Estate Planning

This part of Estate Planning focuses on what will happen with your assets and for your family if you become incapacitated and when you pass away. A page on the website, Child and Family Planning, focuses how to be sure your children are raised as you wish, and by the people you want, in the event of your death or incapacitated.

An important starting point is understanding what happens to your assets and for your family as a default under Florida law, if there isn't Estate Planning in place.

A first concept or process is Probate. Probate is a Court process initiated by an heir or creditor to distribute the property owned by someone who has passed away and pay their debts. It is begun by an heir or creditor filing a request with the Court to start the process. With a few important exceptions, if a person dies their heirs must first go through this Court process to receive and manage the "decedent's" property (decedent is a legal term for person who is deceased). This includes getting access to bank and other accounts that are included in the person's estate -- a Power of Attorney is no longer valid or applicable once the person who granted the Power dies.

No probate is required to pass on property owned where another person has a right of "survivorship", for example a bank account titled in both names; or property passing pursuant to a beneficiary designation - for example the beneficiary of a life insurance policy or retirement account. Property owned with a right of survivorship that passes automatically to the surviving person, or funds received via a beneficiary designation, is said to pass "outside" of probate, and is not included as part of the decedent's probate estate; they are not "probatable" assets.

No Probate is required if the decedent only owns a limited amount of household property (furniture, furnishing and appliances worth less than $20,000) and automobiles (2 passenger automobiles owned by the decedent and used by him or her and immediate family) - called exempt property; or also "non-exempt" property that is not worth more than the cost of funeral expenses and medical expenses during the last 60 days of the decedent's life.

There is a simple process for transfer of ownership of "Homestead" real property; and a probate process called "Summary Administration" that can be available if the value of a decedent's probate estate does not exceed $75,000 (or the decedent has been deceased for two years). Summary administration can be completed within one to three months, but will involve hiring an attorney and the cost of attorney fees for you, unless you handle the process yourself.

For estates which do not qualify for "Summary Administration" there is a process called "Formal Administration" which can take from 6 months to years, depending on the complexity of the matter and the amount of conflict between heirs or creditors of the estate. As part of Formal Administration, there will be a "Personal Representative" inventorying the assets and debts of the estate, giving notices to heirs and creditors, and handling the administrative tasks of disposing of the estate.

The Personal Representative by Statute may be paid 3% of the first $1,000,000 of the estate, with lower percentages on amounts over $1,000,000. In addition, there often will be an attorney for the Personal Representative. There is a fee structure in Florida Statutes for the fees for the attorney, beginning at $1500 for estates with assets not in excess of $40,000; an additional $1,500 for estates up to $100,000; an additional $3000 for each $100,000 up to $900,000; and then 2.5% for amounts over $1,000,000, with lower percentages for amounts over $3,000,000. The Statutes says these fees are presumed to be reasonable, but the actual fees attorneys charge for the probate may be different. Individual heirs will conceivably hire their own attorneys if there are disputes. Some people, for rough calculations, estimate the cost of probate as 5% of the value of probate assets.

In the absence of an estate plan (a Will or trust for example), the Court will distribute your probate estate/assets, after payment of creditors, directly to your heirs as determined under Florida law (remember though that there are some assets that pass outside of probate - right of survivorship property and assets that pass via a beneficiary designation).

There are Florida Statutes which spell out the order of priority as to who receives your property if you die "intestate", which means without there being a Will - basically first to a surviving spouse, and there are rules as well providing for portions going to children from a first marriage, and to your descendants if there isn't a surviving spouse. If an heir is a minor, there will be a guardian, possibly appointed by the Court, to manage the property until the child turns 18, and then there could be a direct distribution to the child.

If you have a Will, your Will and specify who receives your property, but there are Florida Statutes guaranteeing a certain percentage to a surviving spouse - approximately one-third.

There are some potential disadvantages to all of this, even if you have a Will. For example, if the property is passing to your surviving spouse, it could be vulnerable to claims by the spouse's creditors; or be lost in a lawsuit, or divorce if the spouse remarries. If the surviving spouse, for example, were involved in accident after the first spouse's death, or had some other claim against him or her by creditors, the creditors could potentially take all or a portion of the inherited assets, rather than them being preserved to support the surviving spouse, and then pass on to your children.

There are family law rules that provide for inherited property being kept separate, but it can be easy for the property to become marital property if a surviving spouse remarries, and sometimes both spouses want to be sure that if one of you passes away and the survivor remarries, that as a result of a family law rule, property doesn't somehow end up going to a future spouse, rather than being preserved for the surviving spouse and then for your children.

These same issues regarding asset protection are relevant also for property that passes to one of your children, with the added issue of perhaps your not necessarily wanting an 18 year old, for example, to have complete access to funds at that age.

For these reasons, one common and important part of Estate Planning is the use of Trusts. You can provide for assets going to people you select to be held in a trust, which can give them access to income and principle to support themselves, and allow them to invest the funds of the trust within the trust, but provide asset protection, e.g. from creditors or other claims.

One common example is for you and your spouse providing that if one of you passes away, half of your assets goes into what we call the Survivor's Trust, which gives the spouse complete access to the funds, and part of your assets being placed into a trust we call a Family Trust, or other more specialized trusts for tax reasons, that give the spouse access to the funds for many purposes, but provides the kind of asset protection mentioned above. In addition, the funds in the Survivor's Trust can be protected from creditors when they go eventually, e.g. to your children. Florida law provides some very strong asset protection for these kinds of trusts.

These are not required provisions, and some clients will choose to simply leave all property outright to the surviving spouse, and then the same to the children as soon as they turn 18. There is no one right answer, and the focus of our first meeting is deciding what is best for you.

Another page here on the website, Estate Tax Planning, addresses planning options to protect against future changes in the amount of the estate tax exemption, or in the event the value of your assets approach the amount of the Federal Estate Tax Exemption (currently $11.58 million per person), with not too complicated planning to take advantage of both spouses'exemptions.

An important part of Life and Estate Planning in my opinion is including discussions with your family as we are competing the planning, to talk with them about what you have planned, and the reasons it is important to you.

The Firm Story page here on the website explains how some of the following arose as my family was dealing with a parent's illness and passing away. There can be family conflict that rises to the surface under the stress of a parent or other family member being ill, and sometimes conflicts over financial issues after a family member passes away. Often these are sibling or other family issues that just were never fully addressed until the family had to come together for a parent's illness or death.

Having conversations ahead of time discussing what you've planned and what is important to you can help lessen future conflicts. Another significant area of my practice is Collaborative Family Law, and if helpful we can have this discussion or discussions with family members facilitated by one of the Collaborative Law facilitators with whom I work.

One option to consider as part of your estate planning, is to require your heirs, in the event of a dispute, to use the Collaborative Law or mediation, prior to initiating a litigation court battle to address the dispute

By this I don't mean the distinction between different types of property called tangible property (e.g. cars, boats, jewelry, etc., i.e. things) and what is called "intangible" property - e.g. a patent, interest in a partnership, or investment, although these often do have a tangible piece of property representing the interest.

By non-property or non-financial assets we mean passing on to your family life lessons, values, stories you want them to have after you are gone. The value of this can be immense, and not something that can be created after you are gone. The process of thinking about what of this to pass on can be significant itself, and part of Life and Estate Planning in the office is to assist you in preparing a video for your family, to pass on your non-financial assets.

Call me a (954) 636-7498, or use the contact form on the website, and we can discuss Life and Estate Planning for you and your family.