A will is a document outlining your final wishes for your estate. In order to ensure your will is valid and your wishes honored, you must follow certain rules.
Is this a proper trust distribution? Watch and see how it happens and tune in to discuss how a trust is created and how it can give you peace of mind.
This legal guide video is the first in a series that shows why and how to get your legal affairs in order prior to passing.
Why Should a Lawyer Draft your Will? If drafting your Will online may seems “too good to be true” – the answer is… it is! The end result can be costly and detrimental to your estate planning goals. There is a reason that lawyers draft Wills. It is always best to seek legal advice before creating any legal document, including your last will and testament. Although there are many sites and software out there that can assist in drafting your will for a relatively low fee, these resources do not give you advice or counsel necessary to formulate an effective estate plan. None of the programs take into consideration real life scenarios, statutes and case law that can drastically affect your estate plan. Don’t be “pennywise and pound foolish.” What Does a Will Do? A last will and testament will direct where you want assets to go after you die. However, a will should go beyond the simple distribution of assets. Your will can protect your heirs as well. For example, if your will directs assets be payable to your children, you may want these distributions to be paid out to them in a trust. One reason to create a trust within your last will and testament is to give your children creditor protection while also ensuring that the assets are not included in their estate. This can protect them from future creditors, bankruptcy, divorcing spouses, or estate tax. If your beneficiary receiving government assistance, you will want to make sure his or her distribution is paid to a Supplemental Needs Trust in order to protect their inheritance and ensure that the beneficiary doesn’t lose their government benefits. Beyond the who and what of asset distribution, your last will and testament can also control other issues that arise after death. If you have minor children, you will want to name a Guardian for them, this can and should be done in the will. If you are married, you should have a full understanding of a spouse’s right to share in your estate under New York state law and how it relates to your estate plan. Other considerations include what the estate and income tax implications will be; the likelihood of an estate plan being contested; and if your will follows the statutory drafting requirements to constitute a valid will under New York law. What Other Estate Planning Options Do I Have? Furthermore, passing your assets through a last will and testament may not be the best plan for you. A trust may be the better option depending on your estate planning objectives, family structure, and asset structure. A trust maintains the same benefits as those found in a will, but it is a private document that does not go through the probate process and can provide asset protection during your lifetime. Conclusion For all of these reasons, it is best to seek professional advice prior to drafting any estate planning documents. An elder law and estate planning attorney can review your assets, as well as collect all information as it relates to your personal life, in order to determine the best plan for you and your beneficiaries to ensure your goals are met through the drafting of your estate planning documents.
Step 1 Have a Real Discussion When you consider naming legal custodial guardians for your kids, don't ask yourself who is the best to serve in this long-term position. Rather, ask yourself who is the "least offensive." When parents focus too much on making the "perfect" choice, they become frozen in action. There is no perfect choice. The parents are the best choice and anyone else falls flat. But, as parents, we need to make these decisions, so try to make a rational choice. Start with these considerations: 1) religious beliefs; 2) cultural differences, 3) amount of money proposed guardians have, 4) whether they have children, 5) their ages, 6) their willingness (don't assume--ask!), and 7) their arrest records (no felonies or crimes against children. As you consider long-term guardians, keep in mind they may live far away from you currently. If that is the case, you should also name local, temporary guardians that can care for your kids while the permanent ones travel to get to them. Step 2 Fill out the Legal Paperwork In Florida, there are a couple of ways you can name custodial guardians. In a Last Will, as a standalone document, or a statutory "preneed guardian." Find the best avenue for your family and list the guardians, as well as alternates. When you list guardians, keep in mind that "co-guardians" are rarely a good idea, even if they are a couple. It is recommended that you list one person of the couple, but you could state that you only want your children to go there if the proposed guardian is married. Remember, these are your written designations to the Court, so tell the Judge how you feel. You may list multiple names and restrictions. "To Sally, if she moves to Tampa." "To Jude, but only if still married, if not then to Paul." Ensure you fill out each document properly. Some documents require a notary and some require two witnesses. Step 3 Maintain your Paperwork It is always a good idea to start a Legacy Folder. In this folder, you will keep your Estate Plan Organizer, which has important account and other information. Store it all in a fireproof and waterproof place, such as a filing cabinet. You should also give the permanent and temporary guardians a copy of the documents which name them. I suggest creating an Emergency Phone Tree as well so a babysitter knows the contact information for these important people. Keeping copies of the forms in a central location (such as your kitchen) in a bright envelope named "For Emergency Use" will alert emergency personnel that you have these documents. You cannot just fill out the paperwork, you must also make sure people know they exist. Step 4 Don't Stop There You did the first step of naming custodial guardians for your kids. Now, you must name financial ones as well. You do this through Estate Planning. As children cannot inherit money above a certain amount (low number), a Court would have to appoint a guardian to manage the funds. To avoid dealing with the guardianship process in Florida, you would name a "trustee" of your Revocable Trust, or a Testamentary Trust in your Last Will. The trustee would guard and protect the funds. He/she may seek financial advice about investments, and provide for your children. This is your chance to tell the guardians what is truly important to you by allowing the trustee to have discretion to give distributions to your children for travel, a new house, lessons, etc. Your kids would be entitled to income for care, support and maintenance, up until a certain age and then the major distributions would happen where the money is given outright to the kids.
Make an Inventory of Your Assets & Debts You know what you own, where things are, how things are organized…but do your spouse, your children, your family? Maybe they know you own stock, but do they know which ones? Avoid the guessing game and extra cost of tracking down assets and hidden debts by listing everything out in one spot. Keep Accounting and Tax Records Keep detailed accounting and tax records of everything, and make them readily available to whoever will be handling things after your death. Leave contact numbers for your accountant, tax preparer, etc. Make A Will A will gets submitted to probate court where the wishes of the deceased will be legally confirmed (unless challenged by a disgruntled heir). A will accomplishes a lot of different things, such as: (1. Naming an Executor to Handle Things. Your executor will have the authority to handle all of the estate organization and distribution. (2. What Happens to the Kids? You will can list your preferences for who will get custody of your minor children if you and/or their other parent dies. (3. Who Gets What? This is the obvious one. A Will lets people know how you want things divided up among your heirs. A ruling by probate court is generally necessary before property can legally be transferred into the heir’s name. (4. Designate How Debts and Taxes Will Be Paid. This is pretty self-explanatory. (5. Create a Trust. A will could also create a trust for your heirs at your death, which can be useful for distributing wealth a little at a time to overspending heirs. Certain types of trusts can be used to avoid estate taxes as well. Leave a Health Care Directive If you have thoughts about what happens to you if you are incapacitated, unconscious, etc., then you should make your health care wishes known with a Health Care Directive. You can also appointed a Medical Power of Attorney, which gives another person (your health care agent, often a relative) the power to handle your medical affairs for you and make sure your wishes are carried. Grant a Financial Power of Attorney Give someone you trust the ability to handle your financial matters, such as accounts and property, if you become incapacitated (unconscious, in the hospital, etc.) Think About Forming a Trust Trusts are a great way to make every easier and faster for your heirs, as well as avoiding excess costs. Putting your property into a trust will avoid the cost of probate court, streamline the entire process of your estate distribution, and, for larger estates, can arrange your property to avoid paying estate taxes. Create a Billing Schedule If you are the one who takes care of the bills, create a schedule of bills to take the confusion out of the ordeal. Be sure to include contact info for each bill and also login/password info for any electronically paid accounts. Save All Your Passwords and Login Info There is no way to access a locked phone without wiping the memory and social media and email provider sites are prevented from giving out passwords to anyone other than the owner. If you want your family to have access to any of your devices, accounts, etc., you need to make sure all of that information is saved somewhere secure but accessible. Name Beneficiaries on Your Accounts Most bank accounts and retirement accounts allow you to designate a “pay-on-death” beneficiary so that everything automatically transfers over to that person when you die. This can save a ton of time and avoids the requirement of a ruling by probate court that your heir is entitled to receive those account funds. Think About Life Insurance It’s a good consideration to make in order to take care of your loved ones after you are gone. Life insurance can also be used to cover your debts and estate taxes Taxes Talk to your tax accountant to strategize when and how to sell assets to avoid capital gains. If you have a large estate (we’re talking in the millions) you may need to think about estate taxes. Funeral Expenses and Directions Make arrangements and leave instructions for your memorial, funeral, and/or disposition of your body. This will take an enormous weight off your survivors. Plan for Your Business If you own a business, you should have a succession plan in place. What happens to the business when you pass away? Will your partners be able to buy out your share? Will your shares pass to your heirs?
Myth #1: Only the Rich Need Estate Planning When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not have anything close to Bill Gates’ billions. However, this could not be further from the truth. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf – a far more likely scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made. Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what — and many times, what the government’s best guess is as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you. Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals. However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit. Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people. Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you. Myth #3: A Will Avoids Probate Many people believe that once they have created a will — whether drafted by an experienced attorney, or using a DIY solution or online form— they have avoided probate. Unfortunately, they are wrong. While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard-earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record. Summary Proceedings: In some states, if the value of your estate (i.e., what you own at your death) is below a certain monetary threshold, then anyone who is entitled to inherit from the decedent can file a petition and have the property distributed outside of the traditional probate proceedings. The filing may require a court appearance and formal legal notice to anyone who might be interested before allowing your property to be distributed. Affidavit Procedure: Some states allow for an affidavit to be used to collect and distribute a decedent’s money and property. In some states, this affidavit can be self-executed, while others require that the document be filed with the court. Generally, affidavits require the passing of time from the date of a decedent’s death—ranging from a few days to a few months. After that, a “successor” to the decedent (a spouse or heir) signs the affidavit and presents the affidavit to collect the decedent’s assets for distribution to his or her rightful heirs. Supervised Probate: With this type of proceeding, the probate judge oversees every step of the administration process and has to approve of the Personal Representative’s actions. During a supervised probate, all pleadings and required documents have to be filed with the probate court and then served on interested persons or parties. This can be a very time consuming and expensive process. Each time the Personal Representative has to take an action, a legal pleading has to be filed and served on the interested party, which, in contentious situations, opens up the possibility for disagreements and attorneys’ fees. Unsupervised Probate: In cases where there are no controversies and the parties all get along, an unsupervised probate administration may be the best option. In this situation, although the administration is not supervised by a court, there are still actions the Personal Representative needs to take, but the Personal Representative may not be required to file petitions and documents for each of those steps. However, a Personal Representative may be required to file some steps, such as the preparation of the inventory, with the court and the interested parties, but no corresponding hearing is scheduled. While this is less complicated and possibly less expensive than a supervised probate, it can still be time consuming and your financial and personal affairs would become a matter of public record.