Estate Planning Explained

“What I am planning for, exactly?”

  • • Ideally, each of us will retain sufficient mental and physical capabilities to continue making our own decisions and directing our own affairs for our entire lives. However, this is unlikely over the long term, and none of us can guarantee our perpetual and unending capacity.
    • If a person puts off implementing a plan until they are partially or nearly incapacitated, then it may be too late to knowingly execute legal documents. Moreover, if unexpected and untimely accidents occur, they catch us off guard and suddenly restrict viable options. In such situations, loved ones may have to turn to expensive and time-consuming court procedures through Guardianship. The outcomes of Guardianship are uncertain and may not align with what the incapacitated person would have preferred.
    • Accordingly, there is much wisdom in exploring avenues for crafting a plan as to who will oversee your personal financial and medical affairs – as well as caring for any of your minor-aged children – if you become unable to do so yourself.

  • • Benjamin Franklin is famously credited with penning the phrase: “. . . in this world, nothing is certain except death and taxes.” Winston Churchill picked up on another of Franklin’s quotes and restated it in his own words: “He who fails to plan is planning to fail.”
    • It can be understandably unpleasant to fixate on one’s own mortality. But the inevitability of death beckons us to be thoughtful and thorough in considering how the people we cherish may be impacted by our passing. In the absence of appropriate estate planning documents, the legal system in Florida will presume and enforce certain realities upon a person’s death that may be contrary to the decedent’s wishes and cause the estate administration to be unnecessarily cumbersome.
    • In the estate planning context, a person has the opportunity to direct how and to whom their worldly possessions will be distributed post-death. Even more significantly, clients with minor-aged children also have the power to plan for who will care for their children personally and financially. Thankfully, you have the opportunity to engage an attorney to create well-prepared and well-explained estate planning tools. This process clarifies the great liberty and responsibility that are available when planning for these most important matters.

“What is an estate?”

    • People sometimes wonder if “having “an estate” requires that they surpass a threshold in their net worth, or own substantial land or special types of assets. In reality, the current value and nature of one’s property is rarely the sole or primary determining factor in whether that person’s estate will need to be administered when they pass away.

    • Broadly speaking, just about everyone has an estate! At a minimum, every adult in Florida has the potential to own at least one thing that will merit some form of process upon their demise. Even in cases where these processes appear likely to be mitigated or avoided, the potential for an estate remains for various reasons (for instance: coming into a future inheritance, or becoming the victim of a wrongful death, can create the need for an estate administration that was otherwise unforeseen).

    • Extending beyond property considerations, a decedent’s estate is typically the arena in which guardians are appointed for the person and property of the decedent’s minor-aged children.

    • Therefore, it is generally true that every capable adult in Florida should have well-tailored plans in place to address any estate processes that may arise upon their death. One’s family picture and asset situation are ever evolving, and it’s better to have a plan and not need it, than to need a plan and not have it.

Estate Planning Services

Cornerstone Estate Planning Services
The foundation of a comprehensive estate plan

  • A Last Will and Testament (i.e., “Will”) is the most traditional tool for transferring a person’s estate assets when they pass away. Among other things, a Will nominates a Personal Representative (i.e., “executor”) to manage the estate and carry out the decedent’s directions and designates the beneficiaries who ultimately are to receive the decedent’s property after the obligations of the estate are satisfied. There are additional approaches that can be considered and utilized for transferring one’s assets post-death, but a Will is the most straightforward technique to create and implement from the client’s perspective. Even if one chooses to supplement their Will with other approaches, having a proper Will remains a cornerstone of a comprehensive estate plan. In this sense, it is generally true that every capable adult in Florida should have a Will. If a person dies without having executed a valid Will, the legal system in Florida will presume and enforce certain realities that may be contrary to the decedent’s wishes and cause the estate administration to be unnecessarily cumbersome.

  • A Durable Power of Attorney is, arguably, as important as any estate planning tool, and perhaps involves the most discretion. Its purpose is to authorize someone to “stand in your shoes,” so to speak, and to act on your behalf during your lifetime (once a person dies, the power of attorney becomes null and void). Although the reason that powers of attorney are recommended is often to cover the scenario of a person becoming incapacitated, it is not the case that a power of attorney can only be employed if the person is examined by a physician and deemed incompetent. Additionally, Florida Statutes contemplate a great deal of nuanced principles regarding powers of attorney, and certain activities can be granted or withheld in a customized manner. It is highly advisable that one engage a knowledgeable Florida lawyer to educate them in conjunction with preparing and signing a Durable Power of Attorney, which includes vital practical considerations that account for the inherent risks. In essence, these documents empower a trusted person (usually a family member or friend) to access and manage all of your property and financial matters, on your behalf, during your lifetime. Paying bills, liquidating or reinvesting stocks, selling homestead property or other land, filing tax returns, accessing digital records, and applying for government benefits are just some of the measures available to an agent under a Durable Power of Attorney. They are immensely powerful tools that can provide immense benefit if one becomes unable to direct their financial affairs.

  • If a person becomes temporarily or permanently unable to communicate for themselves regarding their medical affairs, it begs the question: “Who then has the authority to act on their behalf?” Whereas powers of attorney focus on finances and property, a Designation of Healthcare Surrogate empowers a trusted person to collaborate with your health care providers, access your private medical information and records, and generally make your health care decisions. The preparation of these documents includes considerations of the available options for end-of-life decisions.

  • For clients who are parents or guardians of minor-aged children, a Declaration of Pre-Need Guardian for Minor is an effective tool for designating who will care for their children if they become incapacitated. Whereas a Durable Power of Attorney and Designation of Health Care Surrogate together address who will act on your behalf, a Declaration of Pre-Need Guardian for Minor addresses who will act on behalf of your children. The persons designated in a Guardian for Minor typically mirror whoever is designated in a Will to care for the children in the event of the parents’/guardians’ deaths.

Additional Estate Planning Services

  • A Will and related documents sufficiently cover most situations for most people, but depending upon a person’s particular context and goals, they can sometimes benefit from more elaborate estate planning vehicles. Trusts are the most prevalent among the more elaborate estate planning tools.

    A trust is designed to receive and sequester specific assets, which are then to be managed by a trustee according to the terms and purposes outlined in the instrument creating the trust.

    Goals that may merit an exploration into creating some form of a trust include, but are not limited to:

    • Structuring a highly customized distribution of assets for minor-aged children.

    • Creating a tailored distribution scheme for particular purposes and under certain criteria (such as education, health, etc.), often to be stretched over time.

    • Providing for beneficiaries who have special needs and/or will benefit from a supplemental resource that will not jeopardize their opportunity for public benefits.

    • Collecting multiple parcels of real estate into one legal entity.

    • Reducing post-death administration costs for more sizeable estates.

    • “Avoiding probate” is often the rationale behind pursuing a trust. However, it should be noted that assets held in a trust are still subject to initial trust administration, and there may be simpler methods for mitigating the effects of probate than creating and funding a trust.

    • There are also trusts that aim to reduce the impact of taxes, but that is beyond the scope of what can be readily and generally summarized.

    • Revocable Trusts – The person who creates the trust is known as the settlor (i.e., grantor). The settlor strategically funds the trust with appropriate assets during his/her lifetime, with a view toward mitigating or avoiding the need for probate of said assets, upon the settlor’s death. Nearly always the settlor is also the original trustee. The assets are typically available to the settlor for their full and unfettered use during their lifetime. Upon the settlor’s death, a successor trustee is installed who then must administer and distribute the trust assets to the beneficiaries, pursuant to Florida law and the requirements of the trust instrument.

    • Testamentary Trusts – A Testamentary Trust has a similar overarching goal to a Revocable Trust, insofar as it customizes distribution terms for specific assets, in order to apply certain criteria to beneficiaries. A key distinction, however, is that a Testamentary Trust is created by and contained within a Will, whereas a Revocable Trust is created separate from and outside of a Will. A Testamentary Trust is funded with assets after the Testator’s death, via a probate process. Pragmatically, this means that while a settlor of a Revocable Trust should strive to fund it with assets during his/her lifetime, the creator of a Testamentary Trust is alleviated of the burden to transfer assets during their lifetime.

    • Supplemental/Special Needs Trusts – If a client wishes to leave a portion of assets to a beneficiary who is currently a recipient of public benefits – or otherwise is anticipated to receive public benefits in the future (including those with special needs) – then one option to consider is a Supplemental Needs Trust. Typically, the beneficiary’s enjoyment of the assets controlled by the Supplemental Needs Trust is subject to very strict and nuanced standards. The motivation behind these trusts is to provide an additional resource, or bucket of assets, that will still allow the beneficiary to receive public benefits. Supplemental Needs Trusts may be crafted either within a Revocable Trust or within a Testamentary Trust.

  • Florida is among the various states whose title companies typically recognize the validity of Ladybird Deeds.

    The three primary designs behind a Ladybird Deed are for one or more owners of a specific parcel of real estate to:

    • Retain full use and enjoyment of the property during their lifetime;

    • Arrange for an automatic transfer of the owner’s property interests upon their death (should they still own an interest at the time of their passing), without involving the use of a Will or Trust to transfer the subject property;

    • While simultaneously retaining the full power and freedom to make changes (such as selling or renting the property and keeping the proceeds, or otherwise changing the future owners upon death) without any accountability to or involvement with the potential future owners designated on the Ladybird Deed.

    • When an attorney and client work together to craft an estate plan, it is vital that the client have a grasp on how the legal documents prepared by the attorney interact with other instruments the client may implement through their financial institutions. For instance, a client may instruct their attorney to designate Bruno Mars as the sole beneficiary in their Will, but if the client has Taylor Swift listed as the sole beneficiary on their IRA, then Taylor Swift (and not Bruno Mars) will become entitled to the IRA upon the client’s death. This does not necessarily present a problem so long as this is in keeping with the client’s intentions, but is should be openly discussed and understood.

    • There is much benefit to the client if they enlist their attorney to review their assets and related beneficiary forms, so as to build a plan that is harmonious with the client’s goals.