When seeking an Estate Planning Attorney in Clearwater for a Last Will and Testament (“Will”), it is important to know the following information. A Will describes how your property is distributed upon your death. It must be in writing, signed by you, and properly witnessed by two persons. A Will should also be self-proving to avoid having to find witnesses upon death. A self-proof is an affidavit stating that you signed the Will and that the witnesses and you signed the Will in the presence of each other. A “Codicil” is the legal term for an amendment to your Will. A Will may contain:
A DPOA permits you to name an agent or attorney-in-fact to handle your financial affairs if you become incapacitated (as defined in the document). The DPOA can authorize the agent or attorney-in-fact to transfer property, borrow money, handle bank accounts and pay bills. This document can be very useful to avoid the time and expense of a court appointed guardian. The agent or attorney-in-fact named should be a person who you trust and who is capable of carrying out your wishes. In 2011, Florida law changed dramatically regarding DPOAs to better define the powers you authorize your agent to use. If you have a preexisting DPOA, then it is a good idea to have an attorney review it to make sure your agent or attorney-in-fact will not have any problems with an older DPOA.
A DHCS is a document naming another person (a “surrogate”) as your representative to make medical decisions for you if you are unable to make them yourself. You can include instructions about any treatment you want or do not want. The DHCS must be in writing and signed by two witnesses. Under prior law, a Designation of Health Care Surrogate was only effective if you were determined to be incapacitated. However, in 2015, Florida law made significant changes to the DHCS. In addition to its previous powers, a DHCS allows you (but is not required) to name a Surrogate to make health care decisions and receive health care information without a determination of incapacity.
A Living Will enables you to direct in advance what kind of life sustaining medical treatments you would or would not want if you developed a terminal condition, an end-stage condition, or you are in a persistent vegetative state and those treatment choices serve only to prolong artificially the process of dying. The Living Will must be in writing and have two witnesses.
This document tells the court your preference of the individual(s) to have legal responsibility for you or your children’s person and/or property. This document appoints an individual(s) to act as a guardian for your minor children and takes effect should both parents become incapacitated, or upon the death of the last surviving parent. An adult person can also use this document to designate a preneed guardian to take effect if a legal guardianship is necessary.
Another important document to consider when looking for an Estate Planning Attorney in Clearwater, is a trust. A trust agreement is a private document and offers more control over the disposition of your assets. A trust can direct distributions to your children/grandchildren, family & friends, charities, and can assist in avoiding or reducing taxes after your death, and can help avoid probate. However, selecting and creating a trust agreement that suits your needs is not an easy process and should be discussed with an attorney. Here are some examples of different trusts:
A Revocable Trust (or a “Living Trust”) is a document created by you to provide for management of your assets during your lifetime and you can designate to whom your assets will be distributed at your death. You can amend or revoke this document at any time provided you are not incapacitated. If you are the initial trustee, then the document will name a successor trustee to administer the trust upon your death or incapacity.
Upon your death, the successor trustee is responsible for paying all claims and taxes and then distributing the assets in accordance with your instructions contained in the trust agreement. This avoids the costs, time and necessity of going through the probate procedures.
With some exceptions, your assets should be titled in the name of the trust before your death to get the maximum benefit from the trust. If assets are not properly titled in the name of the trust, then the assets may be subject to probate.
Our office can also assist you in the amending of your current revocable trust agreement to reflect updates in the law or to your meet your estate planning goals.
A Joint Revocable Trust, another subcategory of estate planning, has become increasingly popular among married couples to simplify their estate plan if their estate is well under the amount subject to estate tax. Instead of having two separate revocable trust agreements, married couples can create “joint trust” which operates under the same principles and guidelines as a revocable trust.
If you have two separate revocable trust agreements, then please contact our office today to discuss how we may be able to simplify your estate plan. Of course, a joint trust is not for everyone. The attorney can help you decide whether it is best to have 2 separate trusts for a husband and wife or whether a joint trust would better fit your needs.
If a trust is the beneficiary of retirement plan benefits and the trust is an “accumulation trust”, then benefits may be accumulated in the trust and payable to the beneficiaries over a period of time for various purposes. However, these benefits may be payable to the trust over the life expectancy of someone who is older than an intended beneficiary (for example the trust states that if everyone is dead then the trust assets are distributed to intestate heirs who could be individuals older than intended beneficiary). The beneficiary may lose the benefit of deferral and income tax may be due sooner than necessary. Further, the beneficiary may lose the tax free compounding of money held in the inherited retirement plan.
If a trust is drafted as a “conduit trust,” then any distributions from a retirement plan, including the annual minimum required distribution, received by the trustee of a trust, must be distributed to the beneficiary. The beneficiary can use his or her own life expectancy. The beneficiary, however, must receive these distributions outright and there is no accumulation in the trust. Such distributions could then be attached by a beneficiary’s creditors or a spouse in a divorce proceeding.
Leaving money or property in a Will or Trust to a loved one with a disability requires intricate planning. Otherwise, your loved one’s ability to receive Social Security Income (“SSI”) and/or Medicaid benefits could be jeopardized or even terminated. However, a special needs trust can allow you can transfer money to a trust for their benefit. There are many variables to a special needs trust (e.g. whose money can be used, what the money can be used for, how is the money distributed upon death, etc.) and very specific rules that must be followed to not affect SSI. If you are in need of an Estate Planning Attorney in Clearwater, please call our office today for a confidential consultation.
Advance Estate Planning is another important area of examination when looking for an Estate Planning Attorney in Clearwater. A Family Limited Partnership (“FLP”) has great potential as an estate planning device to reduce the federal estate tax and gift tax by as much as 40%. Although most people hear about FLPs, a Limited Liability Company (“LLC”) may be an alternative choice. Both FLPs and LLCs allow people to make gifts, avoid or reduce paying federal estate tax and gift tax and maintain control. An FLP or LLC is a great estate planning technique if a person’s estate exceeds $5,490,000, or $10,980,000 if married. An LLC or FLP provides a solution by allowing parents to make gifts of property while continuing to maintain control over the assets gifted.
The general purpose of the Irrevocable Trust is to transfer funds from you into the Irrevocable Trust to reduce your estate for federal estate tax purposes while securing monies for your beneficiary’s future. Once the Irrevocable Trust is executed then it is irrevocable and cannot be changed. Thus, you must carefully understand the document before you execute it.
Life insurance proceeds are not usually part of a decedent’s probate estate but are included in a decedent’s gross estate for federal estate tax purposes. If your estate is the named beneficiary, or if no named beneficiary survives you, then the life insurance proceeds become part of your probate estate. Inclusion in the gross estate for estate tax purposes could dramatically increase the size of the estate and the amount of estate taxes that must be paid.
If your estate is potentially taxable, then a life insurance trust should be seriously considered. The use of an irrevocable life insurance trust is preferable to giving a policy to an individual outright. Giving a policy to your spouse may cause the policy to be included in your spouse’s estate and to revert to your (the insured’s) estate should your spouse die before you.
A Charitable Remainder Trust (“CRT”) is an irrevocable trust where you (or persons you designate) will receive distributions from the trust periodically during your lifetime or the lifetime of others designated to receive distributions, and then at the expiration of the trust term, the remaining balance is distributed to a charity. The distribution amount is determined at inception based on income needs, age, value of the property and other relevant factors. The trust can either be a Charitable Remainder Unitrust (“CRUT”), which provides a distribution of a fixed percentage, or a Charitable Remainder Annuity Trust (“CRAT”), which provides a distribution of a fixed annuity amount.
Upon your death, or at the death of the designated income recipients, the remaining trust assets will be distributed to the charities selected by you. You can retain the right to change the charitable beneficiaries during your lifetime. The amount distributed to the charities will be a deduction in your taxable estate. If the trust has other non-charitable beneficiaries, then the deduction will be based on the anticipated remainder value to the charities.
Alternatively, a Charitable Lead Trust is the opposite of the Charitable Remainder Trust and provides for a charity to receive distributions first and your beneficiaries to receive the remaining balance at the expiration of the trust term. The trust can either be a Charitable Lead Unitrust (“CLUT”), which provides a distribution of a fixed percentage or a Charitable Lead Annuity Trust (“CLAT”), which provides a charity fixed annuity amount.
A Dynasty Trust is designed to exist for an extended period of years to provide a legacy for the benefit of future generations of your descendants. In Florida, there are alternatives for the length of time for such a trust. A Dynasty Trust takes advantage of a Grantor’s gift tax and generation skipping transfer tax exemptions.
A Grantor Trust is funded by a gift from you, as the grantor, and you can retain certain powers over the trust. These powers result in you power to control or direct the trust’s income or assets. Establishing a Grantor Trust has a number of tax advantages. For example, you can sell assets to the trust without recognizing the gain on the sale. You can also loan money to the trust, the interest income is not taxable to you. The primary benefit is that the Grantor can transfer highly appreciating assets out of his or her estate and the assets can grow tax free for the benefit of the beneficiaries.
An IDGT is a form of a Grantor Trust. It allows you to make a gift of assets to an irrevocable trust (thus lowering your estate for federal estate tax purposes) and allows you to retain the ability to pay the income taxes generated by the IDGT. A standard irrevocable trust pays its own income taxes, but, by allowing you to retain the ability to pay income taxes is what makes the irrevocable trust “defective.” Trust assets are not used to pay income taxes. Further, the payment of the trust income taxes by the Grantor does not result in an additional gift to the beneficiaries if the trust is drafted properly.