Estate Planning Services


Estate Planning Services

The Importance of Estate Planning

The ultimate goal of estate planning is to provide for the management and transfer of your property, in the event of your death or incapacity, at the smallest financial and emotional cost to your family.  A properly structured estate plan allows you to choose your beneficiaries, provide for the management of your assets and eliminate or reduce taxes. Without careful planning, your property may pass to unintended beneficiaries or be reduced in value by unnecessary taxes or unsound investments, all of which may cause financial insecurity or bitterness after your death.

Estate planning also addresses such questions as who should own property and what property to own, whether it should be owned jointly or separately, whether trusts are needed for management, control or tax savings, and whether lifetime gifts should be made. The following covers the basics of estate planning and will help you assess whether or not your current plan adequately provides for your family.

Providing for the Transfer of Your Property at Death

At your death, your property will be transferred in one of two ways. Certain assets, referred to as non-probate assets, will be distributed without reference to your Estate Plan or supervision by the Probate Court. Non-probate assets include:

  • Assets owned jointly with right of survivorship, which pass to the surviving joint owner.
  • Assets held in trust, which pass according to the trust agreement.
  • Life insurance proceeds which are paid to the beneficiaries you designate on the beneficiary form.
  • Pension, profit-sharing, deferred compensation or other corporate death benefits, and individual retirement or Keogh accounts, which are paid to the beneficiaries you designate on the beneficiary form.

All of these assets are fully taxable for estate tax purposes. Your other assets will be distributed under the supervision of the Probate Court, in accordance with your Estate Plan, or if you do not have an Estate Plan, as provided by state law. For example, if you are a Florida resident and are survived by a spouse and two children, who are not also your spouse’s children, but you do not have an Estate Plan, your spouse will receive one-half of your estate, and your children will receive one-half.

Planning for Your Children’s Inheritance

If you leave property outright to your children or grandchildren under the age of 18 and do not arrange for the property to be held in a trust or a Uniform Transfers to Minors Account, the Probate Court will require the appointment a guardian to manage the child’s property until he or she turns 18. The guardian will be entitled to reasonable compensation and will be required to account to the court for approval of his or her actions on an ongoing basis.

To avoid the cost and inconvenience of a court-appointed guardian, we recommend that you provide in your Estate Plan for the child’s inheritance to be held in trust. A Trustee will manage the trust funds and distribute them to the child as needed, until the child reaches the age selected by you for outright receipt of his or her inheritance. In addition to ensuring that your child will not receive a substantial inheritance outright at an early age when he or she may not be ready to manage the funds or spend them wisely, the trust can be designed to continue for the child’s lifetime to provide protection from unwise spending or creditor’s claims.

Selection of Personal Representatives, Trustees, and Guardians

While the need for a professional Personal Representative or Trustee will depend in large part on the complexity of your personal and financial circumstances, it is important to realize that the benefits of a well-structured estate plan can easily be jeopardized unless your Personal Representatives and Trustees not only have good judgment in non financial and family matters, but also have the training and experience to make complex economic and tax decisions.

Your Personal Representative collects and invests your assets during the period that your estate is being administered, makes distributions to your family as needed, files the required tax returns, and makes the appropriate tax elections and decisions. Since there are many options available to reduce taxes, the period during which the estate is being administered provides a unique opportunity to achieve substantial tax savings for the estate and its beneficiaries. The Personal Representative should either have the professional expertise to make the right decisions, or the wisdom to retain and follow the advice of a tax attorney who specializes in estate administration. The Personal Representative should also have access to the investment expertise needed to take your place as the ”manager” of the family’s resources during the period that the estate is in administration.

The Trustee takes over from your Personal Representative after your estate is settled. The Trustee’s job is to manage any portion of your estate left in trust. This includes investment of the trust assets to meet the family’s needs and objectives, as well as financial and tax planning. If you have minor children, your Estate Plan should name Guardians for your children in case both you and your spouse die while they are minors. While the Trustee will manage your children’s inheritance and provide funds for their expenses, it will be the Guardians who will make personal decisions concerning the development and welfare of your children.

Revocable Trusts and Durable Powers of Attorney

If you desire assistance in managing your assets, wish to avoid probate or are concerned with providing for the management of your assets in the event of your incapacity, you should consider transferring your assets to a Revocable Trust. A Revocable Trust can be revoked or changed at any time. You can be the sole Trustee of the trust, with a named co-Trustee to assume that responsibility at such time as you are no longer capable of managing the trust assets.

Use of a Revocable Trust can avoid appointment by a court of a conservator to manage your assets in the event of your incapacity. In many cases, however, it will be sufficient to take the simpler step of signing a Durable Power of Attorney, which can be used in the event of your incapacity. The Durable Power of Attorney will name a family member or members or trusted advisor to manage your assets in the event you are no longer capable of doing so.

Advance Directives

Many states have enacted laws that encourage physicians and hospitals to follow the wishes of a terminally ill patient who has signed an Advance Directive expressing his or her wishes that no extraordinary life support measures be used. The law also permits you to appoint a “Health Care Agent” to handle these issues if you cannot act. If you are concerned about this subject, you may wish to consider executing such an Advance Directive which follows the form required by law.

Your Estate Plan

An estate plan must be personalized to consider your objectives and financial situation. This requires a comprehensive review by a qualified estate planner.