December 16, 2008

What is a revocable living trust?

It is a legal document that can, in some cases, partially substitute for a will. With a revocable living trust (also known as a revocable inter vivos trust or grantor trust), your assets are put into the trust, administered for your benefit during your lifetime and transferred to your beneficiaries when you die—all without the need for court involvement.

Most people name themselves as the trustee in charge of managing their living trust’s assets. By naming yourself as trustee, you can remain in control of the assets during your lifetime. In addition, you can revoke or change any terms of the trust at any time as long as you are still competent. (The terms of the trust become irrevocable when you die.)

In your trust agreement, you will also name a successor trustee (a person or institution) who will take over as the trustee and manage the trust’s assets if you should ever become unable to do so. Your successor trustee would also take over the management and distribution of your assets when you die.

A living trust does not, however, remove all need for a will. Generally, you would still need a will—known as a pour over will—to cover any assets that have not been transferred to the trust.

You should consult with a qualified estate planning lawyer to assist you in the preparation of a living trust, your will and other estate planning documents. Also, keep in mind that your choice of trustees is extremely important. That trustee’s management of your living trust assets will not be automatically subject to direct court supervision.

October 18, 2008

Some basic elements to be considered in an effective Florida estate plan

There is a great deal more to be considered in establishing an effective Estate Plan than just drafting a will or a trust – it all depends upon the values of the individual and their station in life. For some, the most important issue is developing a plan to minimize Federal Estate taxes. For others, the most important issue is developing a plan of support for a child with a special needs disability, or perhaps ensuring that the family business is protected and passed on. In all cases, the family situation of both traditional and non-traditional families must be considered and various options evaluated to make sure that those that you love are protected.

While the goal of every estate plan should be to insure that your assets are seamlessly transferred to the persons of your choosing upon your death, additionally estate planning consists of addressing issues during life – developing legally enforceable documents that will allow others to act on your behalf should you not be able to take care of yourself in both managing your finances and making health care decisions. In addition, an estate planning objective is making your desires(and your authority to act)be known on what you want to happen to your bodily remains-and who you want to carry out your wishes - to avoid family conflicts at the time of your death.

Some of the basics instruments that every estate plan will likely include are documents such as a will or a trust, durable power of attorney for finances, durable power of attorney for healthcare, living will and health care surrogate designations, pre-need guardianship designations and designation of agent for bodily remains.

Over the course of the next few days, we’ll give a brief definition of each of these documents and explain how they fit into an overall estate plan.

The Simple Will:

Most estate plans contain a Will document, and are often referred to as a “Simple Wills.” A Will document is a foundational part to almost everyone’s estate plan, and provides written authority as to the disposition of your assets, and perhaps who you wish to take care of your children. Every Will should have a person designated as a “personal representative” (or may be called an “Executor” depending upon the state where you live) that you wish take care of paying your debts and making sure that your wishes are carried out.

What makes a simple Will “simple”? The term “simple” has nothing to do with the document not being complex – most simple Wills are quite complex in their construction, and are very structured documents that comply with the formalities of the state where the person resides. Basically, the term “simple” means that the Will contains no trust provisions (we’ll discuss trusts in the next several posts). A simple Will makes an outright provision for passing the asset directly to the beneficiary without having it administered for their benefit by someone else (called a Trustee).

If you have children that are under the age of 18, then you most likely will not be able to use a simple Will. You will need to consider some type of a trust document as part of your estate plan to ensure that your assets are managed for the benefit of your children. However, if you are under age 50 and don't expect to leave assets valuable enough to be subject to Federal estate taxes, you can probably get by with only a basic will. But as you grow older and acquire more property, you may want to engage in more sophisticated planning.

You have likely heard that if you do nothing else to take care of your legal affairs, you should write a will, and it’s pretty good advice. If you don't make a will before your death, state law will determine who gets your property and a judge may decide who will raise your children (and either or both may not be whom you would have chosen). Writing such an important document as a Will can be intimidating, but it doesn’t need to be. A good attorney will work with you to discuss your unique family situation, your wishes, and draft a Will that will meet your needs and be a legally enforceable document.

Because to the state laws requiring formalities upon the execution to be valid, it is always a good idea to engage an attorney to help you draft the Will according to your wishes and ensure that it is executed according to the formalities required by the state. If your Will is not properly executed, the Court may be asked to set the document aside and your wishes will not be respected. Your estate will be managed by the laws of “intestacy”, meaning that the state will follow its own laws in how your affairs will be settled, and who will take care of your children.

A last important consideration in drafting your Will is to remember that this document will ultimately be considered “public” information. Once your Will has been admitted to probate, your wishes are a part of the public record. If you have concerns about the privacy of your affairs, you may wish to work with an attorney to set up a trust that will ensure that your assets will not go through the Probate process, and therefore will be kept quite confidential.