The phrase “estate planning” is an antiquated term that essentially means “caring for the future with your stuff.” Over time, this term has grown to encompass a broad range of planning techniques ranging from the traditional wills and trusts to modern solutions such as advanced care directives, asset protection, living wills, and advantageous tax structures.
Objectives of Estate Planning
An estate planning attorney has two primary objectives:
- To make your wishes clear to preserve peace among family members and avoid costly litigation; and
- To avoid unnecessary taxation while preserving the most of your estate for your intended beneficiaries.
Who Should Have an Estate Plan?
Estate Planning is not just for the super wealthy. In fact, as a wealth preservation tool, lower- and middle-class families stand to benefit the most from estate planning through increased upward mobility for each generation. Essentially, the more you can pass on to the next generation the better chances they have of reaching their goals.
Planning an estate is not just for the elderly or unwell, either. The pandemic has revealed that even healthy individuals are vulnerable to life-altering situations. No matter your age, marital status, or the size of your estate you can prevent unnecessary conflict and negative consequences of dying or becoming incapacitated without a full plan by seeing an estate planning attorney.
Why Have an Estate Plan?
Without a will or estate plan, state law determines where your property goes. If you have no will and the state is unable to locate surviving relatives, then the government takes your entire estate. Without a living will or advanced care directive, loved ones may struggle to determine how to proceed in the event of your incapacity. Failing to adequately prepare your estate often results in excessive taxation.
Common Estate Planning Tools
Wills are tools used to prove your intent for what should happen upon your death or incapacity. A traditional will deals with what happens upon your death, whereas a “living” will deals with what should happen should you become incapacitated. Wills can describe who has authority to make decisions and what actions they should take in your place. Examples include how to distribute your property or who should care for your pets and animals, who has the authority to manage your accounts and care for and maintain your property.
Some wills, called “pour-over wills” are designed to take property in your name at the time of your death and use them to establish a separate entity called a trust which will then manage those assets in accordance with your wishes.
Florida has strict requirements for how a valid will can be written and executed. You should always seek the advice of an estate planning attorney to avoid the possibility of a will being declared invalid.
A trust is a more advanced form of estate planning that involves transferring some or all of your assets into a separate entity. The person who gives the trust these assets is typically called the settlor.
There are several distinct types of trusts, but each generally requires that you have:
- Capacity – the person creating the trust must have the legal ability to give the assets to the trust;
- Evidence of Intent – this is often expressed through the execution of the trust document;
- A Trustee – a person responsible for managing or administering a trust;
- A Beneficiary – a person, animal, or organization who is intended to benefit from the trust’s operation;
- Trust Res – tangible or intangible property that becomes the subject of the trust’s operation; and
- A Valid Trust Purpose – in Florida, trusts must have a lawful purpose.
Trusts are powerful tools capable of accomplishing a variety of beneficial tasks ranging from avoiding probate (the lengthy legal process of determining what happens to the parts of your estate that haven’t been otherwise disposed of), protecting assets, avoiding unnecessary taxation, caring for your loved ones and animals, and handling a variety of other planning scenarios.
Powers of Attorney
A power of attorney involves the grant of a limited or general authority to step in your shoes and act on your behalf. Because they grant legal power to the person you designate, it is incredibly important that you choose someone you trust like a sibling, parent, or close friend.
A durable power of attorney will not be rescinded in the event of your physical or mental incapacity, whereas a non-durable power of attorney will be rescinded when you become incapacitated. Executing a durable power of attorney helps you designate an individual that you trust to handle your affairs and care for you and your dependents. Without a power of attorney, the courts will appoint a guardian instead.
How to Prepare for Your Estate Planning Consultation
The more you prepare for your consultation, the more you will be able to get out of it, and the better your plan will be. We will need to know at least the following:
More about you: Not just your name, age, and place of residence, but what are your plans for the future? What is your relationship status? Do you have any health concerns? What do you care about?
The people you care about: Who do you hope to care for in the future? If they don’t live with you, where do they live?
The stuff in your name: Even if you plan to give “all” of your assets to one person, it is still helpful to have an inventory of what “all” really includes. We can use this to help estimate the value of your estate for tax planning purposes, to determine how it can be transferred, and to determine which strategies would be most appropriate. This includes not just your real estate, bank accounts, and vehicles, but intangible assets and future interests like remainder interests in life estates, structured settlement payments, and debt owed to you as well.
The people you trust: Take some time to evaluate who you will trust to manage things for you if you die or become incapacitated. If you were in an accident tomorrow, who would you trust to pay your bills and make decisions on your behalf?
In addition, preparing any questions you would like to ask your attorney in the consultation in advance will help ensure that you not only get a plan that works for you, but that you understand what you are getting and how it works.