Probate Avoidance

Attorney Karnardo Garnett of the LegalJourney Law Firm in Tampa will participate in National Elder Law Month by offering seminars and attending expos discussing the importance of planning.

With a growing population of Americans age 65 years or older, the importance of planning for one’s legal needs has become essential.

Attorney Garnett will be hosting or participating in the following events during the month of May:

• 5/15 - University Village: Annual Health & Wellness Expo 12401 North 22nd St, Tampa 33612
• 5/16 - Advanced Retirement Strategies and Asset Protection Workshop: Brio Tuscan Grille 2223 North Westshore Blvd Tampa, FL 33607 at 6:00pm 
• 5/21 - Advanced Retirement Strategies and Asset Protection Workshop: Brio Tuscan Grille 2223 North Westshore Blvd Tampa, FL 33607 at 6:00pm 
• 5/30 - Avoiding the Top Ten Estate Planning Mistakes: Grand Court 4902 Bayshore Blvd  Tampa, FL 33611 at 6:30pm

Attorney Garnett, a resident of Tampa since 1984, has practiced law for several years and focuses his practice on Estate Planning, Elder Law and Asset Protection.  Attorney Garnett is a member of the Florida State Bar Association and the National Academy of Elder Law Attorneys (NAELA).

Day 7: Free Online Trust Based Estate Plan Package¹

The LegalJourney Law Firm is providing a free “Online Trust Based Estate Plan Package” for the first 2 individuals who sign up for a new client account via the online legal services link at www.legaljourney.com. 

To set up a free online account:

1.     Go to www.legaljourney.com;

2.     Select “Click Here For Online Legal Services”;

3.     Select “Register for a New Online Legal Services Account today!"

Create a user account and you will be notified within 24 hours if you will be a recipient of todays offer.

The LegalJourney Law Firm’s Online Will based Estate Plan Package includes: a Will, a Living Will, Health Care Power of Attorney, HIPPA Authorization and Durable Power of Attorney.

To find out additional details, please contact the LegalJourney Law Firm PLLC

¹This offer is available until close of business January 10th, 2013.

Day 6: Save $300 on a Trust Based Estate Plan¹

The LegalJourney Law Firm is providing $300 off a “Trust based Estate Plan” for anyone who contacts the firm prior to close of business on January 11, 2013 and schedules an appointment for a consultation.

The LegalJourney Law Firm’s Trust based Estate Plan includes: a Revocable Trust, a Will, a Living Will, a Health Care Surrogate, HIPPA Authorization and a Durable Power of Attorney.

To find out additional details, please contact the LegalJourney Law Firm PLLC.

¹This offer is available until close of business January 11th, 2013.

In planning your estate, you most likely have concerned yourself with “big picture” issues. Who inherits what? Do I need a living trust? However, there are numerous details that are often overlooked, and which can drastically impact the distribution of your estate to your intended beneficiaries. Listed below are some of the most common overlooked estate planning issues.

Liquid Cash: Is there enough available cash to cover the estate’s operating expenses until it is settled? The estate may have to pay attorneys’ fees, court costs, probate expenses, debts of the decedent, or living expenses for a surviving spouse or other dependents. Your estate plan should estimate the cash needs and ensure there are adequate cash resources to cover these expenses.

Tax Planning: Even if your estate is exempt from federal estate tax, there are other possible taxes that should be anticipated by your estate plan. There may be estate or death taxes at the state level. The estate may have to pay income taxes on investment income earned before the estate is settled. Income taxes can be paid out of the liquid assets held in the estate. Death taxes may be paid by the estate from the amount inherited by each beneficiary. 

Executor’s Access to Documents: The executor or estate administrator must be able to access the decedent’s important papers in order to locate assets and close up the decedent’s affairs. Also, creditors must be identified and paid before an estate can be settled. It is important to leave a notebook or other instructions listing significant assets, where they are located, identifying information such as serial numbers, account numbers or passwords. If the executor is not left with this information, it may require unnecessary expenditures of time and money to locate all of the assets. This notebook should also include a comprehensive list of creditors, to help the executor verify or refute any creditor claims.

Beneficiary Designations: Many assets can be transferred outside of a will or trust, by simply designating a beneficiary to receive the asset upon your death. Life insurance policies, annuities, retirement accounts, and motor vehicles are some of the assets that can be transferred directly to a beneficiary. To make these arrangements, submit a beneficiary designation form to the financial institution, retirement plan or motor vehicle department. Be sure to keep the beneficiary designations current, and provide instructions to the executor listing which assets are to be transferred in this manner.

Fund the Living Trust: Unfortunately, many people establish living trusts, but fail to fully implement them, thereby reducing or eliminating the trust’s potential benefits. To be subject to the trust, as opposed to the probate court, an asset’s ownership must be legally transferred into the trust. If legal title to homes, vehicles or financial accounts is not transferred into the trust, the trust is of no effect and the assets must be probated.

Transfer of property at death can be rather complex.  Many are under the impression that instructions provided in a valid will are sufficient to transfer their assets to the individuals named in the will.   However, there are a myriad of rules that affect how different types of assets transfer to heirs and beneficiaries, often in direct contradiction of what may be clearly stated in one’s will.

The legal process of administering property owned by someone who has passed away with a will is called probate.  Prior to his passing, a deceased person, or decedent, usually names an executor to oversee the process by which his wishes, outlined in his Will, are to be carried out. Probate property, generally consists of everything in a decedent’s estate that was directly in his name. For example, a house, vehicle, monies, stocks or any other asset in the decedent’s name is probate property. Any real or personal property that was in the decedent’s name can be defined as probate property.  

The difference between non-probate property and probate centers around whose name is listed as owner. Non-probate property consists of property that lists both the decedent and another as the joint owner (with right of survivorship) or where someone else has already been designated as a beneficiary, such as life insurance or a retirement account.  In these cases, the joint owners and designated beneficiaries supersede conflicting instructions in one’s will. Other examples of non-probate property include property owned by trusts, which also have beneficiaries designated. At the decedent’s passing, the non-probate items pass automatically to whoever is the joint owner or designated beneficiary.

Why do you need to know the difference? Simply put, the categories of probate and non-probate property will have a serious effect on how plan your estate.  If you own property jointly with right of survivorship with another individual, that individual will inherit your share, regardless of what it states in your will.  Estate and probate law can be different from state-to-state, so it’s best to have an attorney handle your estate plan and property ownership records to ensure that your assets go to the intended beneficiaries.

Contact the LegalJourney Law Firm to schedule a consultation with an Attorney to discuss Your Estate Plan needs today.

Overview of Life Estates

Establishing a Life Estate is a relatively simple process in which you transfer your property to your children, while retaining your right to use and live in the property. Life Estates are used to avoid probate, maximize tax benefits and protect the real property from potential long-term care expenses you may incur in your later years. Transferring property into a Life Estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.

Life Estates establish two different categories of property owners: the Life Tenant Owner and the Remainder Owner. The Life Tenant Owner maintains the absolute and exclusive right to use the property during his or her lifetime. This can be a sole owner or joint Life Tenants. Life Tenant(s) maintain responsibility for property taxes, insurance and maintenance. Life Tenant(s) are also entitled to rent out the property and to receive all income generated by the property.

Remainder Owner(s) automatically take legal ownership of the property immediately upon the death of the last Life Tenant. Remainder Owners have no right to use the property or collect income generated by the property, and are not responsible for taxes, insurance or maintenance, as long as the Life Tenant is still alive.

Advantages

• Life Estates are simple and inexpensive to establish; merely requiring that a new Deed be recorded.
• Life Estates avoid probate; the property automatically transfers to your heirs upon the death of the last surviving Life Tenant.
• Transferring title following your death is a simple, quick process.
• Life Tenant’s right to use and occupy property is protected; a Remainder Owner’s problems (financial or otherwise) do not affect the Life Tenant’s absolute right to the property during your lifetime.
• Favorable tax treatment upon the death of a Life Tenant; when property is titled this way, your heirs enjoy a stepped-up tax basis, as of the date of death, for capital gains purposes.
• Property owned via a Life Estate is typically protected from Medicaid claims once 60 months have elapsed after the date of transfer into the Life Estate. After that five-year period, the property is protected against Medicaid liens to pay for end-of-life care.

Disadvantages

• Medicaid; that 60-month waiting period referenced above also means that the Life Tenants are subject to a 60-month disqualification period for Medicaid purposes. This period begins on the date the property is transferred into the Life Estate.
• Potential income tax consequences if the property is sold while the Life Tenant is still alive; Life Tenants do not receive the full income tax exemption normally available when a personal residence is sold. Remainder Owners receive no such exemption, so any capital gains tax would likely be due from the Remainder Owner’s proportionate share of proceeds from the sale.
• In order to sell the property, all owners must agree and sign the Deed, including Life Tenants and Remainder Owners; Life Tenant’s lose the right of sole control over the property.
• Transfer into a Life Estate is irrevocable; however if all Life Tenants and Remainder Owners agree, a change can be made but may be subject to negative tax or Medicaid consequences.

You want your money and property to go to your loved ones when you die, not to the courts, lawyers or the government. Unfortunately, unless you’ve taken proper estate planning, procedures, your heirs could lose a sizable portion of their inheritance to probate court fees and expenses. A properly-crafted and “funded” living trust is the ideal probate-avoidance tool which can save thousands in legal costs, enhance family privacy and avoid lengthy delays in distributing your property to your loved ones
What is probate, and why should you avoid it? Probate is a court proceeding during which the will is reviewed, executors are approved, heirs, beneficiaries, debtors and creditors are notified, assets are appraised, your debts and taxes are paid, and the remaining estate is distributed according to your will (or according to state law if you don’t have a will). Probate is costly, time-consuming and very public.

A living trust, on the other hand, allows your property to be transferred to your beneficiaries, quickly and privately, with little to no court intervention, maximizing the amount your loved ones end up with.

A basic living trust consists of a declaration of trust, a document that is similar to a will in its form and content, but very different in its legal effect. In the declaration, you name yourself as trustee, the person in charge of your property. If you are married, you and your spouse are co-trustees. Because you are trustee, you retain total control of the property you transfer into the trust. In the declaration, you must also name successor trustees to take over in the event of your death or incapacity.

Once the trust is established, you must transfer ownership of your property to yourself, as trustee of the living trust. This step is critical; the trust has no effect over any of your property unless you formally transfer ownership into the trust. The trust also enables you to name the beneficiaries you want to inherit your property when you die, including providing for alternate or conditional beneficiaries. You can amend your trust at any time, and can even revoke it entirely.

Even if you create a living trust and transfer all of your property into it, you should also create a back-up will, known as a “pour-over will”. This will ensure that any property you own – or may acquire in the future – will be distributed to whomever you want to receive it. Without a will, any property not included in your trust will be distributed according to state law.

After you die, the successor trustee you named in your living trust is immediately empowered to transfer ownership of the trust property according to your wishes. Generally, the successor trustee can efficiently settle your entire estate within a few weeks by filing relatively simple paperwork without court intervention and its associated expenses. The successor trustee can solicit the assistance of an attorney to help with the trust settlement process, though such legal fees are typically a fraction of those incurred during probate.