Estate Planning for Families
A new year is a perfect opportunity for families to plan for the security and well being for their loved ones. It is a common time to tackle personal goals such as weight loss and fitness, paying off debt and saving more money, or planning a special vacation. At a time when so many of us become introspective and think about what we may accomplish in the year ahead, it is important to add estate planning to that list. Today, Elaine McGinnis, Tampa estate attorney shares tips on estate planning for families.
Estate planning is the preparation of documents for use in the event of incapacity or death. A very basic estate plan typically includes the following:
Last Will and Testament
Durable Power of Attorney
Advanced Directive for Health Care
Living Will
Nomination of Preneed Guardian and/or
Nomination of Guardian of a Minor
Often, an estate plan will also include a Revocable Living Trust, and accompanying documents such as a Certificate of Trust, Assignment to Trust, and Deed(s) to Trust. An estate planning attorney can explain the differences between a will and a trust and can explain probate. Joint ownership and beneficiary designations should be considered along with a will and trust as part of a comprehensive estate plan.
Our Tampa estate lawyer knows that whether you own a large estate requiring complex tax planning or are simply want to ensure that your family wedding ring is given to your only daughter, estate planning documents provide the opportunity for you to name a beneficiary of your assets. People often assume that they do not have an “estate” or assets sufficient to require estate planning; however, in Florida, there is a very limited small estate or summary probate administration procedure.
When a person passes away owning assets in his name alone, such as a house, bank account, or stock, a probate is required for a judge to determine the beneficiary of those assets. Without a will or trust, the assets pass “intestate” pursuant to Florida law. Rather than allowing Florida law to determine how your assets are distributed, it is important to memorialize those decisions and create an estate plan.
For parents of minor children, careful consideration should be given to the age, or ages, when funds will be distributed. A child becomes an adult at age 18 according to the law, but most of us recognize that 18 years old is still quite young to inherit a home, life insurance proceeds, a savings account, retirement, or any other valuable item. A revocable living trust or testamentary trust allows you to appoint a trustee or co-trustees to hold and manage the funds, and provides flexibility in determining distribution. For example, you can state that the funds are to be held in trust with principal distributions to be made in the following increments: 1/4 at 25, the next 1/3 at 30, and the balance at 35, allowing your beneficiary time to adjust to the inheritance. Commonly, the trust provisions grant the trustee discretion in distributing trust income and in distributing the principal of the trust for the purposes of paying for health, education, shelter, and maintenance, to ensure that your child enjoys a good quality of life without squandering his inheritance.
Most importantly, parents must also make the very difficult decision of who to nominate as a legal guardian for their children. No one will parent your children as you do, but it is much better to name a family member or friend as your chosen guardian for your child than to risk a potential family conflict, or lengthy court procedure so that your child receives proper care. The guardian is nominated to care for the child and does not have to be the same person as the trustee. Some people prefer to name a different guardian fro trustee to ensure checks and balances for the estate. Others prefer to nominate the same person in both roles to minimize delay in administration. Speak with our Tampa estate attorney about your specific situation; Elaine McGinnis, P.A. will create an estate plan that works for you.
It is also common for you to change the nominated guardian over time. Grandma in Georgia may be perfect for your sweet baby, but now that your baby is 12 and loves her school and friends, and grandma is in her 70s and suffering from several health issues, choosing someone closer to home and in better health may be a better option for your child.
A child’s life will be forever altered by losing a parent, failing to plan for the financial impact on the child, and failing to plan for the care of the child, will only add delay, cost, and stress during an already tragic time.
Estate planning is also planning for incapacity. An agent acting under a power of attorney may continue to pay bills, write checks, contact insurance agencies, and generally act in the shoes of someone who is unable to act for himself. A well-drafted durable power of attorney minimizes the disruption of daily life during a stressful time. It is a common misconception that a spouse or adult child can simply assume this role. Unfortunately, if one suffers from mental incapacity, and does not have a properly executed durable power of attorney and nominated health care surrogate, a legal guardianship may be necessary. A legal guardianship is an expensive and time-consuming court procedure.
Anyone can benefit from estate planning, but it is especially important for the following people:
Families with Minor Children – Parents can name a guardian for their minor children and they can establish a trust for inheritance so that their children will not receive an inheritance at 18 years old.
Families with Special Needs Beneficiaries – Often people with special needs receive government benefits to pay for their care. An inheritance may cause those benefits to be disrupted or suspended. A special needs trust may allow a beneficiary to continue to receive benefits while still receiving the benefit of the inheritance.
Blended Families/Second Marriages – It is quite common for people to enter into a marriage without understanding the rights of a surviving spouse in Florida. A Tampa, FL estate attorney can explain those rights and can advise regarding a prenuptial or postnuptial agreement, or a trust that may become irrevocable upon the first spouse to pass away. – Expand trust for each side of the family
Persons without Family Member Beneficiaries - If one passes away leaving a large estate and only long-lost relatives, it may become a daunting task to determine how to locate heirs, and how to collect and distribute the estate. It may be a great opportunity for charitable giving or for one to connect with family during the planning process.
Large Estates – Families with large estates may be able to minimize tax consequences and add provisions to ensure the longevity of their estate through proper planning.
Clients of Elaine McGinnis, P.A. often feel a sense of relief after they sign all of their documents. They often say that they now have “peace of mind”. It can be difficult to have such intimate and upsetting conversations about death and incapacity, but once the documents are signed, it is something that can be put aside and not thought about again for many years.