There are many legal strategies involved in Estate Planning, including Wills, Revocable Living Trusts, Irrevocable Trusts, Durable Powers of Attorney, and health care documents. New clients often say that they do not have an estate plan. Most people are surprised to learn that they actually do have a plan. In the absence of legal planning otherwise, their estate will be distributed after death according to Florida’s laws of intestacy. Of course, this may not be the plan they would have chosen. A properly drafted Estate Plan will replace the terms of the State’s Estate Plan with your own. It will also minimize Taxes and other Estate cost share and important consideration.
Your Last Will and Testament is just one part of a comprehensive Estate Plan. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:
Trusts come in many “flavors”. They can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a Trust is a legal entity with at least three parties involved: The Trust-Maker, the Trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a Revocable Living Trust, for example, a person may create a trust (the trust-maker) and name themselves the current Trustees (trust managers) who manage the Trust assets for their own benefit (trust beneficiary).
Depending on the situation, there may be many advantages to establishing a Trust, including avoiding probate court. In most cases, assets owned in a Revocable Living Trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the Trust-Maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries. If well drafted, another advantage of trusts is their continuing effectiveness even if the trust-maker dies or becomes incapacitated.
A Power of Attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain financial things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All Powers of Attorney terminate upon the death of the maker, and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). A Durable Power of Attorney is a great planning tool that allows you to designate a back-up decision maker in the event of incapacity. In case a person becomes incapacitated, a power of attorney would become extremely important. Things that a Power of Attorney can do, if necessary, include paying bills, signing nursing home admission contracts, access retirement money, and handle investment decisions. As you can see, a Power of Attorney can be a critical document to have.
An Advance Directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive. Your Advance Directive can specify who will make and communicate decisions for you. It can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery.
A document that goes hand-in-hand with your advance directive is an authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.
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