The Top 5 Estate Planning Questions Answered

Florida probate attorney answering estate planning questions for young couple.

The Top 5 Estate Planning Questions Answered

Estate planning can be a complex and uncomfortable issue to address. Few people want to think about their eventual death. While most people do want to provide for their loved ones and understand that an estate plan will help them do that, they might not understand the importance of an estate plan’s components. Additionally, individuals with limited resources may not understand why they should create an estate plan when they do not have a lot of wealth to pass on. Estate planning is a valuable tool that can make both life and death easier for you and your loved ones. Having unanswered estate planning questions can be one of the biggest reasons someone procrastinates and avoids creating their estate plan. If you still have questions, consider contacting Loughlin Law, P.A. at (561) 677-8384 to schedule a consultation with one of their Florida estate planning attorneys and discuss your concerns.

Estate Planning 101

Many people think estate planning is simply drawing up a Last Will and Testament, signing it, and storing it safely. However, the estate planning process encompasses much more than that. The American Bar Association (ABA) describes estate planning as a process that includes the counsel of professional advisors such as lawyers, financial advisors, and others who understand the individual’s goals, concerns, assets and the ownership of those assets, and the family structure. Individuals should be aware that while the ABA uses examples such as lawyers and financial advisors as part of the process, there is no legal requirement to hire any legal or financial professionals as part of the estate planning process. As in any other area, however, working with experienced professionals in estate planning may confer both practical advantages and peace of mind.

An estate plan includes planning for the transfer of property at death by the use of a will and one or more trusts. The plan may also include tax planning, and typically includes planning for the estate owner’s possible incapacity with such documents as:

  • Power of Attorney
  • Living Will
  • Healthcare Proxy

What Is the Difference Between a Will and a Trust? Why Should I Consider Both?

The differences between wills and trusts give rise to some of the most common estate planning questions. Both wills and trusts are types of estate planning tools, and they share some similarities. Wills and trusts can work together to create a more complete estate plan. Both wills and trusts each have advantages and disadvantages, so individuals may wish to consult with an attorney to discuss the combination of options that may best meet their needs.

Will

A will is not effective until the testator, the individual who creates and signs the will, dies. A will allows the individual to direct the distribution of their property. The individual also uses the will to name the executor of their estate, or the person who will oversee the estate as it goes through probate, debts are paid, assets are distributed, and the estate is eventually closed. After the death of the testator, the will is entered into probate and becomes public record, which means anyone may see its contents.

Trust

A trust can be effective upon creation, or when the trust creator dies or becomes incapacitated. Trusts can be used to distribute property before the grantor (the person who places assets in the trust) dies, but a trust only covers the assets identified in the trust creation document, also known as the trust instrument. Anything not specifically named in the trust or placed in the trust through a pour-over will activated by the grantor’s death will go through probate as if the individual died intestate if there is not a will, per FL §732.101. By contrast to a will, a trust is private and ensures that the individual’s estate is not made public for anyone to see. The knowledgeable attorneys at Loughlin Law, P.A. may be able to assist you with setting up a trust or drawing up a pour-over will.

Can I Update or Change My Estate Plan After Creating It?

One of the most frequently asked estate planning questions is whether an estate plan is permanent or can be changed. Not only can an estate plan be changed, but it is strongly recommended that estate planners review their estate plans every three to five years, even if there have been no life changes or other reasons to go over the plan.

While it is recommended to review the estate plan every few years, there are specific changes that might trigger the need to update an estate plan as soon as possible after the change to ensure that the estate plan still accurately reflects the planner’s wishes, as well as to maintain compliance with all state and federal laws that may apply. Some of these changes include:

  • Marriage
  • Divorce
  • Spousal death
  • New child or grandchild through birth, adoption, or marriage
  • Relocation
  • Changes in assets
  • Changes in the status of someone appointed guardian, trustee, or executor
  • Tax law changes
  • Poor health diagnosis
  • Retirement
  • Starting or selling a business

If I Do Not Have Significant Assets or Own Real Estate, Why Do I Need an Estate Plan?

Of all the estate planning questions, the most common may be: Why should I create an estate plan if I am not wealthy? What many people do not realize is that they do not need a stock portfolio, real estate holdings, or other wealth to create an estate plan. An estate is made up of whatever assets an individual has, even if those assets are nothing more than their clothes and cash in their wallet. A will is part of an estate plan, and if an individual dies without a will, their estate is distributed by the court in accordance with the state’s intestacy laws. This may not be the way the individual would want their estate handled.

Another aspect of estate planning that many people overlook is that it is more than just a vehicle to distribute assets after death. An estate plan can also cover what happens if the individual is incapacitated due to injury or illness. By including a power of attorney and healthcare directives as part of the estate plan, the planner can be clear about their wishes for life-preserving measures, or how their finances should be handled. By indicating these wishes and naming someone to make these decisions on the incapacitated person’s behalf, estate planners can reduce the time demands, emotional stress, and financial burdens placed on their families.

Does an Estate Plan Avoid Probate?

Among estate planning questions, another of the more common ones is whether an estate plan avoids probate. The answer is both yes and no. A will is part of an estate plan, but regardless of the existence of any other components of the estate plan, a Florida will must always be probated unless it meets the criteria for a disposition without administration under FL §735.301.

On the other hand, any trusts that are part of the estate do not go through probate as long as all the documents are properly drawn up and the trusts have been funded. Trusts can save both money and time, protect the decedent’s privacy, and ensure that their choices are honored. If the trust documents are not correct or the trusts are not funded, then the trust assets will go through probate as if the individual died intestate.

What Are Some Common Estate Planning Mistakes To Avoid?

Of all the estate planning questions, one that is common yet occasionally slips past unasked is about mistakes to watch out for. Estate planning mistakes can be quite costly, even rendering the estate or parts of it invalid. Some mistakes to avoid include:

  • Failure to plan: Not having an estate plan at all may be the biggest mistake to avoid. Without an estate plan, or even part of one such as a simple will, an individual’s estate will go through probate as intestate and be distributed according to FL §732.101-732.1081.
  • Failure to update: Estate planning is not a one and done experience. An estate plan requires review and updates when life changes take place and when laws change. Even if nothing changes, reviews to ensure that all the details are still accurate can help avoid problems after the individual has died.
  • Not considering taxes or other financial issues: While the Florida Department of Revenue indicates that Florida does not have an estate tax, the federal estate tax may still apply per the Internal Revenue Service (IRS). These tax payments typically come out of the estate and if not carefully planned for, may require the sale of assets from the estate that otherwise would have been given to beneficiaries. Other financial issues that may be overlooked include not planning for the possibility of long-term care, failing to place new assets in a trust, or leaving significant assets to a beneficiary who is not equipped to manage them (such as minors, adults with special needs, or adults with substance abuse or gambling concerns). An experienced Florida probate attorney may be able to help individuals avoid these mistakes while still ensuring that their loved ones are taken care of.
  • Overlooking incapacity planning and other healthcare needs: Long-term care is both a financial issue and a legal one. While individuals may want to ensure they have the funds or an insurance policy to cover the expense of long-term care, they will also want to include the appropriate documents to clarify their wishes if they are incapacitated. These documents include powers of attorney, living wills, and Health Insurance Portability and Accountability Act (HIPAA) authorizations.
  • Not discussing the plan with loved ones: Creating an estate plan is the first step, but the next step is ensuring that loved ones are aware of the plan’s existence and some of the details. Many people worry about their loved ones contesting the will or the estate plan after their death, and discussions about the plan can help avoid that. These discussions provide an opportunity to explain the estate owner’s decisions and the reasons behind those decisions to help their loved ones understand and perhaps be less likely to contest something they disagree with. Going over the plan with loved ones also ensures that they know how to access it when the time comes.

Do You Have Other Estate Planning Questions?

Estate planning requires careful thought about the assets you have acquired over a lifetime, as well as a straightforward look at your own mortality. This can be intimidating and it is only natural that you would want to ask questions before moving forward with your estate plan. If you have other estate planning questions, an experienced Florida estate planning attorney with Loughlin Law, P.A. may be able to answer them. Call (561) 677-8384 to schedule a consultation to seek answers to your estate planning needs or begin the planning process.

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