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Estate Planning

“Family is not an important thing, it's everything.” - Michael J. Fox

A Well-Crafted Estate Plan Provides Peace of Mind

Did you know that if you die without a Last Will and Testament (“Will”) or a Trust, your assets get distributed according to Florida law? Did you also know that if your loved ones do not know where to find your assets or do not claim them in time, then your estate may be paid out to the government? The only way to prevent this is through proper estate planning.

Estate planning is a topic avoided by many people because it deals with confronting your mortality and feelings about death, property ownership, business arrangements, marriage, divorce, and family relationships that family members may not be ready to discuss. Sometimes family members disagree on how assets are to be handled, and people start to feel uncomfortable. Although planning for the end of life may feel awkward, think of it as a gift to your family. By getting your affairs in order now, you will provide them and yourself with peace of mind. This will save your family a great deal of anxiety, time, and money so they can focus on their grief.

What Is Estate Planning?

The emotional definition of estate planning is putting your wishes in writing to ensure that your loved ones are financially taken care of when you pass away. The technical definition of estate planning is organizing your assets while you are alive to specify who gets what, how much, and who is in charge after your death. You can make provisions for specific family members and friends, your pets, and charities that are meaningful to you. Estate planning also includes selecting guardians for your minor children in case both you and the other parent pass away. Estate planning usually comes in a bundle with a few different documents working together to cover your family’s specific situation.

“Your estate” is your net worth which includes everything you own at the time of your death. This means your home and everything in it (artwork, furniture, paintings, jewelry, etc.), and other real estate you may own in Florida or elsewhere. This also includes your vehicles, watercraft, and beloved pets. Likewise, there are financial assets such as bank accounts, retirement accounts, annuities, CDs, life insurance policies, retirement plans, stocks, and bonds, etc. The amount of assets your beneficiaries will receive after you pass away is calculated by adding together the value of all your assets at the time of your death, and then subtracting any outstanding debts or liabilities you owe. This calculation results in the net value of your estate, which is what will be distributed to your beneficiaries.

Why Do I Need an Estate Plan?

The purpose of a well-crafted 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 do not 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, such as your home, your car, bank accounts, retirement accounts, life insurance policies, etc. will be distributed based on Florida’s intestate succession laws and go through the court-supervised probate administration process. 

Probate, or probate administration, is the legal court process that becomes necessary when someone passes away, and assets or accounts are held in the deceased person’s name (the “decedent”). For those assets or accounts to pass to the correct people (called heirs or beneficiaries), a court process needs to be started in the county of permanent residence as listed on the decedent’s death certificate.

It is highly advisable to avoid probate administration proceedings. Probate is a long complex court process which requires maneuvering through real estate transactions, bank accounts, payment or settlement of creditors’ claims, court fees, and attorney’s fees.  The only way to avoid probate is with a properly executed estate plan created by our seasoned attorneys that focus primarily on this area of law. We are here to design your future and provide you with peace of mind. 

Who is Estate Planning For?

Many people think that estate planning is for someone else, not them. They may rationalize that they are too young, too healthy, or do not have enough money to bother with an estate plan.  The reality is that estate planning is for EVERYONE, regardless of age or net worth. This includes grandparents, parents, parents of children with special needs, adults taking care of their aging parents, the elderly population, homeowners, unmarried couples that reside together, unmarried LGBT couples, real estate investors, business owners, and foreign nationals seeking to buy real estate in Florida.

Do Any of These Situations Apply to You?

  • Are you part of the “Sandwich Generation” and taking care of your children as well as your elderly parents?
  • Are you or a loved one getting older and worry about how medical problems will affect your finances?
  • Do you have children with special needs that require additional planning in case something suddenly happens to you?
  • Do you have minor children (under the age of 18) and worry about who they will live with in case you and the other parent pass away?
01 Are you part of the “Sandwich Generation” and taking care of your children as well as your elderly parents?

The process begins by filing a “Petition for Administration” with the appropriate Florida probate court to open the case. A case number and Judge will be assigned. If the deceased individual had a valid Will, we mail the original Will to the court. By law, the custodian (person having possession) of an original Will is required to deposit the Will with the court within 10 days after receiving information that such person has died. If a person dies leaving a Will, the decedent is said to have died “testate.” If a person dies without a Will, the decedent is said to have died “intestate.”

The process begins by filing a “Petition for Administration” with the appropriate Florida probate court to open the case. A case number and Judge will be assigned. If the deceased individual had a valid Will, we mail the original Will to the court. By law, the custodian (person having possession) of an original Will is required to deposit the Will with the court within 10 days after receiving information that such person has died. If a person dies leaving a Will, the decedent is said to have died “testate.” If a person dies without a Will, the decedent is said to have died “intestate.”

The process begins by filing a “Petition for Administration” with the appropriate Florida probate court to open the case. A case number and Judge will be assigned. If the deceased individual had a valid Will, we mail the original Will to the court. By law, the custodian (person having possession) of an original Will is required to deposit the Will with the court within 10 days after receiving information that such person has died. If a person dies leaving a Will, the decedent is said to have died “testate.” If a person dies without a Will, the decedent is said to have died “intestate.”

The process begins by filing a “Petition for Administration” with the appropriate Florida probate court to open the case. A case number and Judge will be assigned. If the deceased individual had a valid Will, we mail the original Will to the court. By law, the custodian (person having possession) of an original Will is required to deposit the Will with the court within 10 days after receiving information that such person has died. If a person dies leaving a Will, the decedent is said to have died “testate.” If a person dies without a Will, the decedent is said to have died “intestate.”

If so, we are here to help.  Taking the first step is easier than you think.  That is why we created a simple estate planning checklist to get you started.

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5 Step

Estate Planning Checklist

Start Thinking

What do you want to leave to your loved ones?
Thoughts such as:

  • Who will my children live with?
  • Will everyone get an equal percentage?
  • Who will receive my home?
  • Should I leave anything for my grandchildren?
  • Who will take care of my pets?

IMPORTANT ACTORS

Start thinking about the important actors in your life. Who will be in charge of handling day-to-day matters like contacting your banks, selling your home, and distributing your assets to your loved ones?

TAKE INVENTORY

Make a list of what you own:

  • Items of sentimental value
  • Real Estate
  • Jewellery, Art, Family heirlooms
  • Vehicles
  • Financial Accounts

LOCATE USEFUL DOCUMENTS

  • Bank and investment account statements
  • Insurance policies
  • Deeds to real estate and car titles
  • List of digital assets
  • Outstanding debt
  • Prepaid funeral plan contract

Schedule a Consultation:

  • We will organize all your thoughts and provide you with a detailed estate plan tailored to your family’s needs.
  • Our attorneys speak English, Spanish, and Russian.
Schedule a Consultation

Understanding the Basics:  Last Will and Testament in Estate Planning

The Misconception: Automatic Transfer of Assets

A common misconception surrounding a Last Will and Testament, commonly referred to as a “Will,” is the belief that it automatically transfers assets to your loved ones upon your death. This misunderstanding can lead to confusion and frustration for beneficiaries who may expect immediate access to the assets bequeathed to them. In reality, the process is more complex and involves several legal steps.

A Will must always go through a supervised court process called probate administration. Ultimately, the assets will be distributed to the beneficiaries listed in the Will, but that is only at the end of the long and complex probate process and with a court order.

If you do not have a valid signed Will when you pass away, and own an asset in your name, (without a beneficiary designation), that asset must go through the probate process to get to your heirs. Your heirs, which are considered your closest living relatives, are determined by Florida’s intestacy laws, covered by Florida Statute § Sections 732.101–109. Generally speaking:

  • The surviving spouse has the strongest rights to the estate and inherits first, so long as the marriage is valid.
  • If there are no children or only children of this marriage, the spouse receives everything.
  • If there are children from a prior marriage or relationship, the surviving spouse receives half of the estate, and the other half is divided among the children.
  • If there are no children or spouse, the estate goes to the decedent’s parents.
  • If both parents have predeceased, the estate goes to the decedent’s surviving siblings, and so on.

The Essentials of a Last Will and Testament

A Last Will and Testament is a legal document that communicates a person’s wishes regarding how their property and assets should be distributed after their death. It also establishes who is in control of your assets during the probate process.  

It serves as a crucial tool in estate planning, allowing an individual (called the Testator or Testatrix) to specify their intentions clearly and legally. Wills are fairly limited planning devices that are useful mainly in basic situations. Our attorneys often use Wills as one of the many tools (along with Trusts) to help design a well-thought-out estate plan tailored to your family.

Important Considerations When Preparing your Florida Will:

1. Personal Representative (called Executor in other states)

The person creating their Will nominates a Personal Representative. This Personal Representative will be in control of your estate and responsible for carrying out your last wishes according to what you wrote in your Will. They are also responsible for ensuring that the decedent’s outstanding debts, taxes, or expenses are paid from the estate prior to being able to distribute the assets to the beneficiaries.

2. Beneficiaries

These are the individuals or charities specified in the Will that will inherit your assets. You can specify the percentage or lump sum amount that each Beneficiary will receive.  Beneficiaries can be family members, friends, charities, or any other chosen recipients.

3. Guardians for your Children

If you have minor children (under 18 years of age), you can specify who will be the Guardian of your children in case you and the other parent pass away. This reduces lawsuits that arise over custody in cases of sudden or unexpected death. Guardians become responsible for your children’s health and wellbeing as well as living with your children.

4. Pets

Pets become family members, and you can make provisions for the care and future of your pets after your death.  You can choose a caregiver, often referred to as a “pet guardian” as well as allocate financial resources to this caregiver that are specifically designated for the care of your pets. This can cover expenses such as veterinary care, grooming, food, and other necessities.

5. Assets

A Will specifies which assets are to be distributed and to whom. This may include real estate, cars, money, investments, personal belongings such as jewelry, watches, or artwork, and any other possessions owned by the Testator or Testatrix upon their death.

6. Depositing the Will with the Court

Make sure that you preserve your original Will in a safe place where your family can access it.  Ensuring that the original Will is easily found and promptly sent to the court is vital for efficient administration of your estate. There is a 10-day rule for probate in Florida that occurs after the Testator has died. The custodian of a Will (person having possession of the original Will) must deposit the original Will with the clerk of the Court having the venue of the decedent’s estate within 10 days of receiving information that the Testator has died.

Legal Requirements for a Valid Will:

According to Florida Law, the proper execution of a Will is paramount to ensure that it is valid. The specific requirements for the execution of a Will are outlined in Florida Statute § 732.502, which mandates the following:

The Will Must be in Writing

Florida probate courts do not allow oral declarations (called Nuncupative Wills) or handwritten instructions from a Testator without witness signatures (called Holographic Wills) as valid Wills.

Age and Capacity

The Testator must be at least 18 years old and possess testamentary capacity at the time of signing the Will. This means they must understand the nature and extent of the property they own, who the beneficiaries are, and the legal effect of signing the Will.

Witnesses

The Testator’s signature must be witnessed by at least two competent individuals, who are at least 18 years old. These witnesses must sign the Will in the presence of the Testator and in the presence of each other, attesting to the testator’s signature and the Testator’s acknowledgment of the Will.

Signature of the Testator

The Will must be signed by the Testator, or by another person in the Testator’s presence and at their direction if they are unable to sign themselves. The signature must be at the end of the document to signify its completion.

Consequences of Improper Execution of a Will:

Failure to adhere to the above statutory requirements can render your Will invalid. The consequences of improper execution are significant and can lead to several legal and practical issues:

Intestacy

If a Will is deemed invalid due to improper execution, the decedent’s estate may be distributed according to Florida’s intestacy laws. This could result in assets being distributed in a manner contrary to the decedent’s intentions.

Disputes and Litigation

An improperly executed Will can lead to disputes among beneficiaries and potential heirs, often resulting in costly and time-consuming litigation. Challenging the validity of a Will can strain familial relationships and deplete estate assets due to legal fees.

Delay in Probate Process

An invalid Will can cause significant delays in the probate process as the court may need to determine the validity of the document, resolve disputes, or administer the estate under intestacy laws. This can prolong the distribution of assets and settlement of the estate.

Other Crucial Things to Know:

Probate Administration

A Will always gets probated through the supervised court process called probate administration. If an asset of the decedent did not have a beneficiary designation, that asset must go through the probate process to get to the heirs. It is quite common to set up a Trust along with a Will, to avoid the time and the legal fees associated with the complicated probate process.

Will Update

We suggest reviewing your Will every three to five years to reassess your estate plan. This should be done sooner in the event of significant life changes, such as the birth or adoption of a child, the passing of a family member, substantial financial shifts, serious illness, marriage, or divorce.

Intestacy – Dying Without a Will

Someone who dies without a Will is called “intestate,” which invokes state specific intestacy laws. In Florida, if there are no lineal descendants (children) of the decedent, a surviving spouse will generally take all property of the deceased. However, the law provides for very different results depending on whether there is a surviving spouse, children of the current marriage, and children from prior relationships.

Wills are public documents

Meaning that during the court process, the original Will is filed with the court, and anyone can access it via the public records of that county.

Conclusion

While a Last Will and Testament is a critical component of estate planning, it is not a standalone solution. Recognizing that a Will must go through the probate process for asset distribution highlights the importance of a well-rounded estate plan. By understanding the probate process and exploring additional estate planning tools, you can ensure their wishes are fulfilled efficiently, providing peace of mind for you and your family.

By hiring our firm, you are engaging an experienced team that will oversee the execution of the Will to ensure all the legal formalities are met.

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Understanding the Basics: Trusts in Estate Planning

You do not have to be on Fortune magazine’s list of richest families to set up a Trust.  Trusts are no longer just for the Waltons, Rockefellers, and Vanderbilts who built a dynasty for generations.  Every family we meet has built their own dynasty.  You worked hard your whole life; you saved, you sacrificed, maybe became a parent, and maybe bought some real estate.  If any of those describes you, then you should consider a Trust.  Yet there are so many different types of Trusts, and it can get confusing.  Our experienced team will help you select what is right for your family.  Here are the most common types of Trusts used in estate planning.

Revocable Trusts Explained

Revocable Trusts, also known as Living Trusts, are by far the most common type of Trusts for both single individuals and married couples.  Having this type of Trust ensures that your assets, especially your real estate, passes to your loved ones without the court-administered probate process.  This also ensures that if you are leaving assets to minor children (under 18 years of age), a person you trust will have the fiduciary responsibility to protect those assets until your children become adults.  According to Florida Statutes §744.301 and 3021, if a minor child receives more than $15,000 from an estate, Trust, life insurance policy, or other benefit plans or assets, a guardianship of the property and, in some cases, the appointment of a guardian ad litem to protect the child’s interests is required. The inheritance is placed into a restricted account, and the guardian whom the court appoints must get court permission to withdraw and use the funds for any purpose.   With a well-designed Trust, both the probate and guardianship process become unnecessary, and you can avoid depleting your family’s inheritance through court fees and attorney’s fees.

Yet it is not enough to just create a Revocable Trust.  Your Trust must be “funded.” Having a properly funded Trust means that upon your death, all assets that you put into your Trust during your lifetime will pass to your beneficiaries through the Trust, and not through any court process. Trusts can even provide your beneficiaries with asset protection. Upon inheriting any monies or assets through a Trust, the beneficiary enjoys certain financial protections from future creditors, divorces, and bankruptcy. Lastly, Trusts are private documents that, unlike Wills, do not usually become a part of the public record.

Let us explore some fundamental vocabulary associated with Trusts.

1 Grantor, Settlor, or Creator

This is the person that creates the Trust and sets the provisions of the Trust.  In Florida, the term most commonly used is “grantor.” A Revocable Trust is usually income tax neutral and operates under the social security number of the person creating the Trust. All taxable income or tax losses generated by Revocable Trust assets flow through to the grantor.

The trustee is the person who takes legal title to the Trust assets and ensures that the directions in the Trust are carried out. In a Revocable Trust, the person creating the Trust (the grantor) usually also serves as the trustee. The grantor designates a successor trustee to take control upon the grantor’s death or incapacity. Most often the successor trustee will be a spouse, adult children, another trusted family member, or a financial institution.
Revocable means that the Trust created by the grantor can be changed or revoked at any time during the grantor’s lifetime. Once the grantor passes away, the Trust can no longer be changed, and it is up to the successor trustee to carry out the terms of the Trust exactly as written in the Trust. The Trust becomes irrevocable and requires a Tax ID (or EIN) number which can be obtained from the IRS website.

“Funding the Trust” means transferring assets into a Trust. A Trust is a legal setup where one party, the trustee, manages assets for the benefit of another party, the beneficiary. To make the Trust work properly, you need to “fund” it by moving assets such as real estate, bank accounts, investments, or personal property into it. This involves changing the title or ownership of these assets to the name of the Trust. For instance, if you are transferring a house, a new property Deed must be created to list the Trust as the owner. Failing to fund the Trust properly is the most common estate planning mistake. If your assets are not in the Trust, they are not protected by its terms. It is like buying a safe for your jewelry but leaving the jewelry out on the kitchen counter.

Beneficiaries are the individuals you designate who will inherit the assets were placed in your Trust (funding), such as real estate, bank accounts, and other remaining income and principal of the Trust.

An heir is someone who is legally entitled to inherit assets from a deceased person, typically under the laws of intestacy (when someone dies without a Will). Heirs are usually family members such as the spouse, children, siblings, or parents.

A descendant is a person who is related to someone through generations, like children, grandchildren, or great-grandchildren. It is a way of referring to the people who come after you in your family line. It is important to note that in legal terms, adopted children have the rights as biological children regarding inheritance, legal responsibilities, and family relationships. This means they are included in terms of descent and inheritance laws, and they are recognized as descendants.

An individual who is under the legal age of adulthood as defined by law, which 18 years old. Generally, minors are considered to lack the legal capacity to enter into binding contracts or make certain legal decisions independently, and special protections and regulations apply to them.

The property and financial resources owned by an individual or entity that has economic value. Assets can include both tangible and intangible items, such as real estate, investments, bank accounts, business holdings, and personal property.

In simple terms, an estate is everything a person owns at the time of their death. This includes property such as real estate, land, vehicles, financial assets such as bank accounts and investments, and personal items such as jewelry. The estate also includes any debts the decedent left behind.

Design Your Future: 7 Steps To Setting Up Your Trust

1Step
Which Trust is Right For You?

We will have an in-depth discussion and explore the pros and cons of different Trusts.  Together, we will find the right Trust for your family.

2Step
Who Will Control Your Trust When You Can’t?

We will discuss the duties and responsibilities of the trustee who will control your Trust when you cannot. Once we have given you the information, you will be able to select the best person for the job.

3Step
Who Gets Your Stuff?

Not all beneficiaries are alike. We will guide you on the best options available, so your beneficiaries receive their inheritance in the most efficient way.

4Step
We Get to Work!

Once you have decided the details of your estate plan, we get to work.  Allow us 2-3 weeks to draft your documents. Once completed, we review them together to make sure you understand them.

5Step
Signing Your Documents is Easy!

Our mobile notary will come to your home or office to sign the documents.  You will need to have two witnesses present, as required under Florida law.  The notary will then return the signed documents to our office. We keep a digital copy and return the originals to you.

6Step
Moving Your Assets into the Trust.

Moving your assets into your Trust is called “funding the Trust.” We transfer the title of your real estate into your Trust.  Other assets such as bank accounts must also be placed into the Trust.

7Step
Spread the Word!

Congratulations!  You completed a very important milestone in protecting your family. The biggest compliment you can give us is by spreading the word and referring your friends and family.

Conclusion

We do not rely on generic templates to draft your documents. We do not use a one-size-fits-all solution. We recognize that every family is unique. That is why we deliver thoughtful and precise estate plans that truly fit your family’s individual needs.

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Irrevocable Trusts Explained

Irrevocable Trusts are powerful tools for long-term asset protection, helping Florida families avoid probate and protect assets from future creditors. They can also reduce estate taxes for those subject to federal estate tax. By placing assets into an Irrevocable Trust, the grantor removes them from their estate, which can help in qualifying for government benefits while keeping assets within the family. However, since the grantor gives up control over the assets permanently, careful planning is essential. There are various types of Irrevocable Trusts, each designed to meet specific goals based on individual needs.

Some of the most common Irrevocable Trusts are Medicaid Asset Protection Trusts, Special Needs Trusts, and Irrevocable Life Insurance Trusts.

Common Uses for Irrevocable Trusts:

  • Help me qualify for Medicaid later on
  • Preserve my hard-earned assets
  • Help my children retain their government benefits
  • Help avoid the probate process after my death
  • Shield my assets from creditors

Florida Medicaid Asset Protection Trusts

Why Would I Need a Florida Medicaid Asset Protection Trust?

Medicaid is by far the largest health insurance provider in the United States of America. It can provide crucial benefits that otherwise may cost families their entire life’s savings.  Did you know that Medicaid can pay for nursing homes or assisted living facilities (“ALFs”)?  

The cost of long-term care or a nursing home in Florida can be overwhelming, with expenses reaching an average of $10,000 per month.  For many Florida families, these costs can drain life savings quickly. They may be forced into selling assets to pay for nursing homes or long-term care, leaving their loved ones with little to no inheritance. No one wants to see the efforts of a lifetime spent in this way.  Anyone attempting to apply for the Florida Medicaid Institutional Care Program (ICP nursing home benefits) will quickly realize the most cumbersome and problematic aspect of qualifying for Medicaid benefits is the asset limitations. In short, applicants with too many assets or any savings in the bank do not qualify for Medicaid benefits.  Our elder care attorneys have proactive legal strategies to make you or your loved ones eligible for such Medicaid benefits.

What Exactly is a Florida Medicaid Asset Protection Trust?

There is some good news.  Florida Law has allowed certain assets placed in a Medicaid Asset Protection Trust (“MAPT”) to not get counted toward your Medicaid asset limit. A MAPT will enable individuals to protect their assets while still qualifying for Medicaid benefits. When assets are placed into a Florida Medicaid Asset Protection Trust, under the law, you no longer own these assets – they belong to the Trust. Although you may continue to use or access some of these assets, they legally belong to the Trust and, therefore, cannot be counted as your assets when determining Medicaid eligibility.

This means that with some planning, your estate and savings can go to your family rather than being used to pay for nursing home care. Assets are preserved for your loved ones while still being able to legally qualify for Medicaid benefits.  

To ensure your assets are protected under Medicaid guidelines, the MAPT must be created and funded before Medicaid’s 5-year “look-back period.” This period is established to keep applicants from sheltering their assets immediately before applying for Medicaid in an effort to get benefits. Any assets transferred into the MAPT before this five-year period are non-countable for Medicaid eligibility purposes. Not all types of Trusts are Medicaid-compliant, so working with our seasoned elder law attorneys is essential to ensure you are taking the right path to maintain Medicaid eligibility. Our attorneys employ legal methods that help transfer your assets intelligently so that you may qualify for certain Medicaid benefits in the future, such as placement in an assisted living facility.  This falls under the broad scope of elder care asset protection.

Special Needs Trusts (“SNT”)

What is the Purpose of a Special Needs Trust?

Caring for a loved one with special needs has a profound effect on the day-to-day life of a family.  This often leaves little or no time to contemplate what may happen when you are no longer able to provide the care they need.  Did you know that leaving money to your special needs child may hurt them? Often people with special needs rely on government benefits.  Leaving them an inheritance directly may disqualify them from these benefits.  We have strategies to ensure your child can receive their inheritance without losing their government benefits. 

Special needs planning is a specialized area of estate planning designed for individuals with disabilities. This is typically achieved through the use of a Special Needs Trust, which allows assets to be set aside to provide for a loved one with a disability while preserving their eligibility for public assistance programs, such as Medicaid and Supplemental Security Income (SSI). These Trusts are far more effective than simply leaving a lump sum of money, as they ensure long-term financial support without jeopardizing access to essential benefits.

How Do Special Needs Trusts Work?

Special Needs Trust assets are overseen by trusted family members, friends, or professional trustees and are used to enhance the quality of life for the beneficiary with special needs. These funds are allocated to cover products or services not provided by public assistance programs. Importantly, assets placed in a properly established Special Needs Trust are not counted toward Medicaid eligibility, allowing an unlimited amount of assets to be held within the Trust.

Here are some common scenarios where a Special Needs Trust is beneficial:

  • A Medicaid recipient receives an unexpected sum of money, such as from a personal injury settlement or an inheritance.
  • A parent of a child with special needs wishes to avoid leaving a lump sum of money through a Will, as doing so could jeopardize the child’s future eligibility for public assistance.

Once a Special Needs Trust is established and funded, the trustee assumes a critical role. The trustee is instructed to use the Trust’s funds solely for the benefit of the individual with special needs. If the trustee misuses the funds—such as by paying for services already covered by Medicaid rather than focusing on those not provided by Medicaid—it could result in a reduction or loss of Medicaid benefits.

What are the Different Types of Special Needs Trusts?

There are three basic types of Special Needs Trusts, each designed to meet different needs and circumstances:

1. First-Party Special Needs Trust (Self-Settled SNT)

Purpose: This Trust is created using the assets of the individual with special needs, typically in cases where the beneficiary has received a settlement, inheritance, or other direct assets.

Key Features:

  • The beneficiary must be under 65 years old at the time the Trust is established.
  • The Trust is irrevocable.
  • Upon the death of the beneficiary, any remaining assets in the Trust must be used to reimburse Medicaid for the care provided to the individual.

Common Use: Often used when a disabled person inherits money or receives a personal injury settlement, and the funds need to be protected to maintain Medicaid eligibility.

2. Third-Party Special Needs Trust

Purpose: This Trust is funded by someone other than the beneficiary, usually a parent, grandparent, or other relative, to provide for the needs of a person with disabilities without affecting their eligibility for public assistance.

Key Features:

  • There is no payback requirement to Medicaid upon the beneficiary’s death. The remaining assets can be distributed to other family members or heirs as specified in the Trust.
  • It can be established either during the benefactor’s lifetime or through a Will (Testamentary Trust).

Common Use: Often set up by parents or other family members who want to ensure continued support for their loved one with special needs after their death.

3. Pooled Special Needs Trust

Purpose: Managed by a nonprofit organization, this type of Trust pools the assets of multiple beneficiaries while keeping separate accounts for each. It allows individuals with smaller amounts of money to benefit from professional management.

Key Features:

  • There is no age restriction to establish the Trust.
  • Medicaid payback provisions apply if assets remain after the beneficiary’s death, but only up to the amount Medicaid spent on the beneficiary’s care.

Common Use: Beneficial for individuals who do not have a family member available to act as trustee or when the amount of assets doesn’t justify setting up a separate rust.

Irrevocable Life Insurance Trusts

What is an Irrevocable Life Insurance Trust?

An Irrevocable Life Insurance Trust (“ILIT”) is a type of Trust designed specifically to hold and manage life insurance policies. Once established, the terms of the Trust cannot be altered, and the Trust becomes the owner of the life insurance policy. This setup provides several estate planning benefits, particularly in the areas of tax planning and asset protection.

What is the Purpose of an Irrevocable Life Insurance Trust (ILIT)

The primary purpose of an ILIT is to remove the life insurance policy’s death benefit from the insured’s taxable estate, thus helping to reduce estate taxes. By transferring ownership of the policy to the Trust, the policy proceeds can pass to beneficiaries free of estate tax. The ILIT also helps ensure that life insurance proceeds are used according to the policyholder’s wishes, as the trustee will manage and distribute the assets based on the Trust terms.

What are Some Key Features of an ILIT?

Irrevocability

Once the ILIT is created, it cannot be amended, altered, or revoked. The Trust becomes the permanent owner of the life insurance policy, and the grantor (the person creating the Trust) cannot reclaim ownership or make changes.

Ownership Transfer

For existing life insurance policies, ownership is transferred to the Trust. This ensures that the policy proceeds will not be included in the grantor’s estate for tax purposes. For new policies, the ILIT can directly purchase the life insurance policy.

Trustee

The Trust is managed by a trustee (often a trusted family member, financial institution, or professional trustee) who is responsible for paying premiums, administering the policy, and managing the proceeds upon the grantor’s death.

Beneficiaries

The beneficiaries of the ILIT, usually family members, will receive the policy proceeds according to the terms of the Trust. The grantor can specify how the death benefits are distributed (e.g., lump sum, staggered payments, or in a manner that protects the beneficiaries from financial mismanagement).

Crummey Powers

In many cases, the ILIT allows beneficiaries to make limited withdrawals of contributions (usually the premiums) for a short period of time (30-60 days). This is referred to as a Crummey Power and is designed to allow the transfer of funds into the ILIT to qualify as a “present interest” gift for gift tax purposes, allowing the grantor to take advantage of the annual gift tax exclusion.

Tax Treatment

  • Estate Tax: By removing the life insurance policy from the taxable estate, the ILIT can help reduce or eliminate estate taxes on the policy proceeds.
  • Gift Tax: Transfers to the Trust are subject to gift tax rules. However, using Crummey Powers can minimize or avoid gift taxes by leveraging the annual gift tax exclusion.
  • Income Tax: ILITs are generally not subject to income tax on the life insurance proceeds, which are usually paid out to beneficiaries tax-free.

What are Some Common Uses of an ILIT?

  • For individuals with large estates, the ILIT helps to avoid including the life insurance proceeds in the taxable estate, potentially saving heirs from paying substantial estate taxes.
  • Example: John has a $10 million estate and a $2 million life insurance policy. Without an ILIT, the life insurance death benefit would be added to his estate, potentially increasing the estate taxes his heirs would have to pay. By transferring the policy to an ILIT, the $2 million would not be counted towards his estate’s value, reducing estate tax liability.
  • Life insurance proceeds held in an ILIT can be used to provide liquidity for an estate, enabling heirs to pay estate taxes, debts, or other expenses without the need to sell illiquid assets, such as real estate or a family business.
  • Example: Sarah owns a family farm worth $5 million, but her liquid assets are insufficient to pay the estate tax. An ILIT holding a life insurance policy ensures that there are sufficient funds to cover estate taxes, preventing the forced sale of the farm.
  • ILITs can be used to protect life insurance proceeds from creditors or legal claims. Since the proceeds are held in a Trust, they are typically shielded from the beneficiaries’ creditors.
  • Example: Michael, who is in a high-risk profession, creates an ILIT to ensure that the life insurance proceeds will be protected from any potential legal claims against him or his estate, providing his family with financial security.
  • An ILIT can be structured to provide long-term financial support for minor children or beneficiaries with special needs. The trustee can manage the policy proceeds and make distributions over time, ensuring that the funds are used in the best interest of the beneficiaries.
  • Example: Emily has a son with special needs who requires lifetime care. She sets up an ILIT to ensure that the life insurance proceeds will be managed responsibly by the trustee and used for her son’s long-term care and support.

What are Some Examples of How an ILIT Can Be Used?

  • 1. Wealth Transfer and Generational Planning

A wealthy individual can establish an ILIT to purchase a large life insurance policy, ensuring that the death benefit will pass to future generations free of estate taxes. This can be particularly valuable for families aiming to transfer significant wealth while minimizing tax liabilities.

  • 2. Business Succession Planning

A business owner can use an ILIT to ensure that there are funds available for a smooth transition of ownership. The life insurance proceeds can be used to buy out other shareholders, pay off business debts, or provide financial support to heirs who are not involved in the business.

EXAMPLE:

Tom, a business owner, establishes an ILIT to purchase life insurance. When he passes away, the Trust uses the life insurance proceeds to buy out his business partner, ensuring that the company remains in the family.

  • 3. Equalizing Inheritances

If a grantor has illiquid assets, such as a family business or real estate, the ILIT can be used to equalize inheritances among heirs. The life insurance proceeds can go to beneficiaries who are not receiving the illiquid assets, ensuring fair distribution.

EXAMPLE:

A parent owns a family business and plans to leave the business to one child. To equalize the inheritance, the parent creates an ILIT for the other child, funding it with a life insurance policy equal to the value of the business.

Conclusion

An Irrevocable Life Insurance Trust (ILIT) is a powerful estate planning tool that allows individuals to reduce estate taxes, protect assets, and ensure that life insurance proceeds are managed and distributed according to their wishes. It can provide significant benefits in terms of tax efficiency, asset protection, and financial security for beneficiaries. Proper planning and structuring of the ILIT are essential to maximize its effectiveness in achieving long-term estate planning goals.

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Understanding the Basics:  Power of Attorney in Estate Planning

What is a Power of Attorney?

A Power of Attorney (“POA”) is a legal document that allows you (the “principal”) to authorize an individual (the “agent”) to carry out any financial or legal decisions on your behalf.  Simply put, it is a legal document that individuals create and sign, in which they give someone else the legal authority to act for them. This legal document is worth its weight in gold and may even be more important than a Will or a Trust.

A Durable Power of Attorney (“DPOA”) is the most used type of power of attorney in Florida.  The DPOA works while the individual is alive but has a serious illness or incapacity making it difficult for them to carry out their own financial affairs.  The need for this document often arises in cases where the individual is diagnosed with Dementia or Alzheimer’s, Parkinsons, or another debilitating illness.  Preparing this document beforehand ensures that someone you trust will help you manage your finances.

We act as agents all the time without even thinking twice. For example, depositing money into someone’s bank account because that person cannot make it to the bank in time? In our increasingly complex world, new rules and red tape make it harder to do almost any transaction, without having a valid POA. 

What are some other uses of a Power of Attorney?

Selling a Home

Imagine mom and dad owning their home in both names. They want to downsize and sell the home, but one of them has become incapacitated. Unfortunately, it will be impossible to sell the home as both Mom and Dad need to sign at the closing. (Remember – they need to have full capacity to sign any legal documents.) The family will have to go through a court-monitored Guardianship process in order for the court to appoint a legal guardian (for the incapacitated individual) to be able to sell the property. The court-appointed guardian is the only person who can now sign for the incapacitated individual.

Tax Filing

A POA can authorize someone to handle tax-related matters, such as filing tax returns or communicating with the IRS on behalf of the principal.

Protecting assets

The POA can safeguard the principal’s assets by managing their investments.

Apply for Government Benefits

Most DPOAs grant the agent superpowers that allow them to apply for government benefits on behalf of the principal should they need them later on. 

Not Every POA is Equal. There are different types of POAs that can be Used in different situations.

Durable Power of Attorney

A Durable Power of Attorney (“DPOA”) is the most widely used type of POA for Elder Law and Estate Planning in Florida. Generally, a POA becomes invalid if the principal becomes incapacitated, but Florida Statutes, section 709.2104 indicates that a POA becomes “durable” if it contains the words: “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes,” or words to the same effect. Essentially, a DPOA remains effective even if a person becomes incapacitated. This is crucial as it can avoid the need for guardianship of an elderly person and allows the agent to exercise more advanced types of decisions such as Medicaid planning, asset protection, changing beneficiary designations at financial institutions, and probate avoidance. The document contains broader “superpowers” granted by Florida law, which must be specifically initialed by the person while signing their DPOA.

General Power of Attorney

A General Power of Attorney (“POA”) allows you to grant broad authority over all your financial and legal matters. A specific list of the types of activities your agent is authorized to perform must be included in this document. It is only effective while the principal is mentally and physically capable of making their own decisions. If the principal becomes incapacitated (due to illness, injury, or any other reason), the general power of attorney is automatically revoked.

Limited Power of Attorney

A Special or Limited Power of Attorney allows the agent to conduct activities specifically defined in the POA. This is often used in real estate transactions in which the buyer or seller is not available to attend the closing and designates an agent to act on their behalf. These types of POAs are often used for short-term or one-time transactions.

What are the Legal Requirements of a Florida Power of Attorney?

  1. The designated agent must be at least 18 years old or a financial institution that has Trust powers.
  2. The power of attorney must be signed by the principal and by two subscribing witnesses and be acknowledged by the principal before a notary public, pursuant to Florida Statute 709.2105.

Can I Revoke My Power of Attorney Document?

Pursuant to Florida Statute 709.2109, a power of attorney terminates when:

  • The principal dies;
  • The power of attorney provides that it terminates;
  • The agent’s authority terminates, and the power of attorney does not provide for another agent to act under the power of attorney;
  • The principal revokes the power of attorney pursuant to Florida Statute 709.2110; by expressing the revocation in a subsequently executed POA or other writing signed by the principal. This revocation of power of attorney must be recorded in the public records in the county where the principal resides.

What Responsibilities Does My Agent Have?

An agent may perform only those acts specified in the DPOA and any acts reasonably necessary to accomplish those tasks. If an agent is unsure about authorization to do a particular act, the agent should consult the lawyer who prepared the document or other legal counsel.

Agents must act in the best interests of the principal and must meet certain standards of care when performing their duties. An agent is a “fiduciary” under the law, meaning they have a relationship built on trust. If the agent breaches this trust, they may face legal consequences, including civil penalties (such as restitution and fines) and criminal penalties (like imprisonment). Remember you are entrusting someone with your finances; therefore, it is important to appoint someone you can fully rely on as your agent, such as a family member or close friend.

Conclusion

This simple document is worth its weight in gold and can eliminate the need for the tedious and expensive court guardianship process. If the incapacitated individual established a valid DPOA before becoming incapacitated, it might not be necessary for the court to appoint a guardian, as the agent already possesses the authority to act on behalf of the principal. 

It is critical to create and execute this type of document while a person is relatively healthy and mentally competent at the time they sign their DPOA. This means that they fully understand what they are signing, understand the effects of such a document, to whom the power of attorney is being given, and what property is under the purview of the DPOA document. If an individual faces a serious illness and delays the creation of a DPOA, they may find it too late to establish this essential document. The individual may have already lost the capacity to make informed decisions, rendering them unable to fully comprehend the implications of their signature. This underscores the importance of promptly establishing the DPOA and other estate planning documents, as timely action can safeguard your interests. Otherwise, if you do not have a DPOA and you become incapacitated, someone you do not choose will have control over your financial decisions.

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Understanding the Basics:  Health Care Surrogates and Living Wills in Estate Planning

What is a Health Care Surrogate?

A Health Care Surrogate (“HCS”), also known as a Health Care Proxy or Advanced Directive, allows you to plan ahead for difficult medical decisions.  It allows you to name someone (the “agent”) who will make health care decisions for you if you cannot make them yourself. When a person becomes unable to make decisions due to a physical or mental change, such as being in a coma or developing dementia (like Alzheimer’s disease), they are considered incapacitated. A physician must determine such incapacity. Florida law recognizes the right of every competent adult to make decisions concerning his or her own health and enacted legislation allowing an individual to create their health care advance directives (Chapter 765, Florida Statutes). Such healthcare advance directives include a Health Care Surrogate Designation, a Living Will, and sometimes an anatomical donation.

Having these documents in place prevents disagreements within the family as to who should make these critical decisions. Such decisions include consenting to certain medical procedures, seeking a second opinion, or transferring you to a different medical facility. Your agent can also retrieve your medical records. It is important to note that a competent principal may change or revoke an advanced directive at any time. 

What are the Legal Requirements for Designating a Health Care Surrogate?

Pursuant to Florida Statute 765.202:

A written document designating a surrogate to make health care decisions or receive health information on behalf of a principal shall be signed by the principal in the presence of two subscribing adult witnesses.

The person designated as a surrogate shall not act as a witness to the execution of the document designating the health care surrogate.

At least one person who acts as a witness shall be neither the principal’s spouse nor a blood relative.

Unless the document states a time of termination, the designation shall remain in effect until revoked by the principal.

What is a Living Will?

In Florida, a Living Will is a legal document that allows you to specify the kind of medical care you want or do not want if you are unable to communicate your wishes directly. More specifically, a Living Will enables you to outline your wishes regarding end-of-life medical treatments such as life-prolonging procedures, artificial nutrition and hydration, and other medical interventions if you are in a terminal condition, an end-stage condition, or are in a persistent vegetative state. It is called “living” because it starts working while you are still alive.

Other Crucial Things to Know

Closest Living Relative

If you do not have a valid signed Health Care Surrogate document and fall ill and cannot make your own medical decisions, then the healthcare facility will follow Florida law to determine your closest living relative.  That closest living relative is now responsible for your healthcare decisions.

Unmarried Couples

This document is especially important for individuals who are not married. We frequently encounter situations where two seniors have been in a long-term relationship but have chosen not to marry for financial or other reasons. In the event of an unexpected hospitalization, if there is no Designation of Healthcare Surrogate in place, your partner will lack the authority to make decisions on your behalf (as they have no legal familial relationship with you).

Get Consent

Be sure to ask your Health Care Surrogate prior to naming them in your document. You will want to get their consent to this responsibility, make sure you give them a copy of the document, as well as discuss with them the health care you wish to receive.

Revocation

All health care advance directives in Florida, such as a Health Care Surrogate Designation or a Living Will, can be revoked or amended at any time by the creator, as long as they are mentally competent to do so and communicate their intent clearly.

Terminology

There is a significant distinction between a Living Will and a Last Will and Testament, despite the common use of the term “Will.” A Living Will takes effect during your lifetime and communicates your preferences to loved ones regarding the type of end-of-life care you wish to receive. In contrast, a Last Will and Testament becomes effective only after your death and outlines your wishes for the distribution of your assets, such as your home, vehicles, bank accounts, and other belongings.

Do Not Procrastinate!

Planning ahead for your incapacity may be uncomfortable, but once this important task is done, you can rest assured that you will receive the type of care you want, and your family will have greater peace of mind.  Waiting until you become sick or incapacitated is a terrible strategy, as often it is too late to start creating your estate planning documents.

Conclusion

For those of you who have navigated the challenging decision-making process regarding the cessation of life-sustaining efforts and the transition of a loved one to hospice care, you are aware of the profound and often traumatic choices involved. Providing your loved ones with a signed document clearly outlining your intentions can help alleviate some of that burden.

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Maribel Morell

Senior Paralegal

Maribel is our behind-the-scenes expert on probate and trust administration processes. She holds the distinction of being the very first team member in 2015.

Maribel ensures that assets are properly transferred from the deceased to their loved ones. Not as easy as it sounds – Maribel is a whiz in Florida probate law, real estate law, dealing with financial institutions around the world, and serving as a mediator between family members.

Her highly technical role requires meticulous attention to detail and empathy while assisting grieving families who just lost a loved one. It is obvious that Maribel loves her work. She also boasts impeccable fluency in Spanish.

Maribel cherishes time with her family, especially her beloved son. She also excels in the arts, having performed Flamenco and Comparsas dance in parades, winning awards at Miami Beach’s Festival of Arts, and honing her interior design and home renovation skills. Maribel’s secret strength lies in her nurturing character, which plays a pivotal role in shaping our law firm’s achievements.

Education and Training:

  • Associate in Arts Degree, (Miami, Florida)
  • Worked in the financial services industry
  • Florida Notary Public