1. WILL: A Will is the traditional document containing one’s plan of
asset distribution and management after death. All Wills name a Personal
Representative, (often called an Executor in other states) to manage the
decedent’s affairs after death. The Personal Representative may be an individual
or entity such as a bank or asset management company.
All Wills also contain a plan to distribute the assets of the deceased. The
asset distribution plan can range from the simple to the very complex. Complex
distribution plans usually involve a trust or trusts of various types to allow
separation of the benefit of the assets from legal control. A very common type is
to allow minor children to benefit from a parent’s assets while placing a
responsible adult or entity in charge of regulating distribution to or for the
2. REVOCABLE TRUST: This type of Trust is used as an alternative to
a Will. Like a Will, it is designed to provide for the management and distribution
of the maker’s (called the Settlor’s) assets after his death. It can have a simple or
detailed distribution plan and often contains other trusts which become active at
the Settlor’s death. Unlike a Will, a Revocable Trust must operate and be active
from its creation in order to confer its largest benefit. This benefit is that assets
placed in a properly created and maintained revocable trust are not subject to
probate. Probate is a judicial process whereby a court supervises assets of the
decedent to insure creditors and taxes are paid and the terms of the Will are
followed. Probate is time consuming and can be expensive.
A Revocable Trust avoids the probate process, but it does not allow the
avoidance of creditors or taxes in and of itself. For a revocable trust to work
properly all of the decedents assets must be held by the Trust prior to death. The
failure to transfer all assets is the most common failure of a revocable trust based
estate plan. Assets left out of the Trust are still subject to probate. For this
reason, revocable trusts are not for everyone. Revocable Trusts require follow-up
whenever a new asset is acquired. For those comfortable with the administrative
tasks, the benefit for heirs upon death and upon incapacity for the Settlor can be
3. DURABLE POWER OF ATTORNEY: This document allows the
holder of the power to do virtually anything of a business or financial nature, that
the maker can do. Unlike a Will, it is intended to be used while the maker is
alive. The intention is usually that it will not be used while the maker can handle
his or her own affairs. The intention is that it will be used when the maker is alive,
but due to age or mental state, the maker is unable to make informed decisions.
The most common type of Durable Power of Attorney is not contingent upon
incapacity. It is invaluable in the hands of a trustworthy individual in the event of
dementia because it avoids guardianship, which is expensive and time consuming.
4. HEALTH CARE SURROGATE: This document names an individual
or individuals to make health care decisions when one cannot make them for
himself or herself. It is limited to health issues only. It only operates upon the
mental or physical incapacity of the maker.
5. LIVING WILL: A Living Will deals with end of life issues. It covers
terminal conditions and directs life prolonging procedures be stopped when they
would only prolong the process of dying. It can also direct that food and water be
withdrawn when the machines maintaining physical existence are withdrawn. A
few years ago the statute was amended to cover the Terri Shiavo situation; a
persistent vegetative state or the related condition of a coma. In either condition,
the decision is whether and when to withdraw food and water. These conditions
may not require machines to breathe or for dialysis, but can be very long term,
unless food and water are withdrawn. This decision is hard for other to make and
a Living Will allows one to make the decision ahead of time, after due
The five documents discussed above should be considered by virtually anyone. Each can
be changed or revoked during the life and competency of the maker. There are many
other documents and situations which will be beneficial to some people, but not others.
There are many other types of Trusts, each with different terms and characteristics. A
Trust can be used to benefit children or to protect adults from their own spending habits
or from a spouse or other creditors. A very common trust is used to own and receive the
benefits of a life insurance policy.
People who die without an estate plan in Florida are subject to the Florida intestacy
statutes. These work best for a person married to a first spouse with no minor children.
People with minor children or any “unconventional” family arrangement have a much
tougher time. Unmarried partners, whether same sex or mixed, and persons on a second
or subsequent marriage especially with children from a prior marriage or partner will be
ill-served by intestacy. Inheritance is where the “wicked step-mother” (or “step-father”)
made her reputation. Unintentionally disinherited children from a first marriage are all
too common. A proper plan can provide for each of the interests and reduce ill feelings.
Finally, there is the estate tax. Although as this is written in early 2010, there is no estate
tax, Congress and the President have several proposals to reinstate the tax. The worst
scenario would be if Congress passes nothing. In that case, beginning January 1, 2011,
the estate tax springs back to life with a one-million dollar tax exemption and with a 55%
maximum rate. The taxable estate includes retirement plans and almost all life insurance
death benefits, which most people don’t count as wealth and so is often overlooked.
Most people will still be exempt from the tax, but those subject to it will face high tax
bills with an estate valued only modestly above the one-million dollar threshold.
How should a couple own their assets? Should they be in one name or two?
It affects the estate plans and asset protection; the question is nothing new.
So I give people a lawyer’s answer when they ask, and say that it all depends
on whether avoiding taxes or creditors fits more with their planning ends.
But there is one dangerous asset which should always be held alone.
It’s the car you drive, transfer title today and stay away from the liability zone.
There is a way around probate; a Revocable Trust is the Way
But commit your heart to do it and be a Trustee every day.
You must put all your assets in it then turn your mind to how
You saved your heirs months and many thousands, though it’s no “LAUGH IN” now.
So point the feet of all to my office who want to leave a good last impression.
I need your help because I refuse to participate in this recession.]]>
A good referral for me is anyone breathing who won’t always be that way.
I’m different from some other planners because I listen to what my clients actually say.
Everyone needs a plan to be prepared for their last day.]]>
The litigation began within days before the Killer drug was found and brought in
Without a Will, Prince Michael and Prince II and Perhaps Bubbles all will need,
Guardians, advisors, conservators see legal eyes shine with greed
Now a Will has been found and it should prove a legal referee
To regulate how Prince Michael, Katy and Prince II spend the Beatles Royalty
The King of Pop can tell His Story through his Will in the probate process
We can hear his last impression if we try, through the cacophony of the media colossus.]]>