Estate Planning

Why do I need to keep my estate plan current?

 Once you have an estate plan in place, it is essential to understand that your personal and financial situation may change over time. This means that it may be necessary to revise your estate plan to reflect those changes.

By reviewing your estate plan you can keep it up-to-date in the following circumstances:

• Marriage -- A first or second marriage requires  changes  to the terms of your will or trust
• Divorce -- Your estate plan should be revised promptly after your divorce
• Having or adopting a child -- You should make changes to protect your children's financial future and appoint a legal guardian in case you and your spouse die or become incapacitated
• Injury or illness -- If you or a family member becomes seriously ill, special needs may require changes in your estate plan
• Buying or selling a business  -- This can significantly change the extent of your assets and require long-term asset protection for you and your family
• Relocating --  Estate planning documents are portable, but differences in state law, such as those between separate and community property states, can have tax implications

What to Include in an Estate Plan

Whether or not you experience life changes, it is important to ensure that you have a comprehensive estate plan. A well-designed plan will name who you wish to manage your affairs in the event you become disabled, incapacitated or pass away. Planning for incapacity also requires planning for long-term care. Additional benefits of having an estate plan in place include:

• Avoiding probate
• Protecting children from a prior marriage
• Protecting assets inherited by your heirs from lawsuits, divorces, or other claims

The Bottom Line

In the event you experience significant personal or financial changes, your estate plan must be revised to reflect those changes, as well as to protect your assets and your loved ones. Also, your plan could be affected by changes in state and/or federal law that you are not even aware of. This is why it is so important to work with a qualified estate planning attorney to ensure that your estate plan is up-to- date. 

Are there any specific estate planning concerns for those that are getting married for the second time?

For someone who is entering a second marriage, it is imperative to establish an estate plan or review his or her  existing plan. Estate planning at the time of your second marriage is critical to ensure your wishes are carried out.  For someone entering a second marriage, estate planning concerns often stem from the competing interests of the new spouse and the children of the previous marriage.  You want to make sure both parties are treated fairly.  It is important to remember that in the State of Florida, you cannot disinherit your spouse and that he or she is entitled to receive one third of your estate (Section 732.2065).  

If you fail to put a trust in place or at least have a will, your assets will be subject to intestacy statutes and be divided accordingly.  The benefit of a trust is that it allows the surviving spouse to benefit from the trust income and the remaining assets to pass to the children after that person’s death.  Pre- and post-nuptial agreements are also used to address financial matters before or during the marriage.  These can limit the disagreements that might arise after your death.

The primary residence is an asset commonly at issue when there is a second marriage.  You want the surviving spouse to have somewhere to live but granting him or her a life estate makes it possible that the home will be run down or sold and your children will receive less than they should have or nothing at all.  Therefore, many attorneys use a right of occupancy instead of a life estate.  This allows the spouse to live in the home until certain conditions are met terminating the right.

If you are entering into your second marriage, you should consult an attorney to establish or modify your estate plan.

According to the Kaiser Health News Webinar "Who Are America's Caregivers? Nearly A Quarter Are Millennials" the commonly held belief that Baby Boomers are the only ones caring for older relatives is failing to consider the the role Millennials are taking on in the estimated $470 billion worth of work:

"Caring for older relatives is usually a task associated with Baby Boomers, the 50- and 60-somethings who find their aging parents need assistance. But almost a quarter of the adults who take care of older people — on top of their regular jobs and responsibilities — are between the ages of 18 and 34... About 40 million Americans considered themselves caregivers in 2013…[t]hose people are typically women, and their median age is 49. The work they do caring for older relatives…was estimated that same year to be worth about $470 billion.”

Source/more: Kaiser Health News

What steps should you take to put your estate in order while you're young?

A recent survey of 2,000 married couples has found that a third of them do not have life insurance; more than 40 percent admit to being financially unprepared for the death of a spouse. In order to put your family in a state of preparedness, the following should be considered.

Calculating Life Insurance Needs

Commonly, people, especially young people, stick with whatever life insurance their employer provides. There are two problems with this method: the amount of life insurance is likely to be insufficient, and your life insurance policy will probably be lost if you lose your job.

In calculating the amount of life insurance you need, it is important to take into account:

· Mortgage and other debts

· Day care and college tuition

· Annual income of working spouses for requisite number of years

· Cost of replacement services of at-home spouse or caregiver

· Insurance costs

· Savings

Understanding Your Spouse's Life Insurance Policy

A study has found that married adults without children are less likely to understand the specific details of one another's life insurance policies. Perhaps even more disturbingly, women, with or without children, are less knowledgeable about their family's insurance policies than their partners. It is recommended that both partners in a marriage be aware of:

· Which company holds the policy

· How much coverage it provides

· How much it costs

· How long its term is, if it is a term life policy

· Whether the policy can be converted to permanent life insurance

Writing a Will

It is alarming to realize that 70 percent of adults with minor children do not have wills. This means that their estates, their executors and the guardians of their children have not been settled. They are running the risk that, should they die prematurely, state inheritance laws, not their own wishes, will determine what happens to their assets, and possibly who takes care of their children.

Keeping All Financial Records and Important Documents Secure and Available

Between one-fifth and one-third of married adults are unsure of how or where to access their family's most important records. It is important that financial documents, contact numbers of advisors, insurance policy numbers and related information be kept in a secure place known to both partners and to at least one other trusted individual.

While it is uncomfortable to face the possible harsh realities of our futures, it is not nearly as unpleasant to face them when life is going well as under the stress of sudden tragedy. As you proactively plan for a secure future for your family, you should engage the services of an experienced estate planning attorney, one who can make sure you cover all the financial, emotional and legal bases.

Will or Won’t? Things a Will Won’t (or Can’t) Do

 

Wills offer many benefits and are an important part of any estate plan, regardless of how much property you have. Your will can ensure that after death your property will be given to the loved ones you designate. If you have children, a will is necessary to designate a guardian for them. Without a will, the courts and probate laws will decide who inherits your property and who cares for your children. But there are certain things a will cannot accomplish.

A will has no effect on the distribution of certain types of property after your death. For example, if you own property in joint tenancy with another co-owner, your share of that property will automatically belong to the surviving joint tenant. Any contrary will provision would only be effective if all joint tenants died at the same time. 

If you have named a beneficiary on your life insurance policy, those proceeds will not be subject to the terms of a will and will pass directly to your named beneficiary. Similarly, if you have named a beneficiary on your retirement accounts, including pension plans, individual retirement accounts (IRAs), 401(k) or 403(b) retirement plans, the money will be distributed directly to that named beneficiary when you pass on, regardless of any will provisions.

Brokerage accounts, including stocks and bonds, in which you have named a transfer-on-death (TOD) beneficiary will be transferred directly to the named beneficiary. Vehicles may also be titled with a TOD beneficiary, and would therefore transfer to your beneficiary, regardless of any provisions contained in your will. Similar to TODs, bank accounts may have a pay-on-death beneficiary named. 

The will’s shortcomings are not limited to matters of inheritance. Generally, wills are not as well suited as trusts for putting conditions on a gift such as requiring someone to get married or divorced, or obtain a certain education level, as a prerequisite to inheriting a portion of your estate. A simple will cannot reduce estate taxes the way some kinds of trust plans can.

A trust, not a will, is also necessary to arrange for care for a beneficiary who has special needs. A will cannot provide for long-term care arrangements for a loved one. However, a special needs trust can provide financial support for a disabled beneficiary, without risking government disability benefits.

If you want to leave your estate to Fido, you’re out of luck in many states. Without a special pet trust, your will may not be able to provide for pets to inherit your assets. You can use your will to leave your pet to someone, and then leave money to that person in trust to help take care of your pet.

A will cannot help you avoid probate. Assets left through a will generally must be transferred through a court-supervised probate proceeding, which can take months, or longer, at significant expense to your estate. If it’s probate you want to avoid, consider establishing a living trust to hold your significant assets.

Glossary of Estate Planning Terms

Will - a written document specifying a person’s wishes concerning his or her property distribution upon his or her death.

In order to be enforced by a court of law, a will must be signed in accordance with the applicable wills act.

Testator/Testatrix - the person who signs the will.

Heirs - beneficiaries of an estate.

Personal Representative/Executor/Executrix - the individual given authority by the testator to make decisions to put the testator’s written directions into effect.

Once the will is entered into probate, the personal representative’s signature is equivalent to the testator’s. The personal representative has a legal duty to the heirs of the estate to act in the best interest of the estate, and may collect a fee for performing such service.

A personal representative must also be appointed If a person dies without a will (intestate).

Codicil - an amendment to a will.

In order to be valid, a codicil must comply with all the requirements of the applicable wills act.

Holographic Will- a handwritten will. 

Holographic wills are often exempt from requirements of the applicable wills act.

Bequest - a gift given by the testator to his or her heirs through a will.

Residual Estate - the balance of a testator’s belongings after debts have been paid and specific bequests have been distributed. 

Intestate - not having signed a will before one dies; a person who dies without having signed a will.

Life Estate - a bequest that gives an heir the right to have exclusive use of a property for the remainder of his or her life, but without the power to transfer such property upon the death of that heir.

The property will transfer to the heirs of the residual estate after the death of the beneficiary of the life estate.

Per stirpes - a Latin phrase precisely translated as “by the branch” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided equally among that beneficiary’s own heirs.

 An alternative to per capita, described below.

Per capita - a Latin phrase precisely translated as “by the head” meaning that, if an heir named in the will dies before the testator, that heir’s share will be divided among the testator’s remaining heirs.

 An alternative to per stirpes, described above.

While it is a good idea to have a basic understanding of fundamental estate planning vocabulary, this cannot serve as a substitute for the services of an experienced attorney.

While nobody wants to think about disability or the end of life, establishing a sound plan is one of the most important steps you can take to protect yourself and your loved ones. Proper planning not only puts you in charge of your care and finances, it can also spare your loved ones the expense, delay and frustration associated with managing your affairs when you become disabled or pass away. The LegalJourney Law Firm believes that the key to establishing an effective estate, elder care or asset protection plan is working with a law firm that educates and guides each client through their legal journey. As part of the firm's education initiative, Attorney Karnardo Garnett will be speaking at the following seminars throughout the Bay Area:

1.Online Seminar: Estate Planning - 101;Saturday, Nov 7, 2015 10:00 AM - 11 AM 2. Seminar - Estate Planning 101; Japanese Gardens Mobile Home Park (19709 US Hwy 19 N Clearwater, FL 33764) Thursday, Nov 19, 2015 3:00 PM - 4 PM* Visit www.LegalJourney.com today to register

*Estate Planning 101 on November 19th, 2015 at 3pm is being sponsored and hosted by our friends at

Japanese Gardens Mobile Home Park.

What is a Life Estate?

A life estate is a special designation in probate law referring to a gift to a family member that lasts as long as the life of the recipient. If an individual uses a life estate as part of his or her estate plan, whatever is bequeathed under the life estate will revert back to the residual estate upon the death of the life estate recipient. It is most common in scenarios where an individual starts a new family without children later in life and wants to ensure that the present spouse is taken care of for the remainder of her or his life. The owner of a life estate is called a life tenant. A life estate is often used as an alternative to a trust because it provides the life tenant with more control over the transferred asset.

A life tenant may treat an asset as his or her own. A home may be rented to tenants for income. The life tenant may sell his or her interest in the property to the heirs of the residual estate or to third parties. If the property is sold to a third party, that third party must surrender the property to the residual heirs upon the death of the life tenant.

Though the property belongs to the life tenant, the life tenant has a duty to the residual heirs to keep the property reasonably maintained and in good condition. He or she has an obligation to avoid mortgage arrearages and tax liens while in possession of the property. Exploiting natural resources on the property may be restricted during a life tenancy. A life tenant may not bequeath his or her interest in a life estate through a will because that interest immediately terminates upon the life tenant’s death. Significant changes to the property need to be agreed upon by all parties.

Though there are benefits, there are also drawbacks to establishing a life estate as part of an estate plan. The action could create estate tax issues for the tenant’s estate. In addition, creditors of the tenant may attach liens on the property, creating complicated legal issues for the heirs of the residual estate.

Five Common Reasons a Will Might Be Invalid

There are several reasons that a will may prove invalid. It is important for testators to be aware of these pitfalls in order to avoid them.

Improper Execution

The requirements vary from state to state, but most states require a valid will to be witnessed by two people not named in the will. Some jurisdictions require the document to be notarized as well. Although these restrictions may be relaxed if the will is holographic (handwritten), it is best to satisfy these requirements to ensure that the testamentary document will be honored by the probate court.

Lack of Testamentary Capacity

Anyone over the age of 18 is presumed to understand what a will is. At the end of life, individuals are often not in the best state of mind. If court finds that an individual is suffering from dementia, is under the influence of drugs or alcohol, or is incapable of understanding the document being executed for some other reason, the court may invalidate the will on the grounds that the individual does  not have testamentary capacity.

Replacement by a Later Will

Whenever an individual writes a new will, it invalidates all wills made previously. This means that a will might be believed to be valid for months until a more recently executed document surfaces. The newest will always takes precedence, controlling how assets should be distributed.

Lack of Required Content

Every will is required to contain certain provisions to carry out its purpose. These provisions, ensure that the testator understands the reason for executing the document.  Although these provisions vary from state to  state, some are common to all jurisdictions. It should be clear that the document is intended to be a will. The document  should demonstrate an individual’s wishes in regard to what should happen to his or her property after death. A proper will should also include a provision to appoint an executor to act as an agent for the estate and enforce the terms of the will. If the document  lacks any of these provisions, the will may be declared invalid. 

Undue influence or fraud

A will that was executed under undue influence, coercion or fraud will be invalidated by a court. If a will has been presented to a testator for a signature as if it were any other document, like a power of attorney or a business contract, the court will find that the will was fraudulently obtained and will not honor it. If an individual providing end of life care with exclusive access to the testator threatens to stop care unless a will is modified, that modification is considered to be the result of undue influence and the court will not accept it.

With the change to Florida Statute Section 765.202, health care surrogates can immediately make health care decisions and gain access to medical records. Prior to the statute change, a health care surrogate could not act without a medical determination that the surrogacy was needed (i.e. the patient could no longer make their own medical decisions). Due to changes in lucidity, this caused issues based on the stability of the patient. Resulting in the potential for the need of multiple incapacity determinations and gaps in care. With the change to the statute, a surrogate can access medical records and make health care decisions prior to a determination of incompetency, but while the patient has capacity, their decisions controls. 

Section 765.2035 of the new law also removes any confusion around if parents and/or guardians could name surrogates for minor children.

Contact us today to discuss making changes to your current plan or if you have any questions regarding the change in law.

A thorough and complete estate plan must take into account a significant amount of information about your assets, your family, your property, and your wishes during and after your life.  When you make your first appointment with an estate planning attorney, ask the attorney or the paralegal if they can provide a written list of important information and documents that you should bring to the meeting.  

Generally speaking, you should gather the following information before your first appointment with your estate planning lawyer.

Family Information
List the names, birth dates, death dates, and ages of all immediate family members, specifically current and former spouses, all children and stepchildren, and all grandchildren.

If you have any young or adult children with special needs, gather all information you have about their lifetime financial needs.

Property Information
For all real property you own or can reasonably expect to acquire, gather the property description, your ownership interest information, the address, market value, any outstanding mortgage balance, and the most recent tax assessment.

For any personal property of value (such as vehicles, jewelry, coins, antiques, stamps, and art), compile a list that includes a description, the physical location of each item, your ownership interest information, the market value, and any liens against the property.

Business Information
If you have an ownership interest in a business, make sure you have documents showing your ownership interest in the business, the business location, the names and contact information of other owners, and 2-3 years of past profit and loss statements.

Financial Information
Compile a list of all your financial accounts, including: checking accounts, savings accounts, investment accounts, stocks and bonds, and U.S. Treasury notes.  If any of these accounts currently have designated beneficiaries, bring that information as well.

Gather all retirement savings information, including 401(k) plans, 403(b) plans, IRAs, life insurance policies, Social Security statements, and pension information.  Make sure you have the account names, account numbers, current balances, outstanding loan balances, and currently named beneficiaries.

If any family members owe you debts, compile that information.

Questions to Think About
The following are some of the first questions your estate planning attorney will ask.  You are not required to have answers ready for all these questions, but because some of them are complex, it is a good idea to think through these issues before your appointment.

• Who will be beneficiaries of your property?
• Do you want to bequeath any specific items of property to specific individuals?
• Is there anyone you do not want to be a beneficiary of any of your property?
• Do you plan to make any bequests to any nonprofit organizations – university, church, charity, or other organization?
• Do you know who you want to act as executor of your will?
• Do you know who you want to act as trustee of any trusts you establish?
• If you have minor children, who do you want to appoint as guardian?
• Do you want to make arrangements for your health and financial well-being in the event you become unable to make decisions for yourself?
• Do you have specific wishes for your funeral?
• Are you a registered organ donor?

Call and Schedule a Free Initial Consultation Today!

During our initial consultation, we will review your family and financial situation, discuss your wishes, answer your questions and suggest strategies to protect your family, wealth and legacy.