Legal Blog

November 1, 2019

Estate Planning Basics

Estate planning is not a one-size-fits-all endeavor.  When executed properly, an estate plan should be a customized plan designed to best protect you and your loved ones. While each estate plan should be tailored to fit your specific needs and goals, every estate plans should include some or all of the following:

Will: A will (sometimes referred to as a last will and testament) is a written document used to appoint a personal representative (or executor) to handle the person’s affairs upon their death, explain how his or her property and money are to be distributed, and appoint a guardian to care for minor or dependent children.

Pour-Over Will:  This is a special type of will in which the person’s trust is named as his or her beneficiary. This document is used in case a person has created a trust but did not fully fund (i.e. transfer or retitle assets) prior to death. The pour-over will is admitted to the probate court, and everything is transferred to the trust through the probate proceedings.

Revocable Living Trust: While there are many different types of trusts, a revocable living trust is often the foundation of an estate plan.  A revocable living trust is a written agreement in which a trustee is appointed to hold title to and manage property for the benefit of one or more beneficiaries. In many instances, the grantor (person creating the trust) will serve as the initial trustee. Upon the grantor’s incapacity, the trust property will be managed by a nominated successor trustee for the benefit of the grantor with little interruption and no court involvement. Upon the death of the grantor, the successor trustee manages and distributes the assets according to the trust’s terms.  Certain types of trusts have the ability to provide asset protection for the beneficiaries, such as protecting their inheritance from a potential ex-spouse.

Financial Power of Attorney: A legal document where a person has named an individual to act on their behalf in financial affairs (e.g., signing a deed, opening a bank account, signing checks, filing taxes, etc.). There are several different types of financial powers of attorney depending upon a person’s needs and the types of transactions that might be required.  Typically, a durable power of attorney is drafted and included in an estate plan since this it continues to be valid even after the principal (i.e. the person who created the durable power of attorney) has become incapacitated.

Medical Power of Attorney: Florida’s Designation of Healthcare Surrogate allows a person to nominate an individual to make medical decisions on his or her behalf in the event he or she becomes incapacitated or otherwise unable to communicate. This power only goes into effect if the person is able to communicate and make decisions for themselves.

What If No Planning Has Been Done or What if it Has Been Done Incorrectly?

If no estate planning has been done, the court will likely become involved. In the event the a person becomes incapacitated, the family will have to petition the court to appoint a person to make financial decisions on their behalf. The court will also have to appoint an individual to make medical decisions for the individual. Because the individual is incapacitated, he or she will have no way of communicating who he or she would like in those roles. The judge will have to make a determination based on investigations and the testimony of the interested parties in a very public proceeding–which may or may not reflect this person’s actual wishes.

If an individual dies without an estate plan, their property and financial assets will be distributed through the probate process to his or her family based upon the state’s intestacy statute. In many cases, this distribution scheme is contrary to what the individual would have wanted. In addition, the probate process can be time-consuming, expensive, and public.

Probate may still be required even if an individual has a will or if they have a trust that was not completely “funded” (assets were not properly transferred to the trust or retitled in the name of the trust). The only difference is that the will determines who receives the assets rather than Florida law.

For more information on estate planning or Florida probate administration, call (954) 999-9683 for your free consultation.  We have offices in Delray Beach and Coral Springs – we look forward to working with you!

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