You work all of your life to build something – make sure your legacy is one that brings joy and happiness to your loved ones and aavoidsthe pain and turmoil of being unprepared.
Estate planning is the process by which you plan the succession of assets, but more importantly, it is a means by which you can continue caring for those you love and protecting them when you’re no longer there.
Whatever your wealth, every person should have a plan in place to address:
- Probate avoidance;
- Guardianship of minor children;
- Estate tax Minimization/Elimination;
- Asset protection;
- Proper estate allocation to beneficiaries;
- Advanced directives;
- Other considerations based on your personal values and goals.
Probate is the process by which assets are transferred to your beneficiaries at death. This process is complicated, expensive and frustrating. Being that it requires the involvement of a Probate Court, things move very slow and significantly restrict the use of asset
s by the beneficiaries until the proceedings are completed, which could sometimes take years to settle.
Being that the probate proceedings govern assets that are titled in your name at your death, having a last will and testament in place will not avoid probate, since your last will and testament merely addresses the allocation of the assets to your beneficiaries. However, since probate only governs assets that are titled in your name, utilizing a Revocable Trust can significantly reduce, and in most cases even eliminate the probate process. In general, establishing a Revocable Trust and transferring your assets to it during your lifetime will remove those assets from your probate estate, since the assets will not be “owned” by you, but rather by the Revocable Trust. Notwithstanding this legal distinction, you will still have full control and benefit over the Revocable Trust and the assets in it so long as you are living and not incapacitated. It is merely a mechanism by which you avoid probate. Of course, there are many other benefits and uses for a Revocable Trust, but when it comes to probate avoidance, this is the key.
Guardianship of Minor Children
This concerns usually comes up right after you and your spouse book a trip without your children for the first time. Suddenly you are overwhelmed with “what ifs” and encounter the toughest question of your life – what if we don’t come back, who will take care of our children.
Rest assured that Florida law is very minor-child-protective. When no instructions are put in place, a Guardianship Court will appoint a guardian based on “the best interests of the child.” As such, it first looks to immediate and then extended family. It will then consider any close friends who may step up. But what if you don’t have such people in your life; what if you have too many of those people in your life and they fight over the children; what if there are certain family members you simply do not want having parental rights over your children; what if…; what if…; and what if…
While naming a guardian for your minor children is not a “guarantee” that such person would be approved or that such person will be in a position to care for your
children, courts are very reluctant to divert from your appointment and you may appoint successor guardians in such case. The key here is to have a written plan in place that will guide your family and the courts should it come to that.
Estate Tax Minimization/Elimination
Based on recently enacted laws, the first $11M of your estate will not be subject to the Federal estate tax. While this may relieve your concern about taxes, as noted above, the estate tax implications are just one part of a well-designed estate plan and not being subject to it does not mean you do not need an estate plan in place. Of course, if you do fall within the “taxable” category, the financial benefits of a well-designed estate plan would greatly benefit you.
If you do fall into the category of a “taxable estate,” there are numerous strategies which, if properly implemented, can significantly reduce, and in many cases completely eliminate, any estate tax liability on your death. The use of irrevocable trusts, life insurance trusts, GRATs and the like are useful tools. Combining these with discounting strategies and intra-family lifetime transfers make the estate tax liability reduction even more significant. Unfortunately there is no “one-size-fits-all” method to this process, but at Dorot & Bensimon PL we specialize in analyzing each case to custom-build a comprehensive plan tailored to your specific goals and maximize the benefits available.
A strong estate plan always considers asset protection. The plan would not only address the lifetime asset protection needs of you and your family, but will also address the protection of your beneficiaries from creditors and when necessary, themselves. Whether it is the fear of divorce, lawsuits, bankruptcy, drug addiction, loose-spending or any other concern you may have, we will develop a comprehensive approach to protecting you and your family through your estate plan.
At times, we find that our clients need a more aggressive strategy due to involvement in a highly-litigious industry, in which case we refer you to review our dedicated page for our ASSET PROTECTION practice area. [INCLUDE LINK*****].
Proper Estate Allocation to Beneficiaries
Making sure who gets what, when and how. Each client brings with him or her a unique set of values, wealth, personality and goals. Some have beneficiaries who are all adults and others with young children; some have honor roll children, and others have children with special needs; some are worried about their child’s spouse, and others love the spouse more than their own child. These are just some basic distinctions, but as you can imagine, the distinctions are endless. We would love to say that we’ve seen it all, but the truth is that every day we see something new – this is why it is our goal to first fully understand you and your family, so we can tailor your estate plan according to you and your family. Once we have an understanding of what move you, we are able to use a Revocable Trust or any of a number of other mechanisms, to specifically tailor your estate plan to address your unique characteristics and guide you along to achieve your goals.
At Dorot & Bensimon PL, we recommend that our clients have advanced directives in place. While these are relatively fill-in-the-blank documents, their importance should not be minimized. When implementing even the most basic estate plan, each client executes four crucial documents:
- Living Will Declaration. This document addresses end-of-life decisions with respect to life support and artificial means of life. Every day families are faced with a decision to “pull the plug” on a loved one when there is no probability of recovering from a persistent vegetative state. This is a very difficult decision for your loved ones to make, which is why having your wishes proclaimed on an enforceable, legal document alleviates the emotional toll on your family and loved ones when they make this difficult decision.
- Health Care Proxy. This document appoints an individual to make medical decisions on your behalf if you are not capable of making them yourself (i.e., un
conscious or incapacitated). Having a specific person appointed in advance will prevent disagreement and fighting within the family as to who makes that decision.
- Pre-Need Guardianship Designation. Through this document, you appoint a person to be the legal guardian of your person should you become incapacitated. In the event of a circumstance in which a guardian must be appointed, such as in the case of dementia, disease, accident or otherwise, the proceedings to appoint the guardian will be smooth and generally uncontested.
- Durable Power of Attorney. While a power of attorney is a familiar document – appointing someone to stand in your place from a legal perspective – in the event that you become incapacitated and unable to revoke such power of attorney, it automatically, by operation of law, becomes invalid. A Durable Power of Attorney is a power of attorney that “endures” incapacity and continues to be in force. In the event that you become incapacitated, this power allows the appointed individual to act on your behalf to sign legal documents as if such person’s signature is in fact your signature.
- Publication 950, Introduction to Estate and Gift
- The Estate Tax
- Frequently Asked Questions on Estate Taxes
- The Gift Tax
- Frequently Asked Questions on Gift Taxes
- Filing Estate and Gift Tax Returns
- Forms and Publications – Estate and Gift Tax
- 2010 Brings Big Changes to Estate and Gift Tax
- What’s New – Estate and Gift Tax