Estate Planning

The death of a loved one is never easy to navigate for family members and close friends, but the process of managing their personal assets in their absence can be all the more challenging without a proper plan in place. A will provides instructions for the distribution of personal belongings and final wishes.

An estate plan provides further details about estate management’s critical aspects, including the guardianship of surviving children, the transfer of retirement accounts or real estate, and properties belonging to a living trust. Working with Lopez Law Group to develop your estate plan will facilitate the preparation of your assets and inform a future executor on how to manage your estate upon death.

What Is An Estate Plan?

An estate contains all of an individual’s financial and personal properties upon their death, including real estate, retirement accounts, life insurance benefits, stocks, and vehicles. While a will is a legally protected document that explains a loved one’s final wishes, an estate plan is more in-depth with the distribution of assets and specific financial planning.

An estate plan anticipates an individual’s potential end-of-life needs from supportive care to guardianship and helps an executor avoid probate court when settling the estate. Additionally, an estate plan can designate beneficiaries outside of the traditional blood relative or legal partner.

What Happens If I Don’t Have An Estate Plan?

The purpose of estate planning is to minimize complexity and see the family through a smooth transition. It also sets forth a clear expectation for the division of assets and distribution of wealth to beneficiaries. It is specifically designed to protect the deceased’s wishes and give relatives a roadmap to honoring their wishes. The Florida Probate Code can be found in Chapters 731 through 735 in the Florida Statutes.

If someone passes without issuing a legal will or estate plan, their assets become the probate courts’ responsibility. Should this occur, loved ones may face several challenges when attempting to settle the estate:

• Higher Expenses: Managing the estate through probate can be an expensive process in which attorney’s fees and court costs can quickly drain from the estate’s value.
• Lack Of Privacy: Probate courts are public records, meaning that creditors, as well as ill-intending relatives, can gain access to the proceedings and challenge the settlements to serve their own interests.
• Lack Of Efficiency: Particularly if creditors or relatives challenge the courts’ proceedings, settling an estate through probate can drastically delay the timeline.

Debt Settlement

If your estate goes to probate due to a lack of will or estate plan, debt collectors are more likely to go after remaining assets to repay outstanding debts. While there are some instances in which a surviving spouse or another heir may become legally responsible for settling debts, creditors may still have the opportunity to get ahold of assets before they are transferred to beneficiaries. If you don’t have a will and are a recipient of Medicaid, for example, your assets may be acquired by the state to pay off your remaining debt.

Minor Children And Inheritance Distribution

Without a will, any minor children will be assigned a guardian by the courts rather than become the responsibility of a close friend or family member. Additionally, inheritance distributed by the probate court will proceed according to state standards, which may not accommodate step-children, foster children, or a child born outside of marriage. Having an estate plan will clearly define beneficiaries regardless of whether they would qualify under standard state procedures.

Executor Assignments And Estate Management

If there is not an assigned executor to your estate, the probate courts will select someone from a list of eligible family members. This will often be a surviving spouse or domestic partner, or an adult child. Without a will, this means you may not be assigned an executor that has your best interests at heart.

Distribution Of Assets

An estate plan determines the preferred distribution of assets. Without the document to serve as a guide for an executor, the probate courts will distribute according to the state standard. This means only legal spouses or registered domestic partners, and blood relatives will receive an inheritance. If there are no spouses, domestic partners, or children who survive you, distant relatives would be eligible for the inheritance. Unmarried partners, close friends, or charitable organizations will not receive any assets.

Power Of Attorney And Guardianship

Estate plans serve as preparation for managing assets upon death and play a significant role if you were to become incapacitated or otherwise incapable of caring for yourself. Whether due to progressive health complications or a sudden accident, an estate plan can designate a preferred guardian to care for your wellness, as well as a financial and medical power of attorney. According to the estate plan, these responsible parties would be tasked with legally representing you and your known preferences.

What To Include In An Estate Plan

An estate plan incorporates more than just a living will and serves as an all-encompassing guide for managing assets upon death. Typically, an estate plan includes:

• A living will or trust
• An inventory of your accounts or significant assets
• A financial power of attorney
• A healthcare power of attorney
• Guardianship assignments
• A letter of intent
• Beneficiary designations

Working with an experienced attorney will ensure that your basic estate planning needs are met and that any additional considerations are brought to the table for discussion. A well-developed estate plan will provide your loved ones with adequate financial support and logistical guidance in your absence.

How Can An Estate Plan Benefit My Finances?

In addition to establishing the distribution of assets and property, an estate plan can significantly impact a beneficiary’s financial inheritance by reducing tax estate responsibilities and avoiding the costs of probate court. Even if you don’t have an extensive estate or a significant financial portfolio to hand down, an estate plan will ensure that the beneficiaries you’ve worked hard to support will receive every bit of what you intended to leave them.

Similarly, if you don’t plan for the transfer of certain assets, your loved ones may find themselves burdened by excessive taxes from the Internal Revenue Service (IRS). The financial aspect of your estate plan can reduce most if not all of the federal, state, and inheritance taxes.

Supporting Surviving Family Members

Having an estate plan will also make it easier for surviving family members to continue living a financially stable life. Just because someone is legally married does not mean that their spouse automatically has access to their bank accounts or estate upon death. Without an estate plan, those finances could take years to make it through probate court. Likewise, your spouse would not have access to cash sitting in your bank account.

An estate plan can arrange for an account transfer upon death or at least grant access to specified individuals in the instance of your untimely passing. For example, if you are the primary breadwinner and were to pass suddenly, your surviving family may not be able to continue making house payments, buying food, or afford legal fees to claim assets.

With the proper documentation, a surviving spouse can be granted access to predetermined accounts and therefore continue to afford an essential cost of living. The same also applies to housing and vehicles; without a proper estate plan, any personal assets may become the property of the probate courts, and your family would be expected to make other arrangements.

Charitable Giving And Philanthropy

Many individuals wish to leave part or even all of their estate to a charitable organization. If philanthropy was important to you throughout your life, you might wish to continue giving after you’ve passed. An estate plan is a primary way in which to arrange such ongoing or lump sum support. It is a way to leave a particular legacy and minimize your loved ones’ estate tax responsibility.

There are several forms of charitable giving you may wish to include in your estate plan:

• The creation of a family or private foundation
• Charitable gift at death via a trust or will
• Gift assets such as real estate, art, or land
• Donate a retirement account
• Charitable gift annuity

How To Develop An Effective Estate Plan

In addition to considering the distribution of assets and settling of personal debt, an estate plan will provide stability and peace of mind in your elder years. This is why it can be critical to update your estate plan as circumstances shift and make adaptations according to changing needs.

Address Needs For Long-Term And Disability Care

Although it can be discomforting to think about, anticipating potential long-term care needs and support for disability can be critical in any estate plan. In addition to assigning a financial and healthcare power of attorney, ensure that your stability and comfort will be guaranteed by designating funds in your estate plan.

Home healthcare, as well as long-term living facilities, can rapidly drain your finances and put your loved ones in a difficult place. Whether you are anticipating eligibility for Medicaid or intend to utilize long-term care insurance, consult with your attorney as to how you can best protect your financial and physical wellbeing towards the end of your life.

Plan For Estate Tax Liability

While leaving an inheritance sounds like a wonderfully intentional gift, it is also possible to unintentionally burden your surviving family members with estate and inheritance taxes. Although most states have reduced or eliminated this “death tax,” some states still enforce some or both. Consult with your attorney to understand your state’s tax exemption level and how to prepare accordingly.

Ensure Proper Ownership Of Assets

There are many reasons that couples may choose to maintain separate assets; however, that can complicate the transfer of ownership in the case of an untimely passing. Particularly for more considerable assets, it may be to your benefit to list both you and your spouse as owners to ensure a smooth transfer upon death.

A skilled attorney should verify that business assets and personal assets are claimed appropriately and that the right assets belong to the trust. Incorrectly maintaining ownership can further delay the transfer process and prevent loved ones from gaining access to the assets they need.

Planning Ahead

An estate plan will help guide you through critical decision-making processes while you are still in full capacity to do so. Working with an experienced attorney will provide you peace of mind in the instance that you or a loved one suffers a serious health complication or early death.

Estate planning will prepare you for future financial and healthcare support while ensuring that, upon your death, your family members will also be cared for. With a proper plan in place, the executor of your estate plan will be able to efficiently and effectively carry out your final wishes.

The Lopez Law Group has the experience and skill to help you develop a comprehensive estate plan to ensure you and your loved ones are protected. Contact us for a consultation about life care and estate planning.