributed. Probate proceedings can also limit your estate's liability to creditors after your death.

During a probate administration your estate will be scrutinized by a circuit court judge and his or her staff. Thus, your beneficiaries enjoy the protections of the court in ensuring not only that they receive what they are entitled to, but also that the administration of the estate has been properly carried out. During a trust administration, no one will be looking over the trustee' s shoulder to ensure that he or she has fulfilled fiduciary duties. If a problem in a trust administration does arise, a lawsuit must be brought against the trustee to obtain judicial intervention.

A further benefit of probate is that during a probate administration, your creditors are limited in the amount of time they have to make claims against your property. If they do not come forward within the prescribed time, they may be forever barred from making claims against your estate or your beneficiaries. This protection from creditors is not offered by a trust administration. Many practitioners will open a small probate estate even if a living trust has been properly utilized simply to take advantage of this protection from potential creditors.

Winner: Probate

D. Impact on Lifestyle (or effort it takes to make the thing work).

Assets passed through your probate estate are those in your sole name. Other than balancing spouses' estates, if required, little or no planning must be done to change the title to your assets when preparing a will. In order to take advantage of a living trust, however, all of your assets must be retitled to the trustee. This means preparing and recording new deeds to your real property and filing account transfer documentation with your bank, brokerage house or other account holder. As discussed above, this can be a time consuming process. In addition, your living trust must be properly maintained. If additional assets are purchased after creating your trust, you must remember to title them to the trust or they will end up going through probate. Finally, if title is not properly created in the trustee initially, transferring assets out of the trust may become complicated. For these reasons, utilizing a will is much less intrusive to your lifestyle than a living trust.

Winner: Probate

E. Planning for Incapacity.

Perhaps the greatest benefit of a revocable living trust, and surprisingly the most unknown, is its ability to provide for your support during incapacity. In the event you are unable to manage your assets or provide for your care, the successor trustee named in your living trust may take control of all trust assets on your behalf in order to pay your medical bills, living expenses, etc. A will cannot provide this service as it only takes effect at death. Incapacity documents (such as the Durable Power of Attorney),  can come close to providing this level of protection during incapacity, but do not have the ease of transition offered by a living trust setup.

Winner:     Trust

F. Tax Savings.

A living trust offers no estate tax advantages over a will. Tax planning may be accomplished by either a living trust or a will.

Winner:     Tie

G. And the Winner Is?

The final tally indicates that a living trust has a slight advantage over a will (3-2-1). As a final note, however, consider that most clients do not maintain their living trusts properly during their lifetime and thus rarely escape probate entirely. Any time a living trust is utilized, a will (called a "Pour-Over Will") should also be prepared passing any property to your trust  that was not titled to the trustee.

The real winner depends upon your particular circumstances. You should discuss your particular situation and objectives with a qualified estate planning attorney before deciding which is best for you. Should you choose to retain our services in formulating your estate plan, we will discuss your goals and make recommendations in an honest and un-biased manner. We will not try to sell you the more expensive product. Our goal is to provide estate planning services to carry out YOUR wishes in a legally sound and efficient manner.

Products and Services

Listed below are some of the estate planning services we provide. 

SIMPLE ESTATE PLANNING SERVICES

Simple Estate Planning Package

Includes: Last Will and Testament, Personal Property Memorandum, Durable Power of Attorney, Designation of Health Care Surrogate, Living Will, Declaration Naming  Preneed Guardian.  

We consider a simple will to be a will directing a transfer of your property to limited number of named beneficiaries without trust provisions. We reserve the right to evaluate whether or not your objectives qualify as a simple will. Of course, we will discuss this with you before preparing your documentation.

We also offer the documentation included in a the simple estate planning package on an individual basis. However, we STRONGLY encourage clients to complete an entire estate planning package and thus documents are offered at a substantial discount as part of the packages. If special needs dictate, we are willing to discuss an extended payment plan (we are only able to offer a payment plan to our local clients).

ADVANCED ESTATE PLANNING SERVICES

Tax Planning

Revocable Living Trusts 

Irrevocable Gift Trust

Irrevocable Insurance Trust

Qualified Residence Trust

Charitable Gifting

Charitable Trusts