Probate Advantages and Disadvantages

Largo estate planning attorney Money and CalculatorWhile you may have heard many individuals talk about the hideous probate process and the desperate need to avoid them, your Largo estate planning attorney can explain the advantages as well as disadvantages of the probate process. Being more informed on this topic can help you construct a more effective estate plan with your Largo estate planning attorney.

Disadvantages of Probate

Your Largo estate planning attorney can explain that the most significant disadvantage of probate is that it takes too much time. While life insurance proceeds may go to the beneficiary shortly after the necessary forms and proof of death are completed or a property may immediately transfer if there is a right of survivorship attached to it, probate can take many months or even years. This means that the beneficiaries may not receive needed assets until well after the decedent dies. Another disadvantage that your Largo estate planning lawyer may discuss with you is the cumbersome characteristic of probate. Probating a will can involve the need to file numerous documents with the court.

How to Avoid Probate

Due to these disadvantages, your Largo estate planning lawyer may recommend attempting to avoid probate. This can be accomplished through several avenues, such as by providing inter vivos gifts, adding a transfer on death characteristic for bank accounts, joint tenancies with the right of survivorship for certain bank accounts and real property, trusts and life insurance policies.

Advantages of Probate

Probate offers some advantages. For example, it usually provides greater protection to your beneficiaries. Additionally, it has an established set of rules to help handle creditor claims of the estate.

Unexpected Circumstances

While many individuals have the goal of avoiding probate, they may be unaware of the consequences that can occur when this route is taken. For example, if a person is added to an account so that the account can pass automatically at death, that individual may make charges that the original owner did not authorize. Likewise, a person may use up their gift tax and have their beneficiaries liable for estate tax.

If you would like more information on the probate process, contact the Coleman Law Firm at 727-461-7474.

Information to Provide to Your Estate Planning Attorney

Largo estate lawyer GavelYour Largo estate lawyer requires a lot of information in order to help you establish an effective estate plan. This information helps your Largo estate attorney to better understand your financial situation and goals. Your lawyer may ask you to complete a questionnaire or to bring a variety of documents with you when you first meet with your Largo estate attorney. The following information may be required by your attorney.

Information about You and Your Background

Your Largo estate lawyer may ask you about the following information that is pertinent to you and your background:
  • Your full legal name
  • Your mailing and physical address
  • Your home phone number and your cell phone number
  • Whether you have lived in another state or country
  • The country where you are considered a citizen
  • Your date of birth
  • Your job

Family Information

Your Largo estate lawyer may ask about your marital and family history. In particular, he or she may ask for the following information:

  • Your current marital status
  • Date of your current marriage
  • Whether you are divorced or widowed
  • The name of your former spouse
  • The date of death of your former spouse or the date of divorce
  • Whether your deceased spouse left a will
  • State where your former spouse died or where the divorce was granted
  • Financial requirements listed in the divorce decree
  • Whether a prenuptial or postnuptial agreement is in place
  • Whether you have any children and their identification
  • Whether you wish to leave any children out of your will

Assets

Your lawyer also needs to know about the types of assets that you have. He or she will likely ask for the different types of financial accounts you have, their location and their relative value. You may be asked to provide information about real property you own, checking accounts, retirement accounts, life insurance policies, business interests, pension plans, trust interests and other assets of significant value.

For help with your estate plan, contact Coleman Law Firm at 727-461-7474.

Probate and Non-probate Assets

Dunedin estate attorneys meetingOne of the important aspects of developing an estate plan is using non-probate assets. Your Dunedin estate attorney can explain the key differences between probate and non-probate assets.

Probate Assets

Your Dunedin estate attorney may tell you that probate assets are those that are typically subject to probate. They may include assets that are listed in the decedent’s will or that are those mentioned in the laws of intestacy if the decedent had no will or his or her will was declared invalid. Your Dunedin lawyer may further simplify this definition by saying that probate assets are usually those that are titled in the decedent’s name.

For example, real property, bank accounts, CDs, stocks, bonds, brokerage accounts, vehicles, personal property, royalties from intellectual property, personal loans, an interest in a pending lawsuit and money are commonly probate assets. However, if there is a right of survivorship that is attached to the asset or if the asset is subject to a payable-on-death designation, the asset is usually not a probate asset. Additionally, many jurisdictions have a protected homestead law to prevent the decedent’s primary residence from being passed through the probate process. Furthermore, if any of these assets allowed the decedent to establish a beneficiary upon death, the asset is usually not subject to probate.

Non-Probate Assets

In contrast, your Dunedin lawyer can explain that non-probate assets are those that do not pass under the terms of a will or the laws of intestacy. Additionally, your Dunedin estate attorney may provide you with a list of typical non-probate assets. For example, life insurance is commonly a large portion of non-probate assets as long as the estate or the personal representative is not named as the beneficiary. Employer-provided retirement plans are common non-probate assets, assuming that the testator is not married. Likewise, funds that are part of a person’s Individual Retirement Account are usually non-probate assets. So are assets that are part of trusts and assets that pass with a right of survivorship, such as real property or a bank account.

Contact the Coleman Law Firm at 727-461-7474 for help with your estate plan.

Legal Requirements for Trusts

If you are interested in creating a trust as part of your estate plan, a Belleair estate planning attorney can discuss the legal formalities that must be executed with trusts. Additionally, your Belleair estate planning lawyer can explain that these formalities are the same as those required by individuals who make a valid will.

Writing

One basic requirement of a valid trust that your Belleair estate planning attorney can mention to you is the need for the trust to be in writing.

Signatures

Additionally, your Belleair estate planning attorney can explain that you must sign the trust or ask another person to sign on your behalf in your presence. Two witnesses must see this signing personally. These witnesses must also sign the trust in front of the person creating it and in the presence of one another.

Presumption of Revocability

The person who establishes the trust is usually able to revoke or amend the trust at his or her bidding unless the trust is expressly made irrevocable.

Revoking or Amending a Trust

If only one person created the trust, the settlor can generally amend or revoke the trust by substantially complying with a revocation or amendment provision in the trust. If the trust does not say how to amend or revoke the trust, the settlor can revoke or amend it by making a later will or codicil that specifically devises the trust property or any other method that provides clear and convincing evidence of the settlor’s intention to revoke or amend the trust. Again, the formalities of creating a will are required.

Special Rules Regarding Joint Settlors

If more than one settlor established a trust, such as when a married couple does, there are different rules regarding revoking or amending the trust. For example, if the trust has community property in it, the trust can be revoked by either spouse. However, it can only be amended by both of the spouses together. For property amendments that are separate property, each settlor can revoke or amend the trust regarding that part of the trust individually.

Contact a Belleair estate planning lawyer from the Coleman Law Firm at 727-461-7474 for help with your estate plan.

Probate Advantages and Disadvantages

While you may have heard many individuals talk about the hideous probate process and the desperate need to avoid them, your Largo estate planning attorney can explain the advantages as well as disadvantages of the probate process. Being more informed on this topic can help you construct a more effective estate plan with your Largo estate planning attorney.

Disadvantages of Probate

Your Largo estate planning attorney can explain that the most significant disadvantage of probate is that it takes too much time. While life insurance proceeds may go to the beneficiary shortly after the necessary forms and proof of death are completed or a property may immediately transfer if there is a right of survivorship attached to it, probate can take many months or even years. This means that the beneficiaries may not receive needed assets until well after the decedent dies. Another disadvantage that your Largo estate planning lawyer may discuss with you is the cumbersome characteristic of probate. Probating a will can involve the need to file numerous documents with the court.

How to Avoid Probate

Due to these disadvantages, your Largo estate planning lawyer may recommend attempting to avoid probate. This can be accomplished through several avenues, such as by providing inter vivos gifts, adding a transfer on death characteristic for bank accounts, joint tenancies with the right of survivorship for certain bank accounts and real property, trusts and life insurance policies.

Advantages of Probate

Probate offers some advantages. For example, it usually provides greater protection to your beneficiaries. Additionally, it has an established set of rules to help handle creditor claims of the estate.

Unexpected Circumstances

While many individuals have the goal of avoiding probate, they may be unaware of the consequences that can occur when this route is taken. For example, if a person is added to an account so that the account can pass automatically at death, that individual may make charges that the original owner did not authorize. Likewise, a person may use up their gift tax and have their beneficiaries liable for estate tax.

If you would like more information on the probate process, contact the Coleman Law Firm at 727-461-7474.

Information to Provide to Your Estate Planning Attorney

Your Largo estate lawyer requires a lot of information in order to help you establish an effective estate plan. This information helps your Largo estate attorney to better understand your financial situation and goals. Your lawyer may ask you to complete a questionnaire or to bring a variety of documents with you when you first meet with your Largo estate attorney. The following information may be required by your attorney.

Information about You and Your Background

Your Largo estate lawyer may ask you about the following information that is pertinent to you and your background:

Your full legal name
Your mailing and physical address
Your home phone number and your cell phone number
Whether you have lived in another state or country
The country where you are considered a citizen
Your date of birth
Your job

Family Information

Your Largo estate lawyer may ask about your marital and family history. In particular, he or she may ask for the following information:

Your current marital status
Date of your current marriage
Whether you are divorced or widowed
The name of your former spouse
The date of death of your former spouse or the date of divorce
Whether your deceased spouse left a will
State where your former spouse died or where the divorce was granted
Financial requirements listed in the divorce decree
Whether a prenuptial or postnuptial agreement is in place
Whether you have any children and their identification
Whether you wish to leave any children out of your will

Assets

Your lawyer also needs to know about the types of assets that you have. He or she will likely ask for the different types of financial accounts you have, their location and their relative value. You may be asked to provide information about real property you own, checking accounts, retirement accounts, life insurance policies, business interests, pension plans, trust interests and other assets of significant value.

For help with your estate plan, contact Coleman Law Firm at 727-461-7474.

An Overview of Estate Planning

Some of our clients come to Coleman Law Firm with the mistaken belief that estate planning is only for the elderly. However, it is especially necessary for anyone with minor children, assets to protect and anyone who wants to prepare for the future. Your estate plan helps you clearly communicate your wishes in writing through legal documents, including a will, a trust, a living will and powers of attorney. The focus is on helping your loved ones after your passing and protecting them from undue expense or pain. Our Dunedin estate planning lawyer can provide guidance through this process, no matter the size of your estate.

Meeting Your Estate Planning Needs

Our Dunedin estate planning attorney will discuss your goals and work to develop an estate plan tailor-made to meet your needs. We will answer your questions and address your concerns in order to ease your mind as you take care of these matters.

Parts of Estate Planning

The amount of estate planning you need depends on your specific concerns. For example, a will is used to transfer your property to those you designate, such as individuals, charities or businesses. The will also addresses the care of any minor children and usually sets up a trustee to represent you after your death. A living will is used to provide instructions regarding medical treatment if you cannot make your own decisions and generally includes addressing your preferences regarding any life-sustaining methods. A trust is an entity that manages monies and distributes them to one or more beneficiaries. While a will takes time to administer, a trust is immediately effective and avoids the red tape of probate. Our Dunedin estate planning lawyer can address your concerns regarding each of these areas.

Probate

Probate settles the decedent’s estate and transfers assets to the correct recipients. It is also the process of legally validating the will. The time frame can take from a few months to many years. Our Dunedin estate planning attorney can provide suggestions on how to minimize this time frame.

If you have questions or need help with organizing your affairs, call our Dunedin estate planning lawyer. Contact Coleman Law Firm at 727-461-7474 for further information.

Probate and Non-Probate Assets

One of the important aspects of developing an estate plan is using non-probate assets. Your Dunedin estate attorney can explain the key differences between probate and non-probate assets.

Probate Assets

Your Dunedin estate attorney may tell you that probate assets are those that are typically subject to probate. They may include assets that are listed in the decedent’s will or that are those mentioned in the laws of intestacy if the decedent had no will or his or her will was declared invalid. Your Clearwater Dunedin lawyer may further simplify this definition by saying that probate assets are usually those that are titled in the decedent’s name. For example, real property, bank accounts, CDs, stocks, bonds, brokerage accounts, vehicles, personal property, royalties from intellectual property, personal loans, an interest in a pending lawsuit and money are commonly probate assets. However, if there is a right of survivorship that is attached to the asset or if the asset is subject to a payable-on-death designation, the asset is usually not a probate asset. Additionally, many jurisdictions have a protected homestead law to prevent the decedent’s primary residence from being passed through the probate process. Furthermore, if any of these assets allowed the decedent to establish a beneficiary upon death, the asset is usually not subject to probate.

Non-Probate Assets

In contrast, your Clearwater Dunedin lawyer can explain that non-probate assets are those that do not pass under the terms of a will or the laws of intestacy. Additionally, your
Dunedin estate attorney may provide you with a list of typical non-probate assets. For example, life insurance is commonly a large portion of non-probate assets as long as the estate or the personal representative is not named as the beneficiary. Employer-provided retirement plans are common non-probate assets, assuming that the testator is not married. Likewise, funds that are part of a person’s Individual Retirement Account are usually non-probate assets. So are assets that are part of trusts and assets that pass with a right of survivorship, such as real property or a bank account.

Contact the Coleman Law Firm at 727-461-7474 for help with your estate plan.

Estate Planning and Fiduciary Management

Clearwater estate attorney Lawyers Business MeetingA fiduciary is a person who holds something in trust for another, such as management of assets. In estate planning, fiduciaries are deemed to have a great deal of power and authority in the management of one’s affairs and may be empowered to make decisions that are delicate and difficult when you, the testator, are not able. When planning your estate you will need to appoint one or more fiduciaries, and a Clearwater estate attorney will help in this regard.

Who Can Be Named Fiduciaries to Manage the Estate?

It is the duty of the named fiduciary to act on behalf of the testator and carry out responsibilities that serve his best interests. A fiduciary may be a person, but it may also be an entity. For instance, a tax advisor can be a fiduciary, but a bank, or your Clearwater estate law firm, may also assume this role.

It is important to point out that you should appoint individuals whom you feel are best suited to the various roles. You might also name one person to take on all of the fiduciary responsibilities. There is good reason for this. The individual you name must be someone you implicitly trust, one who you literally trust with your life. Moreover, you need to make sure that the person you name does not have a personal stake in your estate. This may exclude a spouse. The fiduciary may need at some point to make difficult decisions regarding the medical status of the testator, which may be hard for a spouse to do. You must also make sure that the person you name will not cause undue conflict in the family.

What Are the Specific Functions of the Fiduciary?

The fiduciary may make decisions when you are deemed incapacitated and unable to do so for yourself. Also, the fiduciary will carry out functions such as investing funds held in trust, offering financial planning advice and paying taxes. Your Clearwater estate attorney will tell you that when you choose the fiduciary, there are matters you need to consider:

• Does the person have sufficient knowledge of financial matters to help?
• Does he/she want to take on the role?
• Does the person live nearby, and will he/she be available when needed?

A Clearwater Estate Law Firm Can Help

If you are planning your estate and need to name fiduciaries, consult with a Clearwater estate attorney. Call Coleman Law Firm to arrange a meeting at 727-461-7474.

Charitable Trusts

Clearwater trusts attorney Father and Son Reviewing Estate Planning DocumentsOne of the chief goals of estate planning is to find ways of minimizing taxes on money left to beneficiaries. Sometimes settlors wish a portion of their assets to go to a charity as well. Charity trusts serve this purpose. The charitable remainder trust, or CRT, is one of the most common charitable trusts. A Clearwater trusts attorney will help you ascertain whether a charitable trust is right for you, and help you to set it up.

Charitable Remainder Trusts Explained

A CRT allows you, the settlor, to use part of the assets during your lifetime. A portion of the rest is left to named beneficiaries when you die, and the remainder goes to a charity that you name. The attorney with your Clearwater trusts law firm will tell you that one distinct disadvantage of this type of trust is that once it is established, you cannot add or remove beneficiaries. One way to circumvent this problem is to name heirs as contingent beneficiaries, which your will can order removed.

Types of Charitable Remainder Trusts

Three types of CRTs exist, and your Clearwater trusts attorney will help you choose which one is best suited to your needs: the unitrust, annuity trust or pooled income trust. While there are definite differences with each, in common is the fact that the named charity acts as trustee. The charity will invest the money in ways that will bring the highest return. It is the charity, then, that will pay assets out of the trust to beneficiaries for the appointed amount and duration.

It is important to note that the named charity must be one that is approved by the IRS for this purpose.

Tax Savings

You can enjoy tax advantages in a number of ways. For one, you can take a tax deduction spread over five years for the amount you gift to charity. It is important to note, however, that the IRS will calculate the amount you are likely to receive out of the CRT during your lifetime and deduct this amount from the tax-deductible gift.

You may also be able to help beneficiaries avoid a capital gains tax, since charities do not have to pay this. Unless your estate is very large, it is unlikely you will need to worry about an estate tax.

A Clearwater Trusts Law Firm Can Help You Establish a CRT

If you are interested in setting up a charitable trust or have questions, call a Clearwater trusts attorney today. Call Coleman Law Firm at 727-461-7474.

Living Trusts

Clearwater trusts lawyer meeting with clientsA living trust is a popular estate planning tool a Clearwater trusts lawyer can create that can be useful during the lifetime of the person as well as make the distribution of assets after death less complicated and less expensive.

A Living Trust is Revocable

The person who creates the trust, called the settlor or grantor, creates the trust in their lifetime and can add to it, change it in any way or revoke it entirely in their lifetime.

Essential Components

A Clearwater trusts attorney can explain that a legal trust requires a grantor, at least one named beneficiary, a trustee and assets that are legally transferred to the trust. Most often, the grantor is also the original trustee and thus retains complete control over the management of the trust.

Incapacity

A well-crafted trust should contemplate the possibility that the grantor, or other named trustee, may become incapacitated. By naming a successor trustee who assumes trust management in the event the trustee can no longer handle trust management duties, the trust can continue to operate to pay bills and make investment decisions without the need for a court-ordered guardian.

Death of the Grantor

Typically, at the death of the grantor, the trust becomes irrevocable and the plan for distribution of the decedent’s assets is implemented. The primary exception is for a trust created for a married couple. In such a case, most commonly the surviving spouse becomes the sole trustee upon the death of the first, and the trust becomes irrevocable after the death of the survivor. In either case, a named successor trustee then manages the trust.

Living Trust Advantages

The primary advantage is the avoidance of probate for those assets that have been properly transferred to the trust. Title to those assets remains in the trust after the grantor’s death. Assets that are not in a trust need to go through probate to legally allow transfer of title from the name of the grantor to the name of the beneficiary. For large estates, there may also be a federal estate tax advantage where a married couple has a joint trust.

Contact a Clearwater Trusts Lawyer for Legal Advice

Learn whether a living trust provides an advantage over a standard will for your particular needs. Call the Coleman Law Firm at 727-461-7474.

 

Estate Planning for Dual-State Residents

estate planning lawyer in Clearwater Balancing Money and HomeHaving a residence in another state is not uncommon for many Floridians. While this clearly provides many benefits for the individual’s lifestyle, it requires some extra planning by an estate planning lawyer in Clearwater.

State of Domicile

While a person may have a residence and spend time in more than one state, they may have only one domicile, which as defined by an estate planning lawyer in Clearwater, is the person’s legal home. If that fact is in dispute, the primary consideration is the person’s intent, as evidenced by some of the following:

• Where the person holds their driver’s license
• Where the person is registered to vote
• The mailing address the person uses for federal and state income tax purposes

Estate Probate

As each state has different laws regarding probate issues, there can be a significant impact on the heirs and beneficiaries depending on the person’s legal residence. This impact can be even greater in instances where one state is a community property state and the other is a non-community property state or where the person dies and leaves an intestate estate.

Other Considerations

Not only is the state of domicile on the date of death an important factor, so too is the consideration of which state the estate planning documents were executed in. Again, each state has its own laws. Issues to consider include:

• The executor; some states place limitations on who may be named as an executor if that person is not a state resident. At the very least, the fact that an executor may have to travel to another state for probate purposes should be considered.
• Advance healthcare directives; sometimes called living wills, these documents provide guidance for the type of medical care the person wishes to receive if incapacitated. The forms as well as the limitations may vary by state.
• Durable powers of attorney; these documents appoint an individual to handle a person’s financial needs if that person becomes incapacitated. This is especially important to consider if the person conducts business in both states.

Contact an Estate Planning Lawyer in Clearwater for Legal Advice

The planning necessary to properly safeguard an estate is more difficult for those with residences in two states. Be certain your interests are well protected. Call the Coleman Law Firm at 727-461-7474.

Storing Wills

Largo estate attorney Living Trust & Estate Planning DocumentAs you wrap up your session with a Largo estate attorney, you may learn about how to properly store your will. This is important information to know because if your will is not located, all of your hard work with establishing the best estate plan for you with your Largo estate attorney may be for nothing.

Reasons Why Storage Is Important

While many clients might express fear of their will being lost because of water damage, fire or theft, these occurrences are much less likely than family members being unable to find the original will. In some situations, the family does locate the will but only after they have incurred significant legal expenses.

Contingencies

Your Largo estate lawyer can also explain that it is important that you plan for contingencies. For example, your personal representative may die before you do and your alternate personal representative will be the one who needs to know where the will is. If you simply informed your original personal representative of the will’s location, this will not assist you if the contingency arises. Another possibility is that both personal representatives might predecease you. Planning for these contingencies can help your beneficiaries be spared from hassle and expense.

Storage Locations

Your Largo estate lawyer may give you several options for storing your will. For example, he or she may say that you might choose to store your will in the same location where you keep other important documents. Your Largo estate planning lawyer might inform you of the pros and cons of certain storage locations. For example, if you store the will in a safe deposit box, the contract with the bank may state that no one can access the contents if you die without certain documentation from a court, which would not help your beneficiaries who need to get the will before any such legal procedures were put in place. Your Largo estate attorney might recommend providing a copy of the will to the personal representative that you have named or storing the will himself or herself.

If you would like more information on this subject, contact Coleman Law Firm at 727-461-7474.

Community Property in Florida

estate planning attorney in Clearwater Scales of JusticeAlthough Florida is considered a non-community property state, Florida probate law does recognize that assets and the proceeds from those assets acquired by an individual while living in a community property state may retain their community property character. A estate planning attorney in Clearwater can explain if it is beneficial to retain the assets as community property and the issues that affect how such assets are distributed.

Application

In addition to the actual assets that were acquired or became community property in a community property jurisdiction, a estate planning attorney in Clearwater emphasizes that the law also applies to:
• Assets acquired with the proceeds or income from community property, or
• Assets that are traceable to community property.

Presumptions

A presumption is a fact that the law presumes, but which can be overcome by evidence to the contrary. Florida law presumes personal property acquired in a community property jurisdiction is community property, but real property located in Florida is presumed not to be community property, with some exceptions.

Distribution after the Death of the First Spouse

If an asset is deemed to be community property, then, upon the death of the first spouse, one-half of that asset belongs to the surviving spouse and is not subject to any testamentary disposition of the deceased spouse. The other-half is subject to the deceased spouse’s testamentary disposition.

Stepped-up Basis

The benefit for a surviving spouse in holding assets as community property is that under federal estate planning tax law, the entire value of community property receives an adjustment to a valuation as of the date of death. If the property was held as non-community property, the income tax basis of the deceased spouse’s property and only one-half of the jointly owned assets receive a date of death valuation.

Contact an Estate Law Firm in Clearwater for Legal Advice

It is possible to sever the community property nature of assets without intending to do so. It is important to have a clear understanding of the goals of the individuals and a complete knowledge of the complexities and nuances of the law. For all your estate planning planning concerns, call the Coleman Law Firm at 727-461-7474.

Where Should I Keep My Estate Planning Documents?

In our estate planning practice, we are frequently asked by our clients where they should maintain their original estate planning documents. In my opinion, the place to keep your original Last Will and Testament, Power of Attorney, Health Care Power of Attorney, Trust, and Living Will is with your lawyer. There are a number of reasons why this is advisable. This article attempts to address some of the major considerations for placing your estate planning documents with your attorney.

If you choose to keep the Will in a safe place at your home, you face a number of possible risks that could frustrate the purpose of your Will or otherwise impede the appropriate distribution under the Will or effectuate other documents related to your healthcare directives. For instance, if your Will is different from the distribution plan written for you by the Florida Legislature under the laws relating to intestate (meaning “without a Will”) succession, then you run the risk of an individual (who might be receiving less under your Will than they would receive under intestate succession) destroying the Will, thereby creating the possibility of argument by the beneficiaries that the previously executed Will was actually revoked by the deceased individual by the physical act of destroying the original.

Another potential difficulty in keeping the estate planning documents at your home is if the documents include an original Power of Attorney, the Power of Attorney could be misused by the Attorney-in-Fact to effectuate “advance planning” with respect to any estate planning or even divorce. By keeping the Power of Attorney at the law offices, it is less likely that a Power of Attorney could be misused by the person given authority under that Power of Attorney.

The third reason to keep your estate planning documents with your attorney is that sometimes situations occur outside your living area that might require a transmittal of estate planning documents. For instance, let us suppose that you are injured in an automobile accident while visiting your daughter in Nebraska. It might be necessary for a Health Care Power of Attorney, Power of Attorney or Living Will to be used at the hospital in Nebraska. A simple phone call to your lawyer results in those documents being faxed to the hospital so that your plans and interests can be protected and effectuated.

Some people have the idea that these important documents should be placed in a safe deposit box owned by the client. As discussed above, one of the difficulties with having the documents in your safe deposit box is that if you were injured outside of Florida and you were not available to access the safe deposit box, your important documents may not be available when they are urgently needed. Also, if you place the original Will in a safe deposit box, it is possible that it would be necessary upon your death to obtain a court order to get access to the estate planning documents. This would entail substantial legal expense, and perhaps, the expense of actually “drilling” out the lock on the safe deposit box if the key cannot be found.

Original documents are extremely important. In order to probate a Will, the court will typically require the production of the original Will. Unlike some states, Florida does not allow for the filing of original Wills before death. Safe deposit boxes can be difficult to access after death and, even after the death, what protection is there from the person entering the box? Additionally, there is a risk from an unscrupulous heir that may choose to destroy a document that does not serve their interest.

Finally, this issue cannot be properly addressed without talking about the tremendous risk associated with a Power of Attorney. A Power of Attorney can be used by any individual that might be designated thereunder to transfer assets in such a way that would effectuate “pre-divorce planning” or “pre-death planning” that would frustrate the estate plan of the client. The procedure followed at the Coleman Law Firm is that the Power of Attorney is not generally provided to the client. Rather, a letter is prepared by our law firm indicating in what circumstances a Power of Attorney will be released to the designated Attorney-in-Fact so that there will be some degree of protection that the Power of Attorney will not be misused to address such issues as the Attorney-in-Fact’s financial difficulties or to otherwise frustrate the intent set forth in the Last Will and Testament of our client.

Coleman Law Firm works to document the client’s intent with respect to the distribution of their wealth and their healthcare decisions. It is critical that the documents prepared by our law firm be effective and enforceable at the time of the death or disability of our client.

© Jeffrey P. Coleman P.A. 2011

Estate Planning 101

Unfortunately, confusion and myth abound when it comes to estate planning. Perhaps that is why so few people actually get around to making such plans at all.

What is estate planning? If you were to ask 10 adult Americans this question, you would likely get 10 different answers. Even otherwise financially savvy people seem confused about estate planning. Most erroneously equate estate planning with death planning. They think estate planning is limited to arranging for the ultimate distribution of their assets at life’s end. Due partly to this confusion and partly to good, old-fashioned procrastination, it is little wonder that six out of 10 adult Americans have no estate plan at all.

In reality, the ultimate distribution of your assets is but one of many important elements to successful estate planning. Were your estate plan your autobiography, then the ultimate distribution of your assets would only be Chapter 4, the book’s final chapter. The preceding chapters of your estate plan would involve a lifetime process of making legal arrangements to protect yourself, your loved ones and your hard-earned assets from three fundamental estate planning challenges: unnecessary probate, confiscatory taxes and unpleasant surprises.

Chapter 1: Unnecessary Probate

Probate is the court process that takes care of people and their assets when they no longer can make their own personal, health care and financial decisions. You have two opportunities to experience probate: at incapacity and at death.

The law says every adult American is responsible for their own personal, health care and financial decisions. Such decisions include everything from where to live, to when to die (e.g., authorizing or withholding/withdrawing health care treatments), to filing tax returns, to real estate transactions.

What happens, though, if a stroke, a car wreck or advanced Alzheimer’s leaves you disabled to the point of legal incapacity? Who will make your decisions for you? Will it be someone you know and trust? Perhaps it will be your spouse, your children, your siblings, a friend or a trusted professional advisor. The answer is none of the above … unless you make proper estate plans in advance of such tragedy.

Incapacity probate is the default plan for people who fail to make plans to avoid it. In the incapacity probate process you can expect to employ at least three lawyers (the probate judge, an attorney to represent your interests and an attorney representing the potential guardian), potentially spend thousands of dollars, expose your personal situation and financial matters to the public, and place yourself under the ongoing control of the probate court until you either recover or die.

At your death, any assets that are titled in your name alone or which name your estate as the beneficiary (e.g., life insurance or retirement plans) will go through probate. One common estate plan myth is that a valid Last Will & Testament will avoid probate of these assets. That myth could not be further from the truth.

In reality, a Will is your admission ticket to the probate court and only has legal effect when accepted by the court as valid. Like the incapacity probate, the death probate is the default plan for people who fail to make plans to avoid it. Similarly, in the death probate process you may expect to pay some potentially unnecessary costs, expose your personal situation and financial matters to the public, and place your assets under the ongoing control of the probate court for six months to a year or more.

Chapter 2: Confiscatory Taxes

Question: Which tax can take the biggest bite out of your estate assets? Is it the income tax, the capital gains tax or the estate tax? Answer: The estate tax. While no one enjoys the income tax with a top marginal rate of 35 percent or the capital gains tax with a top rate of 20 percent, most are shocked to learn that the estate tax is more than 40 percent. Even more disturbing is that this is a final tax on assets that have already been subject to income and capital gains taxes…oftentimes repeatedly during one’s life.

As noted earlier, six out of 10 adult Americans have no estate plan. They likely are headed to probate unnecessarily and may lose hundreds of thousands of dollars to the IRS in death taxes unnecessarily. Even people with estate plans in effect may have made serious mistakes in their planning.

Common mistakes may include joint tenancy ownership of assets, improper ownership methods for life insurance and simple Wills with no tax planning provisions.

Chapter 3: Unpleasant Surprises

Along with probate avoidance and tax minimization, asset protection should be a cornerstone of every estate plan. With divorces, lawsuits and bankruptcies (probably as a result of the other two), proper estate planning includes protecting your assets from unnecessary loss while you are alive and protecting them for your loved ones upon your death. The next and final chapter is a natural extension of this chapter.

Chapter 4: Unpleasant Surprises Reprise

A well-designed, thoroughly implemented and faithfully maintained estate plan can not only protect you and your hard-earned assets from unnecessary probate, confiscatory death taxes and unpleasant surprises, but it also can protect your assets from these same fundamental estate planning challenges to benefit your loved ones over multiple generations.

Is it Time to Review Your Plan?

Estate Planning is a Lifetime Process, not simply an after-death distribution program. So, it makes sense to periodically reflect on your Life & Estate Planning goals, and review your legal documents as circumstances in your life change. Use this checklist of life changes or activities that could alter your estate-planning needs as a starting point.

– Marriage, remarriage or divorce

– Death of a spouse

– Substantial change in total asset value

– Death or incapacity of an executor, guardian or trustee

– Move to another state

– Acquisition of real estate in another state

– Birth or adoption of a child or grandchild

– Serious illness of a family member

– Change in business interest or retirement

– Change in insurability for life insurance

– Marriage or divorce of a beneficiary

– Change in beneficiary attitudes

– Financial irresponsibility of a beneficiary

– Change in tax laws

– More than two years since last review of plan with attorney

Finally, seek appropriate legal counsel. It will be time and money well spent.

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material. Note: Nothing in this publication is intended or written to be used, and cannot be used by any person for the purpose of avoiding tax penalties regarding any transactions or matters addressed herein. You should always seek advice from independent tax advisors regarding the same. [See IRS Circular 230.]

Seniors Should Review Their Will

Published by LYNNE BUTLER, Globe and Mail Update

People in their 60s and 70s shift the focus of their estate planning away from accumulation of wealth for the first time. They now focus on strategic use and preservation of assets. Until this point, most planning has been for the future. In this stage of life, the future has arrived.

Most people will retire or semi-retire during this phase of life, happily pursuing those golf games and Aegean cruises that were postponed in the name of work. It’s the time when the initial plans made during your earlier years begin to bear fruit.

It’s not that adults are no longer saving money at this age; it’s more that income sources change. At age 65, you’ll begin to collect Old Age Security and Pension Plan benefits. Private pensions also kick in. By the end of the year you turn 71, your RRSP must be converted to a RRIF, which will provide income whether you want it or not. It’s important to continue working with a financial planner to maximize these sources, minimize taxes and understand what will be available for retirement and to leave in your will.

Incapacity

The second major focus during this phase of life must be planning for incapacity. Of course nobody wants to think about it, but seniors will notice the uptick in the number of serious health issues happening among their contemporaries. Most people will already have health care directives in place and should take them out, dust them off and update them if necessary. This is the time to put serious thought into how one spouse will fare if the other loses mental capacity.

Health and money intersect, of course, and couples should consider the potential cost of health care that may or may not be needed in years to come. Have you thought about the cost of your spouse continuing to live in the family home if you must live in a long-term care facility due to incapacity?

Powers of attorney

In enduring powers of attorney and health care directives, you will name the person or people you want to put in charge of your decision making in the event you cannot manage it yourself. By the time adults are in their 60s and 70s, they generally want to rethink the previous appointment of friends and siblings and appoint their children instead.

The choice of representative is crucial. Financial abuse of seniors is rampant. Sadly, much of the suffering could have been avoided by a more thoughtful and critical choice of attorney under a power of attorney.

Widowhood

During the later years of this phase of life, some Canadians will be widowed. This carries its own set of emotional and financial challenges. The death of a spouse should bring about a complete review of the survivor’s plans.

A majority of widows and widowers find it worthwhile to simplify their assets at this point. For example, a cottage that you’re not going to use much now that you’re a single rather than part of a couple might be sold. The large family home may prove to be too much of a handful for you alone, and you may wish to downsize to a condominium, apartment or smaller house. Joint investments and bank accounts are now solely owned.

Handing down assets

These are worthwhile steps to take as they can smooth potential estate problems. But as always, there are pitfalls. The process of simplification can end up creating as many problems as it solves if it is taken too far. A common homemade estate-planning strategy is to put assets into joint names with the children, which can make even the toughest estate lawyer or accountant wince.

The idea is to avoid probate fees and possibly “simplify” by avoiding the probate process altogether, but the cost is frequently disputes among the children, and in many cases, lawsuits to determine the true owner of the joint asset.

While it’s not always advisable to transfer assets to the kids without advice, it is definitely a good idea to open conversations with your children about estate planning. Let them know who you have named as your executor, your attorney and your health care representative. Tell them where your documents are kept. Find out their thoughts on the family cabin.

And send them a postcard from Greece.

Lynne Butler has worked in estate planning and law for more than 20 years and is the author of several books about estate planning, published by Self-Counsel Press.

Seniors in Clearwater, Palm Harbor, Oldsmar, Seminole and the Tampa area can count on the Coleman Law firm to help them with their wills and other financial planning issues. For more information, see our web site www.colemanlaw.com