Tampa Estate Planning Attorney
A thorough estate plan can relieve many worries about end-of-life care and about what will happen to your family and your property after your death. Estate plans may include many tools, including powers of attorney, wills, and trusts, and can achieve many goals, including probate, tax planning and the protection of family members. Call our experienced Tampa estate planning attorneys today to create your estate plan.
Estate Tax Planning
The federal estate tax rate for 2015 is 40 percent, with an exemption from taxation for the first $5.43 million of a person’s estate, or $10.86 million for a married couple. Additionally, any property inherited by a surviving spouse inherits is exempt from estate taxation, and will only be taxed upon the surviving spouse’s death. However, for a surviving spouse to take advantage of the combined $10.86 exemption, the spouse must elect portability of the exemption by filing a Form 706 Estate Tax Return within nine months of the decedent’s death.
The absence of a Florida estate tax and the federal estate tax’s large exemption amount means that many Florida residents need not worry about estate tax planning. But an attorney can also help you work to minimize your gift tax, generation-skipping transfer tax, and income tax liabilities. Additionally, if you may move to another state that does assess an estate tax, you should plan for that estate taxation. Contact our Tampa estate tax planning attorneys.
Everyone who is over the age of 18 should have a will. If a decedent’s assets are not disposed of under a will or trust, the estate will pass under Florida’s rules of intestacy, which may not exactly comport with your wishes. Wills must be executed in accordance with certain formalities, including being properly signed and witnessed. Additionally, for a will to be valid, the testator must be of sound mind. A Tampa estate planning attorney can work with you to ensure that your will is validly executed and that it correctly states to whom you want your property to go.
Special Needs Trusts
If you want to provide, after your death, for a special needs family member, but are worried that if you leave money, the family member will no longer qualify for Medicaid or other similar government benefits, you can create a special needs trust. Special needs trusts are created for the benefit of a disabled individual under the age of 65. They allow a family member to provide care and services beyond that which would be provided by government benefits. But funds in a special needs trust do not count toward the income limit for those benefits.
Revocable and Irrevocable Trusts
A trust is an estate planning tool that, depending on the type of trust, may be used to minimize tax liability, shield assets from creditors, manage assets for young or irresponsible family members, and avoid probate. A grantor creates the trust and deposits assets into it. The trust is then managed by the trustee for the benefit of the beneficiaries.
There are two major types of trust: revocable and irrevocable. Revocable trusts are created during the grantor’s lifetime, and may be amended or revoked at any point by the grantor. Irrevocable trusts may not be revoked, but shield assets from creditors, since the assets deposited into the trust no longer belong to the grantor, but instead to the trustee. They may be established either during the grantor’s lifetime or at death. An attorney can help you determine which types of trust best suit your individual needs and goals.
If you have not created your estate plan, please call Tampa estate planning attorney Paul Riffel today for a free initial consultation.
Health Care Surrogate
Florida Law now allows you to designate what is termed a “Health Care Surrogate” in order to have another person make health care decisions for you if you are unable. Much like a health care power of attorney, this document allows your designated person to provide informed consent for medical treatment and surgical and diagnostic procedures. This is very useful if you are unable to make these decisions while receiving medical treatment. Contact our health care surrogate attorney.
Power of Attorney
A power of attorney authorizes a trusted person, known as the attorney-in-fact, to manage the financial affairs of another person, known as the principal. A durable power of attorney survives into the principal’s incapacity. Thus, if the principal loses the ability to manage his or her finances, the court will not have to appoint a conservator; instead, the attorney-in-fact can take care of financial issues. A lawyer can help you draft a power of attorney to identify the specific powers and restrictions you want the the attorney-in-fact to have.
Who will manage your affairs for you if you become mentally or physically incapacitated? What if you must be out of town at the time of a real estate transaction or when another legal act will be completed? Fortunately for situations such as these, there is a powerful and relatively inexpensive legal tool — the Power of Attorney.
The Power of Attorney authorizes one person to act as another’s attorney or agent. This document gives power to a designated agent, called the “attorney in fact”— hence the name Power of Attorney. The agent does not have to be an attorney at law; it must be someone you trust.
There are two basic types of powers of attorney; the general which grants power over all your assets to the agent, and the special, which allows the agent to manage one specific asset. General and special Powers of Attorney are valid only as long as the principal, the person granting the power, is alive and competent,
Both types can also be made durable, that is, written to remain valid even if the principal becomes incapacitated. When prepared and executed correctly, the durable power is a highly effective financial management instrument. It can also avoid the necessity of a guardianship, which can be fairly expensive.
Remember, death of the principal always nullifies any Power of Attorney, even those made durable. Therefore, a Power of Attorney should not be confused with, or substituted for, a Will.
Also, the law was substantially rewritten effective October 1, 2011. Older power of attorneys, while not invalid, may be questioned by banks and other financial institutions. You may consider updating your power of attorney because of this issue.
Life Estate Deed
In some circumstances, the only item that needs to be probated is the homestead. You can avoid probate entirely, in this situation, by having a life estate deed drafted. This deed allows the owner to keep full rights in the property for as long as he or she lives. Upon the owner’s death the property automatically goes to the person listed in the deed. This is similar to placing someone as a beneficiary on an account. And it is not considered a transfer for purposes of qualifying for Medicaid. Our life estate deed attorney can help.
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Estate Planning FAQs
Where is the best place to keep my signed original estate planning documents?
The best place is probably in a safe deposit box because it will protect the documents from theft, fire, accidental loss, and most other types of damage or harm. A potential problem, though, is getting it opened after your death.
If you decide to keep your estate planning documents in a safe deposit box, consider naming a family member or your Personal Representative or trustee as a joint holder on the box. That should simplify matters following your death because someone will be able to get into the box without delay.
Another place to keep your original estate planning documents is with the attorney who drafted them. However, I have decided not to retain original documents because of concern over theft, fire, flood, storms, or other loss of the document. It would also be prohibitively expensive to store hundreds or thousands of original documents. Also, what would happen if I was to die or my law firm was to cease operations?
Many people keep their original estate planning documents at home in a secure place. If you have a safe at home, that can be a good place to keep them. Be aware though, when thieves enter your home and discover a locked safe, they often take the whole safe thinking they’ll find cash and jewelry. The last thing they want is a file containing your estate planning documents, but that’s one of the things they’ll get if you keep them in your safe. Therefore, unless your safe is bolted to the foundation of your house, it may not be the best place to keep your originals.
More people than you would expect keep original Wills and other estate planning documents in an air-tight plastic bag at the bottom of their freezers. Freezers are well insulated and heavy, and have a way of withstanding fires, hurricanes, and tornadoes. Also, they don’t die or move away, and they are stolen far less frequently than in-home safes.
Should I give copies of my Will and other estate planning documents to my children and to the Personal Representatives of my estate?
For some people, their estate planning documents are as private as their income tax returns, and nobody is ever given copies. For other people, estate planning documents are. no different than a spare key to the house, and every family member and Personal Representative and/or trustee named in the documents is given a copy.
If you are the type of person who values your privacy, who does not especially trust your children, Personal Representative, or trustee, or if you have written a Will or trust which does not treat all the children equally, then it may not be a good idea to hand out copies. Also, you may have more money than your children expect, and depending on how your Will or trust is written, giving them a copy may be letting them know too much about your personal business.
On the other hand, if you have a fairly open relationship with all your children, you regularly discuss finances with them, and you are leaving your estate to them in equal shares, then go ahead and give everyone a copy. Of course, if you decide to change your Will or revocable trust, you should be sure to give all the same people copies of the new documents. If you don’t, then there may be some arguments following your death over which document controls the disposition of your estate.
Revocable and Irrevocable Trust FAQs
For who are living trusts most appropriate? What are the pros and cons?
Living trusts are useful estate planning tools, and they have an important place in many people’s estate plans. If you find any one of the following benefits appealing, then a living trust may be appropriate for you.
Benefit #1: No Court Involvement.
When a person dies, most properties pass either under a person’s Will or under a living trust. Some properties—such as life insurance, IRAs, and certain types of bank and brokerage accounts—pass directly to named beneficiaries. If property passes under a Will, then the Will must be probated at the courthouse. Probate entails hiring a lawyer, filing a number of papers with the court, attending one or more hearings, and providing a written inventory to the court valuing the properties which passed under the Will.
Some people don’t want this type of involvement with the court, so they opt for a living trust. By transferring all properties which would otherwise pass under your Will to a living trust, you can avoid the court entirely. For estates which don’t owe estate taxes, there is usually less work for the lawyers, and that translates into reduced estate administration costs.
Benefit #2: Privacy.
As mentioned above, when a person dies with a Will, an inventory must be filed with the court. You may not want your friends, neighbors, or the media to be able to read a listing of what you own and what it is worth. After all, an inventory is a public record. With a living trust, your properties and their values are all kept private.
Benefit #3: Plan for Future Incapacity.
You may be worried that one day you won’t be able to manage your own finances, and you may want to name someone to handle these types of matters for you. You can address this potential problem with a power of attorney or with a living trust. A power of attorney will usually be accepted by banks, title companies and the like, but there is always the risk that an institution’s legal department will reject it. The same person who may be denied the ability to use a power of attorney will likely be allowed to do anything he or she wants when acting as trustee of a living trust.
Benefit #4: Harder to Challenge.
If you are planning to disinherit one of your children or grandchildren, you may be better off with a living trust because there is nothing filed at the courthouse. Also, it is a little harder to contest a living trust than a Will. Many people are interested in doing as much as possible to prevent a successful challenge to their estate plan
Benefit #5: Avoid Out-of-state Probate.
If you own property in another state, you can avoid a costly probate proceeding in that state by transferring the property to a living trust.
Before you establish a living trust you need to understand the downsides, which include the following:
Disadvantage #1: Time-consuming to Set Up.
Depending on how many different types of properties and accounts you own, it can take quite some time to switch everything over to the name of your living trust.
Disadvantage #2: Complicated.
Wills are usually shorter and simpler to understand than living trusts. Also, with a Will, you can sign it and forget about it. But with a living trust, you need to put your property into the trust and run your life out of it for as long as you live. For many people, this downside outweighs all the potential benefits.
Disadvantage #3: Time-consuming to Revoke.
A year after you set up the living trust, you may decide you don’t want it any more. At this point, you will need to return to every bank and brokerage house, and undo everything you had done to establish the trust. You can expect more lawyers’ fees too.
Disadvantage #4: Post-Death Costs Not Eliminated.
If you have a taxable estate (which is generally an estate over $2,000,000 in 2007 and 2008), there will be a lot of work to be done after death regardless of whether probate is required. Typically, there are tax returns to file, trusts to establish, assets to value, and more. Avoiding probate will only marginally reduce the cost of administering a taxable estate.
Disadvantage #5: May Still Need to Probate Will.
If you leave just one bank account or one piece of real estate out of the trust, probate will still be necessary. And probate takes about as long when there is one asset as when there are twenty.
Estate Tax FAQs
Could you explain how stock values are “stepped up” as a result of death? My father has a lot of stocks that he bought decades ago, and I’ll be inheriting them when he dies.
Getting a stepped-up cost basis on inherited stock allows you to save taxes when the stock is sold.
For instance, if your father bought a stock at $10 a share, and it is now worth $100 a share, when he sells the stock, he will owe a capital gains tax on the $90 the stock .has appreciated. If your father gives you the stock before his death, the gift will be valued at $100 a share, but you will take his cost basis of $10 a share. That means you will owe a capital gains tax when you sell the stock.
If your father waits to give you the stock until after his death, the stock will be valued in his estate at $100 a share, and you will have a new cost basis of $100. Your father’s $10 cost basis gets “stepped-up” to $100 as a result of his death. This is true even if your father’s estate is not required to file a federal estate tax return. When you later sell the stock, you will only owe capital gains if the value of the stock is higher than $100.
There are two exceptions worth noting. First, after your father’s death, if his estate owes estate taxes, it is possible to value the stock six months following his date of death. If the stock is worth less at that time, you can use this lower value as a way to pay less estate taxes. But if you do, the basis in the stock is also the lower value—not the higher date of death value.
Second, if you own $20,000 worth of stock that you purchased for $1,000 years ago, you may be hesitant to sell the stock because you don’t want to pay capital gains taxes (typically 15% of $19,000, or $2,850). Your idea may be to give the stock to your father, who is very ill and near death, and then have him leave it to you when he dies, thereby getting a stepped-up cost basis. As you might expect, the IRS doesn’t like this, and there is a rule which says if your father dies within one year of being given your stock, then you receive the stock with your old cost basis. If your father makes it more than a year, then you do get the stepped up cost basis.
Power of Attorney FAQs
What is the difference between a Designation of Health Care Surrogate and a Living Will?
A Designation of Health Care Surrogate is a document that allows you to name an agent to make medical treatment decisions for you in accordance with your wishes if you are not able to do so yourself.
A Living Will is a document that allows you to address what kind of medical treatment you would like to receive if you ever face a terminal or irreversible medical condition. It is often referred to as the document where you tell the doctors to “pull the plug.” Most people request that all treatments other than those needed to keep them comfortable be discontinued or withheld so they can be allowed to die as gently as possible.
The main difference between the two documents is that the Living Will is where you actually express your own specific preferences as to the use of life sustaining treatment, and the Designation of Health Care Surrogate is where you name one or more persons to make most medical decisions for you.
It is not uncommon to combine a Living Will and a Designation of Health Care Surrogate into a single form. Preparing the two documents as separate forms or as a single form are both valid ways to address the medical issues.
If I name someone to make medical decisions for me in a Designation of Health Care Surrogate, can that person later decide not to turn off the machines even though I have signed my Living Will?
If you have both a Living Will and a Designation of Health Care Surrogate, there certainly can be some overlap.
For instance, a decision made by your agent under a Designation of Health Care Surrogate may have the effect of ending your life within hours or days even though you may not yet have reached the point at which your Living Will would have applied to your medical condition.
Which assets are handled outside of probate?
There are a number of different kinds of properties that may pass outside the provisions of your Will
The list includes life insurance, retirement plans, individual retirement accounts, and annuities. When you purchased or set up these types of assets and accounts, you were probably asked to fill out a form listing the beneficiaries who will receive payments upon your death. These investments will pass to the named beneficiaries regardless of whether you have a Will. However, if you don’t have a beneficiary named, if the beneficiary named is your “estate,” or if all the beneficiaries are dead, then those investments will be paid to your estate and pass under your Will.
Certain bank and brokerage accounts will also pass outside your Will. For instance, payable-on-death accounts (sometimes called “POD” accounts) will be distributed to the named beneficiary. Additionally, accounts set up by one or more persons as joint tenants with rights of survivorship will pass to the surviving account holder or holders.
Some banks allow you to set up what they call trust accounts even though there is no written trust agreement. These types of accounts will pass to a named beneficiary without going through probate as well.
Not all joint accounts pass to the survivor. When joint accounts are set up as tenents in common, the portion of the account that was owned by the decedent passes under his or her Will.
Many people have decided to create revocable or irrevocable trusts as part of their estate plan. Virtually all such trusts are designed to pass directly to persons or other trusts named in the document rather than under a Will.
You may find that most of your estate consists of non-probate property. Therefore, it is extremely important to coordinate the beneficiaries of all these properties to make certain your assets will be distributed as you want when you pass away.
Must a Will be probated if the estate is less than $2,000,000? Are insurance proceeds included in that total?
There is no requirement that you probate a Will no matter how much the estate is worth. Wills need to be probated only if property is not transferred by some other means.
You are confusing probate with the filling of federal estate tax return. Regardless of how the property is transferred at death, if an estate is valued at $2,000,000 or more in 2007, then a federal estate tax return must be filed. And yes, you must include proceeds of life insurance owned by the decedent in computing the $2,000,000. (This $2,000,000 amount will be increasing to $3,500,000 in 2009).
The probate process is primairly a method of changing title from the deceased to the person or persons who inherit the property. Some assets require probate, such as real estate and bank accounts held only in the name of the deceased, while others do not, such as life insurance policies or retirement plans payable directly to named beneficiaries.
Contact our Tampa Estate Planning Attorney Today
If you live in the Tampa, Brandon, Riverview, or Hillsborough County areas and you want to plan for the future disposition of your property, please contact Tampa elder law attorney Paul Riffel at (813) 265-1185 to schedule a free consultation.