Florida Estate Planning: Despite the benefits already inherent in living in a state with no inheritance or estate tax, you should make plans to protect your estate even further, such as developing a proper estate plan. Proper estate planning should provide answers to such questions as 1) who should own your property once you pass away, 2) what property should they own (and how much), and 3) whether the property should be owned jointly or separately. Estate planning also assists in the decision of whether trusts are needed for management, control or tax savings; and whether gifts, annual or lifetime, should be made.
Estate planning provides for the management and transfer of your property in the event of your death or incapacity in an efficient and, in some cases, tax saving, manner. A well-thought-out estate plan allows you to designate your beneficiaries, provide for the management of your assets and eliminate or minimize any federal taxes that may be due. Without sufficient careful planning, your property may pass to unintended beneficiaries; may be diminished in value by unnecessary taxes or unsound investments; may be subject to inadequate investment oversight; or may not be readily available to you and your family in the event of your death, illness or incapacity. All of these possible problems may cause financial instability or distress during your lifetime or after death.
The documents which comprise the basics in estate planning are explained below. Like most states, Florida recommends that residents take time to determine advanced health care directives in case they experience a sudden, unexpected medical emergency. The first two documents, the Health Care Surrogate and Living Will, allow you to make such health care directives.
The Revocable Trust and the Durable Power of Attorney are two other important documents you can create to manage your assets during your lifetime. In the case of the Revocable Trust, you can also distribute your remaining assets after your death. A brief discussion on each of these two documents follows. Lastly the process that is followed in Florida for the transfer of property when a person dies, is explained.
Health Care Surrogate: It is important to consider providing a means to ensuring that your personal care requirements are met in the event that you become incapable of attending to them. You can achieve this goal by designating a health care surrogate.
In Florida, any competent adult has the power to designate another individual as his or her health care surrogate, thereby conferring upon such person the authority to make health care decisions for him or her if incapacitated and to provide informed consent if he or she is incapable of doing so. The powers that can be given to the health care surrogate include, but are not limited to, the authority to consult with health care providers; to provide consent for medical procedures which the health care surrogate determines are in the best interest of the patient; to have access to all medical records of the patient; to apply for public benefits (such as Medicare and Medicaid); and to have access to the patient’s financial records in order to assist in the preparation of an application for such public benefits.
In addition, you can specifically grant the health care surrogate the authority to order the withholding or withdrawal of life-prolonging medical procedures, usually in conjunction with a “Living Will.” You may revoke the document at any time as long as you are competent.
Living Will: Florida has recognized the desire of many people to be able to designate when life support should be withheld in instances when death is imminent or the chances for one’s recovery are non-existent. By executing a Living Will, you direct your health care provider not to prolong your death by means of extraordinary methods in which there is no chance for your recovery. You can name a trusted individual to carry out your wishes with respect to these critical decisions.
Revocable Trust: If you want to manage and control your assets, wish to avoid probate, or are concerned about who would manage your financial affairs in the event of your illness or incapacity, you should consider creating a Revocable Trust, also referred to as a “Living Trust.” A Revocable Trust is a flexible arrangement in which you, as “Grantor,” transfer assets to yourself, another individual or a professional fiduciary, such as a trust company, as “Trustee.” The Trustee invests, manages and deals with the assets for your benefit and, after your death, for the benefit of the beneficiaries you designate in the written trust agreement You can retain total control of your investments by acting as your own Trustee; completely turn over financial management to another individual or a professional Trustee; or act jointly with another individual or professional Trustee. You can revise or terminate your trust at any time, and you can also add to or subtract assets from your Revocable Trust at any time.
A Revocable Trust can also provide other individuals selected by you to handle your affairs in the event of your illness or incapacity. This can avoid the expense and delay of obtaining a court-appointed guardian to manage your assets while you are incapacitated. Since the proper use of a trust will allow the trust assets to avoid the probate process upon your death, your family will continue to be provided for without interruption.
Durable Power of Attorney: Some individuals do not require or desire a Revocable Trust and would rather provide asset management in cases of illness or incapacity through the simpler step of signing a Durable Power of Attorney. This document enables an individual designated by you to manage your assets in the event that you are no longer capable of doing so. This individual is known as an “attorney-in-fact.” Unlike the more commonly known “power of attorney,” the powers granted by the “durable power of attorney” do not terminate upon your incapacity. Thus, the individual you choose as your attorney-in-fact, not the individual chosen by the court in a guardianship proceeding, will manage your financial affairs in the event that you are unable to so act. Additionally, a durable power of attorney can supplement the powers granted to the trustee of the Revocable Trust. The trustee controls the assets held in the Trust; the attorney-in-fact controls the assets not held in the Trust, such as personal property or assets which the grantor did not title in the name of the Revocable Trust.
Providing for the Transfer of Your Property at Death: When you die, your property will be transferred in one of two ways. Certain assets, sometimes referred to as non-probate assets, will be distributed without reference to your Will and without supervision by the Probate Court. Non-probate assets include:
a. Assets owned jointly with right of survivorship that will pass to the surviving joint owner by operation of law. b. Assets held in trusts that will pass according to the trust agreement. c. Life insurance proceeds that will be paid to the beneficiaries you designate in the policy or beneficiary form, pursuant to your contract with the life insurance company. d. Pension, profit-sharing, deferred compensation or other corporate death benefits, and individual retirement or Keogh accounts, which will be paid to the beneficiaries you designate in the beneficiary form, pursuant to contract.
Your other assets (assets owned in your individual name) will be distributed under the supervision of the Probate Court in accordance with your Will, or if you do not have a Will, pursuant to Florida Intestacy laws. For example, if you are a Florida resident and are survived by a spouse and three children, and you do not have a Will, your spouse will receive $60,000 (if the children are also your spouse’s children), plus one-half of the balance of your estate. Your children will receive the remainder.
In Florida, a surviving spouse should have a minimum right of inheritance. That is, one spouse cannot disinherit the other. A surviving spouse has long had the right to choose to inherit, not what was left to him or her under the deceased spouse’s Will, but rather to take an “elective share” of 30 percent of the probate estate. However, as more assets were accumulated, and as the types of property that were non-probate assets increased, less and less passed through the probate estate. There were cases where either unintentionally or deliberately, spouses were being disinherited and there was no probate estate to obtain assets from. Now the elective share consists of 30 percent of a large number of assets, whether in or out of the probate estate.
Learn everything about Establishing Residency in Florida in A Guide to Establishing Florida Residency.