1. What is estate planning?

The emotional definition of estate planning is putting your wishes in writing to ensure that your loved ones are taken care of when you pass away. The technical definition is organizing your assets and liabilities while you are alive to specify who gets what, how much, and who is in charge when you are no longer around. You can make provisions for charities that are meaningful to you, as well as individuals. Estate planning includes selecting guardians for your minor children, creating a Last Will and Testament or a Trust, along with a Power of Attorney and a Living Will.

2. What is an estate?

It is your net worth which includes everything you own at the time of your death - your home and everything in it (furnishings, paintings, jewelry, etc.), other real estate in Florida and elsewhere, your car(s), bank accounts, retirement accounts, life insurance policies, retirement plans, stocks and bonds. It is your total assets minus your liabilities and what will be left for your beneficiaries after you pass away.

3. Why is estate planning important?

The purpose of a well constructed estate plan is to save your family money, time and stress in the chaotic aftermath following the death of a loved one. You probably have an estate plan in your mind. If you don’t put it in writing, the state of Florida has its own plan in mind for you. Not having a Will or a Trust means that at your death – your assets, your home, your car, bank accounts, retirement accounts, life insurance, etc. will be distributed based on Florida’s inheritance laws and go through the probate court process.

4. Who is estate planning for?

A common misperception is that only wealthy individuals require estate planning but the reality is EVERYBODY needs estate planning. This includes parents, parents of children with special needs, children taking care of aging parents, the elderly population, homeowners, unmarried couples that reside together, entrepreneurs, and foreign nationals seeking to buy real estate in Florida. The list is endless. Whether you own a business, work for a company, are married or single, or have children, the way you decide to manage your estate can have an impact on your loved ones for generations.

5. What documents are included in my estate plan?

Every individual’s estate plan is unique based on their family dynamics; however the following is a list of common documents used in estate planning:

  • Last Will and Testament (“Will”)
  • Living [Revocable] Trust or an Irrevocable Trust
  • Durable Power of Attorney
  • Health Care Surrogate or Health Care Proxy
  • Living Will
  • HIPAA Authorization Form
  • Deeds that transfer real estate
6. What if I Have an Out-of-State or very old Will?

Out-of-state Last Will and Testaments (“Wills”) are generally valid in Florida, although problems may result when they are not executed in accordance with Florida law regarding “self-proving Wills”. In such instances, the beneficiaries must locate the out-of-state witnesses that were present when that Will was signed. The same is true with regard to unusually old Wills (even those executed in Florida). Generally speaking only the original Will may be admitted to the Court. Showing the Court a copy of the Will creates a presumption that the original was destroyed with the intent to revoke it. Wills and other estate planning documents should be reviewed every 5 years or after a major life change.

7. How much does estate planning cost?

The cost to plan a larger estate will be higher than the cost to plan a smaller estate. The costs vary depending on your individual family needs. There is no one size fits all approach to assessing fees but they are typically in proportion to the size of your estate. Estate planning is always hugely more economical that going through the probate process after a loved one passes away not having any estate planning documents in place.

8. Should I appoint a guardian for my children?

Yes, yes, yes. Selecting a guardian for your children is the best way to have their interests protected. The guardians you choose can be a married couple or a single individual. Writing your wishes down on paper while you are alive will eliminate family fighting over the childrens’ custody that often occurs after the unexpected death of one or both parents. You can also select an alternate guardian in the event the first guardian is not able to serve.

9. Do I need a power of attorney?

Yes, yes, yes. A Power of Attorney ("POA") is a legal document that allows you to give permission to another person (your agent) to act on your behalf regarding financial and legal matters. This need can arise in emergency situations where you are incapacitated and cannot make decisions on your own. A POA legally protects your financial and health-related interests that would otherwise be appointed in court. Your appointed agent should be someone that you trust, such as a family member or close friend. The Power of Attorney document only works while you are alive and ends when a person passes away. At which point, your Trust or Will should kick in to dictate the terms of how to distribute your estate.

10. What is a trust?

A trust is a legal document that allows an individual to avoid the probate process after they pass away. (see Probate FAQs for more details on probate). With a Trust, any assets that are located in the trust on the date of your death, get passed automatically to your loved ones without having to go through any court process. Think of it as a treasure chest. The individual who creates a trust (the “grantor” or “settlor”) places their assets and other property into the treasure chest (the trust). This includes real estate, savings accounts, life insurance policies, etc. Within the trust document, you indicate who your beneficiaries are and exactly how much they receive upon your death. You also specify who is in charge of distributing the assets after your death. That allows the property to be held and protected for the benefit of your beneficiaries. Upon your death (the death of the grantor), the assets pass to your beneficiaries through trust, and bypass the need for an attorney as well as the court-supervised probate process.

11. What is a living trust?

A living trust (or revocable trust) is one that is created during your lifetime as opposed to one that is created at your death (testamentary trust). In a living trust you serve as your own trustee, maintaining control of the property held in trust during your lifetime. You can make any changes, additions, cancellations, or modifications to the trust document at any time. This is often the preferred type of trust for inheritance purposes.

12. What are the benefits of a living trust?

The benefits of a living trust include: avoiding probate (a costly court process), retaining control and exclusive use of all your assets while you are alive, and provides privacy because a trust does not get recorded into the public records.

13. What are the different types of trusts and what are the advantages?

There are several types of trusts, each with its own advantages. Revocable trusts or “living” trusts help avoid probate, protect the assets in the trust from potential future creditors of your beneficiaries, pass on assets to your loved ones much more efficiently, and provide privacy as trusts do not become part of public record.

Irrevocable Trusts are great long-term asset protection tools that transfer money out of your name by assigning someone you trust to manage the money. The person managing the trust ("Trustee") can be almost anyone other than your spouse. The assets placed into an Irrevocable Trust are generally protected so long as the Grantor is not a direct beneficiary of the Trust.

14. Will a revocable trust provide asset protection?

A revocable (“living”) trust will not shield your assets during your lifetime because you are still the owner of your assets since you can revoke or change the terms of your trust at anytime. Companies or individuals with legal claims against you can still reach those assets. However, a revocable trust will provide asset protection to your beneficiaries after your death. Once your family inherits your assets through trust, those funds are shielded from creditors, divorce, and bankruptcy. If you goal is asset protection, an irrevocable trust is a better option to safeguard your assets.

15. Does my family have to pay estate tax when I die?

Most likely, no. Florida has no state estate tax upon inheritances received. There is a federal estate tax but the exemption amount fluctuates every year. Usually the exemption amount is upwards of a few million dollars per person. Meaning that anyone who inherits over the exemption amount must pay estate tax on the difference. This is due nine months after the date of death, but six month extensions are allowed. Since the exemption amount varies yearly, it is best to consult an estate planning attorney to determine if the federal estate tax will affect your family.