Achieving Your Particular Goals. A good estate plan can provide for and protect your family, preserve your assets for future generations, and reduce estate and income taxes. The failure to plan is a “plan to fail” in achieving these important goals. There are many, who have failed to make a good estate plan, and some have been celebrities and those with the means to do extensive planning, and who have significant assets to pass to their loved ones. The history books and newspaper reports are full of many of these sad, but interesting stories. In some cases, estates have ultimately passed to persons unknown to the person who passed away, and in some cases, significant estate assets have passed outside of the family as a result of the divorce of a beneficiary.

 

Your Planning may be for More than One Generation. If your estate is substantial enough that it could (or should) last for more than one generation, then you certainly need to do some careful and thoughtful estate planning, to make certain that your estate assets get to the people you intend them to go to. For Florida residents, dying without a will often means that the State of Florida will decide how your assets are distributed, and even who will be the guardians of your minor children, without any input from you.  If you do have a will, it is important to make sure that the provisions are clear and up to date. Conflicting provisions can result in litigation. Also, promises made to loved ones and not clearly stated in your will may result in time consuming and expensive litigation, having unintended results.

 

Consider a Trust, and Make Sure it is Funded. In some circumstances, people establish a trust, but fail to fund the trust or otherwise to transfer their assets to trust. This may result in the need for probate, which can be time consuming and costly. A trust can assist a married couple to maximize their separate exemptions from estate taxes. The use of a trust is not the only way this can be accomplished, but it is a common method. Each person can exempt a certain amount of their estate from estate taxes. This is called the “exemption amount” or more correctly the “exemption equivalent”. The exemption equivalent is the amount you can pass through to your heirs without paying estate tax.  Below are those amounts and the top tax rates since 2005 and for the next several years:

If the size of your estate exceeds the exemption equivalent, you may want to consider setting up a “credit shelter” trust. This may help to save hundreds of thousands of dollars in estate tax.

 

Advanced Directives can make the Difference. Aside from a will or a trust, many people fail to plan or rather “plan to fail” by not appointing an attorney in fact under a Durable Power of Attorney.  The recent case of Terri Schiavo is an example of what can happen. If Terri Schiavo had signed a durable power of attorney or living will making her desires known, this may have saved her family much agony. A Durable Power of Attorney allows someone to act on your behalf – generally allowing your attorney in fact to do what you can do, with some exceptions. Two related documents are a Living Will and Declaration of Health Care Surrogate. The latter two documents primarily relate to health care decisions. A living will appoints someone to act on your behalf if you have a terminal condition. A Declaration of Health Care Surrogate allows your appointed surrogate (even if you do not have terminal condition) to make health care decisions for you, if you are unable to do so. All of these documents are part of a good estate plan, and must be considered thoughtfully. 

 

Thoughtful Estate Planning is Required. Thoughtful consideration is extremely important in estate planning. A good estate plan is generally not achieved simply from obtaining documents. You have spent your life earning and preserving your estate, you should thoughtfully consider how to protect your assets, preserve them for your benefit and the benefit of your loved ones. Only a thoughtful consideration of your estate plan will accomplish these goals.

Choose Guardians, Trustees and Other Agents Carefully. Essential in the estate planning process is the choice of Guardians, Personal Representatives, Trustees, and Attorneys in fact. This requires thoughtful consideration. You should choose only those who you can trust to carry out your wishes. You will need to rely on others to help implement and carry out your thoughtful estate plan. Be careful, for history is replete with stories of how estates were plundered by unscrupulous executors and trustees. In terms of guardians for you children, think about who you would want to raise your minor children if you and your spouse both died. You may want to consider guardians who have similar religious backgrounds, disciplinary styles, and ages. Regarding the nomination of a Personal Representative under your will, you should choose someone you trust, and who has an understanding of the beneficiaries’ needs, the appropriate organizational skills, ability and willingness to serve, geographic proximity to the estate's beneficiaries and the estate’s assets, lack of any conflict of interest, and integrity and loyalty. In Florida, unless the intended personal representative is related by blood or marriage, it will be best to choose someone residing within the state; otherwise he or she may not be permitted to serve. In terms of a trustee, remember that the trustee may need to make financial decisions on your behalf, during your lifetime. In this regard, consider someone who is financially secure, has a good grasp of investment understanding, does not have a have conflict of interest,  is knowledgeable of and sensitive to the trust beneficiaries and their circumstances, and has competence and integrity. The same is true with the appointment of an attorney in fact under a durable power of attorney. You should choose someone who you can trust, who knows your wishes, and who can be sensitive to your family’s needs.

 

A thoughtful estate plan can ensure that you leave your loved ones a legacy worthy of the life you have spent working and saving.  Do not fail to plan, and you will not “fail to plan.”