Tag: probate

Three Reasons Why Trusts Fail

Are you contemplating adding a trust to your Florida estate plan? Trusts are a useful estate planning instrument: To keep an estate out of probate. For tax planning purposes. For long-term care planning by structuring a person’s assets in a way that makes him or her eligible for Medicaid to cover the expense of a nursing home. Unfortunately, though, trusts can also fail. We would like to share with you three reasons why a trust may fail.

1. The trust was never funded. Working with your Florida estate planning attorney and creating a trust is a lot of work. Equally important is signing the trust and making it legal. However, there is one more very important step, the trust must be funded. All of the assets described in the trust must be moved into the trust in order for the trust to be funded. This means that the trust must hold title to all of your assets. This involves changing the deed on your home, the title to cars, boats, RV’s, the ownership of bank accounts and stock certificates intended to be transferred into the trust. Funding a trust can be a critical step in properly establishing a trust, but it is also one that may be overlooked. If the trust is not funded, the trust’s beneficiaries may find that they will receive nothing from the trust.

2. The beneficiaries were never updated. Once you have completed your trust, you do not just place it in a drawer or safety deposit box and forget it. A trust should be reviewed and if necessary updated whenever there is a significant life change, such as the birth or death of a loved one, a divorce or a remarriage, or even the death of your trustor. All of these life events can impact who inherits from your estate.

3. The trust was never updated to reflect current law. You need to be aware that the laws on trust and estates can change. In fact, your trust may have been drafted under one set of laws, but more importantly, there may be new or updated laws at the time of your passing, which have the potential to invalidate portions of your trust. Your best solution to this problem is to work with your Florida estate planning attorney. She can provide periodic bulletins regarding significant changes in the law, which can alert you to the need to have your trust revised. It is vital that everyone have their trust reviewed periodically by their estate planning attorney to assure that it is supported by current law.

With good planning, trusts can be one of the most useful estate planning instruments. Elder and Estate Planning Attorneys, PA, is a law office small enough to provide personal service but large enough to provide service in Jupiter, as well as Palm Beach, Martin, St. Lucie, and Indian River Counties in Florida. Our law firm will guide you through legal challenges involving elder law, estate planning, trusts, veterans benefits, real estate, and more. We encourage you to contact us and schedule a meeting with our attorneys.

Are You Worried About Florida Probate? Here Is How To Avoid It

Do you want to have your estate avoid probate when you pass away? Have you recently created your last will and testament, but worried that your estate may still have to be probated? Are you planning for your estate to not go through probate when you pass away because you have a Florida last will and testament? First, having a Florida will in place is excellent. However, the fact that you have a will does not, by itself, allow your estate to avoid probate. Let us share some information with you.

You should consider other estate planning tools if you want to keep your assets out of probate. Your Florida will is a set of instructions for your personal representative. Your will lets your personal representative know how to distribute all of your assets, which may include a house, a vehicle, bank or brokerage accounts or personal items. However, even though you have written down instructions in your will it does not change the fact that the assets may be subject to probate. Your personal representative will be required to probate your will, and this could possibly take time and money from your estate.

You might want to consider putting your assets into a trust if you are worried about probate. By meeting with your Florida estate planning attorney she may advise you that a revocable trust could be a good way to avoid putting your estate through probate. Now that you have created your revocable trust and put your assets into the trust, your work may not be done if you want your estate to avoid probate. Unfortunately, you may not always be set at this point. If there are any changes in your assets, they must be reflected in your trust. For example, you may sell some assets, acquire some assets but forget to put your new assets into your trust. Be aware that only the assets in your trust will avoid probate. Any other assets you may have acquired but forgot to put into the trust will have to go through probate.

You must be careful to not have any information in your will and in your trust that does not match. If the information in your will does not match the terms of your trust document, then your trust document may prevail. If there are any inconsistencies they may have to be reviewed by a probate court.

Elder and Estate Planning Attorneys, PA, is a law office small enough to provide personal service but large enough to provide service in Jupiter, as well as Palm Beach, Martin, St. Lucie, and Indian River Counties in Florida. Our law firm will guide you through legal challenges involving elder law, estate planning, trusts, veterans benefits, real estate, and more. We encourage you to contact us and schedule a meeting with our attorneys.

Common Myths about Estate Planning

No matter what your age, Estate Planning is essential to distributing assets according to your wishes and not that of the government’s laws and statutes. Estate Planning is very complicated where myths abound and they can be harmful to you and your loved ones. Below is a list of common myths about estate planning.

 

If I have a valid and thorough Last Will and Testament, probate will not be required, and my assets can be transferred immediately to the beneficiaries of the Will. In fact, having a Will forces probate in most circumstances and the assets may not be transferred to the heirs for months or years. Most importantly, depending how title is held, real estate must be transferred through a probate and generally is not a good idea to add your children to your deed unless they live with you, are adults and you intend them to inherit the property to the exclusion of others.

 

Probate is a proceeding involving the court which forces the transfer of title from the decedent’s name to your living beneficiaries. Probate is filed in county in the state of your legal residence as well as any state where you own real property. The length of time to complete probate varies from state to state, but can take six months to two years, on average. At a time of emotional trauma from the death, probate adds confusion and frustration to the heirs and is public record which means available for review by anyone, not just your heirs.

 

I do not need a Last Will and Testament if I have a small estate. Many people also believe that if there is no Will, all the decedent’s assets will be distributed to the surviving spouse. In Florida, if you die without a will, your spouse gets the first $60,000 and the statutes dictate where the rest of your assets go and who will administer your estate. That means Florida Statutes may not distribute your assets to the people you want to have them.

 

If my assets do not exceed $600,000, I will avoid probate. The law used to be your asset was taxed 55% for any assets exceeding $600,000.00 for Federal estate tax purposes. This is old law. However, the law was amended late last year changed the limits again. First, as the law stands now, if you die in 2010, there is no Federal estate tax but there is a modified step up in basis of assets inherited. That is how the several billionaires who have died this year have transferred assets without Federal estate taxes but the heirs inherit assets without the benefit of the step in basis (which used to be the value of the asset at the time of death). Therefore selling inherited assets that have increased in value since purchase will now be subject to a 15% capital gains tax in 2010 and 20% (or more) if sold after 2010. But the law which was passed earlier this century sunsets (ends) on December 31, 2010 which means the law is set to change in 2011. For those persons dying on or after January 1, 2011 there is no Federal inheritance tax for the first million dollars of assets but for each $1 above 1 million, heirs are taxed at the 55% tax rate. The unlimited marital deduction will still exist so married couples can transfer assets between spouses without Federal estate tax but the assets are taxed when the last spouse dies. If you die in the year 2010 under the current law, you can transfer an unlimited amount of assets to your heirs (does not have to be spouse) and the transfer is not subject to estate tax. However if you die after December 31, 2010, your heirs will taxed at the 55% tax rate.

 

Most importantly is to understand what assets are included in your estate for Federal estate tax purposes and what is transferred without probate. Generally, assets owned even held jointly with another person are considered in the taxable estate even though the assets may pass by operation of law (without further legal action or probate). In addition, you must consider and plan for the way in which taxes are paid if due. If estate taxes are due, typically your heirs must liquidate the very assets they are inheriting to pay the estate taxes so you are not transferring the assets you want them to inherit. No matter where you stand economically, you need to plan your estate to take advantage of estate planning vehicles to limit the exposure to estate inheritance tax and transfer the assets to whom you want to transfer. We should recognize all of us will die someday; we do not know what day that will be. For now, because the law will revert back to pre 2001 tax levels and rates, if you have over $1,000,000 in assets, your estate will taxed unless proper planning is in place.

 

A Will covers all my assets. Wills do not cover assets held as joint tenants with right of survivorship, retirement plans, annuities, life insurance, and other financial accounts with payable on death or transfer on death designations and named beneficiaries.

 

I can do my own estate plan. Estate planning is more than just creating documents. It requires understanding the whole picture and how legal documents work in concert with the assets at the time they are needed and what form documents do not contain. And you should not allow a minor to inherit assets outright because that may require a court supervised guardianship.

 

Only the wealthy need to worry about estate taxes. In fact, in Florida, any estate exceeding $1 million is subject to estate taxes as of January 1, 2011.

 

I do not need estate planning because I hold all my assets jointly with another. In fact, this is one of the worst ways to plan you estate. The asset may be exposed to estate and gift taxes; it does not avoid probate, just delays it until the last owner’s death; it may result in estate, gift and capital gains taxes; it is subject to the creditors of all owners except a home if the other owner claims it as their homestead; and it will result in the transfer of the property to the joint owner when one owner dies, even if that was not intention.

 

You cannot afford to rely on myths when it comes to your estate. Talk to a lawyer who practices in estate planning and knows how the laws of inheritance work and how to avoid the unintended consequences. Investigate the law and how it affects your facts, plan carefully and execute a plan to provide you with peace of mind and security for your loved ones.