Designates who or what entities will receive and manage properties upon death.
Provides instructions relating to life-prolonging procedures when a person has a terminal condition.
Trusts & Estates
A legal arrangement where a trustee agrees to manage property for the benefit of beneficiaries.
Legal proceeding whereby the court supervises the distribution of assets and the payment of creditors.
Powers of Attorney
A legal document in which an agent is granted authority to act on behalf of the principal.
Health Care Surrogate
A document designating a person to make health care decisions if you are incapacitated.
More About Wills
In simplistic terms, a will is a document whereby an individual designates the individuals, charities or other entities who will receive his property upon death, who will manage his estate (in Florida known as the Personal Representative) and can include other provisions such as how a trustee under a trust created pursuant to the will should manage the trust’s property, who should be appointed guardian over any minor children and even may contain wishes concerning funeral arrangements. If a person dies intestate in Florida without having prepared a will (intestate) Florida Statute 732.102 will determine the manner and persons to whom the individual’s property is distributed. This may or may not be consistent with how you would have devised your property had you left a properly executed will. If there is property of the decedent that has not passed by operation of law (like a joint tenancy of bank accounts, contains a beneficiary designation or that has been titled in the name of a trust or other entity (an LLC or partnership) a probate proceeding will have to be instituted and the property will be distributed according to the terms of the decedent’s will if one exists or via the intestacy statute.
A properly drafted will remains an integral part of any estate plan. With the advent of the popularity of revocable trusts, wills are now often considered secondary or insignificant. However, even if probate avoidance is your main concern and goal, and even if you have successfully removed most of your assets out of the probate estate, either through titling property jointly, using beneficiary designations on bank or brokerage accounts, and life insurance plans, and/or through revocable trust planning, a will serves as a necessary back-up document. Even with a revocable trust, a will should be drafted that pours you estate assets over into the trust to be distributed in accordance with the terms of the trust in case you have neglected to properly transfer property into the trust as planned.
Estate planning utilizing wills can take many shapes. Wills can include provisions for the creation of testamentary trusts in the event you have minor or disabled children, or in the event a potential heir has judgment creditors or is too unsophisticated financially to handle receiving an inheritance all at once. Additionally, to adapt to constantly changing federal laws regarding taxation of estates and trusts, wills can be drafted with flexibility in order to best maximize estate and income tax savings for your family or other beneficiaries of your estate.
While it is easy to buy self-help will forms online, it takes a thorough understanding of many facets of Florida law and federal income and estate tax laws to include the proper provisions in in the will. A review of how the client’s assets are titled must be performed in order to ensure sure provisions of the will are not undermined by other property laws which will take precedence over contrary provisions contained in the will. A simple example would be property owned as joint tenants with rights of survivorship. Making things more complicate are constitutional and statutory provisions such as the restraint on the devise of the homestead if the decedent is survived by a spouse or minor child, elective share rights, and rights afforded pretermitted children and spouses. To properly draft a will that carries out your wishes, a full picture must be grasped. These rules are often confusing, even for attorneys in the field who study them constantly.
Understanding Living Wills
A living will, not to be confused with a will, is a document whereby a person executes a document that provides instructions relating to the providing, withholding, or withdrawal of life-prolonging procedures when a person has a terminal condition, has an end-stage condition, or is in a persistent vegetative state. The Florida Legislature has provided a sample form in Florida Statute 765.303. The general concept behind living wills is to prevent confusion and conflict resulting when family members or other individuals, including doctors, are unable to agree as to what type of treatment should be given to an individual under these severe circumstances. The infamous case of Terri Schiavo served to illustrate the problems that can arise when different family members have different views on life-saving procedures and where the wishes of the patient have not been made abundantly clear in a signed writing.
The living will must be executed in front of two witnesses. The statute provides that if no living will exists, the decision to withhold or withdraw life-prolonging procedures from a patient may be made by a health care surrogate designated by the patient in a health care advance directive (which is described elsewhere on this site) unless the designation limits the surrogate’s authority to consent to the withholding or withdrawal of life-prolonging procedures. While most of the clients we have prepared living wills for seem to favor declining life saving procedures under these circumstances, that is a highly personal choice to make. Living wills are usually part of a simple estate package which consists of a will, living will, designation of health care surrogate, and a durable power of attorney (commonly known as the package).
Defining Power of Attorney
A power of attorney is a legal document whereby an individual, usually referred to as the “Principal”, grants another person known as the “Agent”, the authority to act on his or her behalf relating to financial matters and other transactions. The powers granted to the agent can be extremely comprehensive or limited depending on the specific needs of the client. Sometimes a power of attorney is meant only to be used for one transaction (example-the client is out of town and wants someone he trusts to be able to be sign a mortgage or deed for him). This power of attorney is commonly known as a limited power of attorney. Other times the power of attorney is intended to be effective for multiple transactions over a sustained period. This is referred to as a general power of attorney. Examples of some of the powers that can be bestowed upon an agent can include the power to sell the principal’s property and execute deeds (including the homestead), the authority to conduct banking and investment transactions, and even to make financial gifts of the principal’s property and create, amend or revoke a trust. The collective group of laws in Florida that regulate the execution and validity of powers of attorney can be found in Chapter 709, Florida Statutes, known as the Florida Power of Attorney Act.
A power of attorney must be acknowledged by the principal and by two subscribing witnesses and be notarized. A power of attorney is considered durable if it contains specific language required by the statute. If a power of attorney is durable it allows the power of attorney to remain effective even if the principal becomes incapacitated (unable to handle his own affairs). A durable power of attorney can be limited or general. Because of the wide range of powers given to the agent in most commonly used powers of attorney, there is of course the risk that the agent will abuse these powers and not uphold his or her fiduciary duties to the principal. The power of attorney can distort an otherwise well-conceived estate plan and the utmost care must be used by the client in choosing a trustworthy agent.
One of the benefits of utilizing a durable power of attorney as one of the documents in your estate plan is that it can be used as a simple mechanism to obviate the appointment of a guardianship in the event you become unable to manage your daily affairs. Guardianship proceedings are costly and time-consuming legal proceeding which necessitate the hiring of an attorney. Please note that a revocable trust can serve a similar function and may be more appropriate in certain circumstances as the trustee has a set of guidelines he must follow that are contained within the trust. Powers of attorney or often convenient tools to use, but like most things in the law can have unintended consequences. There are nuances which must be considered on a case-by-case basis after analyzing the estate plan of the client. Although there are self-help forms readily available online, it is probably preferable for you to have a durable power of attorney prepared by a licensed Florida attorney as there are sometimes important provisions which should either be included or omitted depending on the circumstances.
Call us today for a free consultation at our office in Fort Lauderdale or Boynton Beach regarding any questions you may have regarding powers of attorney or any other estate planning matters. We make best efforts not to overcomplicate matters unnecessarily and we will always try to come up with simple and specific cost-saving solutions based on your family’s needs. Estate planning can be annoying and complex, but we do our best to keep the process as straight-forward as possible given the complexity of the topics involved.
Lady Bird Deed
A lady bird deed, also known as an enhanced life estate deed, is a form of conveyance used in estate planning relating to the transfer of real property. A lady bird deed allows a property owner to transfer property to the person designated in the deed without the need for probate. It is essentially the equivalent of a pay on death account for a piece of real estate. Currently, lady bird deeds are only recognized in 5 states. Florida is one of the states in which lady bird deeds may be utilized.
To create a lady bird deed a property owner(s) will execute a deed (a quit claim deed) whereby they retain an enhanced life estate in the property meaning that they enjoy all of the benefits of ownership that a person with a fee simple form of ownership possesses. During the life of the life tenant, he or she can sell the property, mortgage the property and even keep the property as their primary homestead, thus retaining the benefits associated with homestead rights in Florida such as exemption from judgment creditors and the homestead tax exemptions. The deed will then designate individual(s) or another entity that will automatically be granted full ownership of the property upon the life tenant’s death. The beneficiaries can be given the property as tenants in common or joint tenants with rights of survivorship depending on how the client wishes to distribute the property to the heirs.
Upon death, the beneficiaries will not have to probate the estate inherit the property as the real property does not become an asset of the probate estate. This of course, will in most circumstances, save the heirs or beneficiaries time and money by avoiding the need to file a probate proceeding in Florida.
Depending on the circumstances, a lady bird deed can prove a useful tool in a client’s estate plan to either eliminate or minimize the probate estate and the cost and time customarily associated with a probate proceeding.
If you would like to consult with us regarding a lady bird deed or any other estate planning or probate issue, please call our offices today.
Trust – Managing Property
In order to simplify things, a trust is a legal arrangement whereby one person usually referred to as the settlor, or grantor, gives property to another person or entity known as the trustee, who agrees to manage that property for the benefit of whomever the settlor chooses. In the standard revocable trust, the initial trustee is also usually the settlor who manages the property for his or her own benefit during lifetime. Upon death, a successor trustee that has been named in the trust, takes over management of the trust property and depending on the desired results and the terms of the trust, either distributes the property outright to beneficiaries, or continues to manage the property for the benefit of the beneficiaries (this is often the case if the beneficiaries are minors where a continuing trust for the children is established within the trust). The trustee is said to be the legal owner of the trust, while the beneficiaries are deemed the equitable owners of the property owned in the name of the trust. A trust is deemed revocable (can be changed or terminated by the settlor) according to Florida law unless the trust specifically provides otherwise.
A trust can be created during life, known as an intervivos trust, or can be created within a will, which is known as a testamentary trust. There are many different benefits to trusts. These benefits include estate tax minimization opportunities using marital trusts, credit shelter trusts as well as irrevocable life insurance trusts(used in order to remove assets from the estate). Trusts can also serve as mechanism through which parents can gift assets for the benefit of children and have a trustee manage the funds until the children are financially mature enough to do so on their own. Irrevocable trusts can serve to shield assets from the creditors of beneficiaries through the use of spendthrift provisions. The laws relating to trusts are extremely complex and involve various issues relating to income, gift and estate tax.
The classic revocable trust has become extremely popular for its use as a probate-avoidance mechanism. As a general rule, evading probate will save the heirs time and money after the death of the settlor because no lengthy and costly probate proceeding will be necessary. For the most part, (once again generalizing) after the successor trustee is satisfied there are no creditors or estate taxes due, he can immediately distribute the property to the beneficiaries. There is no court supervision and no court filings other than a notice of trust which must be recorded. The assets of the trust will remain private as opposed to a probate proceeding in which the documents filed in the case, including the will, become matters of public record. Most people would prefer to keep their affairs as private as possible and not expose the family assets to the public and potential financial predators.
Trusts can be a useful tool in estate planning depending on your circumstances. We will not suggest a trust for you unless we are confident that it will serve some readily identifiable purpose, such as tax avoidance or some other advantage for you or your family, either immediately, or down the road.
Probate – Distribution of Assets
A probate is a legal proceeding initiated upon a person’s death and which essentially serves to wrap up the individual’s affairs. It can be viewed as a type of lawsuit whereby the court supervises the distribution of the decedent’s assets and the payment of creditors. Probate may or may not be required depending on the nature of the assets of the estate. In many cases, the decedent has left no “estate assets” to probate because the assets are all owned along with a spouse or other individual as joint tenants (such as a house owned with the spouse). If this is the case, probate will not be necessary because the property will automatically pass to the surviving joint tenant without the need to prove entitlement to ownership through a probate proceeding. Other examples of property that is not subject to probate are assets with beneficiary designations such as POD bank accounts, as well as life insurance, or retirement plans. Sometimes very large estates will not require probate while very small ones will, depending on how the assets have been titled as well as other factors too numerous to mention.
In a probate proceeding, the person nominated by the will, if one exists, is known as the personal representative. His or her job is to administer the estate for the benefit of creditors and the beneficiaries or heirs of the estate. The PR must use the available assets to pay creditors, estate taxes and costs of administration. If assets remain available, the PR can then distribute the remaining property to the heirs. In Florida, unless the PR is a Florida attorney, it he or she is required by law to have an attorney represent him in the probate proceeding. If there are assets under $75,000, a summary administration (an abbreviated probate proceeding)may be available. This procedure is also available if the person died more than two years ago. An attorney will usually charge a fee based upon the value of the assets contained within the estate as well as based on other additional factors, such as additional petitions that must be filed and whether estate tax returns are required. It is impossible to know whether probate will be required for you until the assets of the estate are examined on a case-by-case basis.
For small estates, where summary administration proceedings are available, the probate process can sometimes be concluded within only takes a few weeks. Unfortunately, when the estate is larger, or heirs cannot agree on matters, or there are a number of outstanding creditors or estate tax issues, probate has been known to last for years. A personal representative will distribute your property either according to the terms of your will, or if there is no will, according to the intestacy statute (intestate meaning without a will) provided by Florida law. Often times, a homestead will be involved and in order to be able to sell the property and convey clear title, a title insurance company will require that a petition to determine homestead will need to filed along with either formal administration or summary administration.
Some of the steps in the probate process include obtaining certified copies of the death certificate, locating the original will, identifying the assets owned and then filing a petition for administration in the County where the decedent resided at death. A diligent search for known creditors must be made and they must be notified of the probate proceedings so that any debts owed to them by the person that died can be made. The petitioner must also publish a notice in the local newspaper for two consecutive weeks so that unknown creditors are given notice that a probate proceeding has been filed and they are given an opportunity to file claims against the estate. There is also a process known as ancillary administration which is sometimes required if a non-resident of Florida died owning real estate in Florida. The heirs will not be able to sell the property even if a probate proceeding was concluded in the person’s state of residence unless the ancillary administration is initiated. If a person owns multiple pieces of real property, there are sometimes numerous probate proceedings occurring simultaneously in different states. This is of course timely and costly. There are probate avoidance techniques to avoid this result through the use of revocable trusts, lady bird deeds, and other means.
The personal representative is responsible for ensuring that the decedent’s final income tax returns are filed, as well as filing any estate income tax returns and estate taxes if the amount of assets exceed the applicable exemption amounts. If a personal representative pays creditors or distributes property to beneficiaries before paying the IRS any money it is owed, the PR may be held individually liable.
Probate is a complex administrative proceeding that has numerous time deadlines that must be strictly adhered to. There are many steps in the probate proceeding and a good relationship between the PR and attorney is vital as they will need to work together to properly administer the estate. Sometimes additional parties like accountants and investment advisors must be utilized to assist the attorney in wrapping up the estate. Mistakes in the probate process can prove very costly.
What does a health care surrogate do?
A designation of health care surrogate, like a living will, is a form of advance directive. Specifically, a designation of health care surrogate is a document whereby a person, known as the principal, designates another person as an agent to make health care decisions in certain situations. Some of the powers given in the advance directive can include general authority to act for the principal and to make health care decisions, to provide informed consent for health care and to be given access to the principal’s medical records. While customarily a designation of health care surrogate only takes effect if the principal is incapacitated and is unable to manage his or her own health care decisions, it is possible to allow the surrogate’s powers to take effect immediately.
The purpose of the health care surrogate is to try to prevent confusion as to who should make health care decisions in case the individual is unable to make those decisions. It also serves as a convenient tool where a person requires assistance and needs someone trusted to be able to access health care records and be able to assist them going to doctors, hospitals and generally helping to manage their care.
Certain formalities must be followed when executing a designation of health care surrogate. The document must be signed by the principal in the presence of two subscribing adult witnesses. Furthermore, any person named as the surrogate can not act as a witness. Florida Statute 765.202 further provides that at least one of the subscribing witnesses can not be either the spouse of the principal or a blood relative.
The living will and designation of health care surrogate are standard planning documents that are included in most basic estate plans. While a durable power of attorney can grant powers to the agent to make health care decisions, there are a variety of reasons which make it preferable to deal with health care issues in a document that is separate from the one relating to financial matter. These can include, but are not limited, to privacy concerns relating to the client’s financial matters.