The “Sunshine State” is one of the most ideal areas for people to retire and enjoy living the remainder of their lives. Apart from 365 days of warm weather and sunshine every year, Florida is one of the most tax friendly states in the U.S. The State of Florida has many legal tools available that can help protect your property, minimize taxes, and ensure a comfortable future for yourself and your loved ones.
With proper estate planning, you won’t have to burden yourself with concerns such as what happens to your property after you pass away, or who makes healthcare and financial decisions in the event you become incapacitated.
This article serves as an estate planning guide for people living in, or planning on moving to the State of Florida. The article will discuss the basics of estate planning, various legal documents involved, and offer tips on creating an effective long term plan.
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What Is Estate Planning?
Estate planning involves legally documenting your final wishes and planning a future for yourself and loved ones. This planning is especially important in the event of an emergency or for when you inevitably reach the end of your life.
To an attorney, proper estate planning involves first, minimizing the tax consequences of transferring a person’s property under state and federal gift and estate tax laws; and secondly, accurately drafting, within the proper documents, provisions for taking care of the decedent’s loved ones. These two goals may sound simple; however, proper estate planning is a very complex area of the law.
Last Will & Testament
One of the first, and most common parts of an estate plan involves drafting a will to legally document your final wishes. In Florida, the standard type of will used for this is known as a Last Will and Testament which is also commonly referred to as a “last will,” or “simple will.”
The Last Will and Testament allows you to hand down all your assets to particular persons and/or entities, assign guardians for your minor children, as well as prevent children and your assets from being dispersed among the default beneficiaries of the state.
Depending on your circumstances there are several other types of wills with more complex provisions.
Other types of Florida wills include:
- Pour-Over Will
- Complex Will
- Testamentary Will (involves setting up a trust under a will)
Florida Trusts
Numerous types of trusts exist under Florida law. These trusts fall under two main headings: revocable or irrevocable. Most trusts are revocable which means they can be modified at any time during the life of the person establishing the trust if they have the mental capacity to make changes.
A revocable trust is a fiduciary arrangement that allows a trustee (third party) to hold assets on behalf of a beneficiary. Of course, trusts are set up in various ways and may affect assets during a person’s life or establish how estates are distributed upon an individual’s passing. This process is known as trust administration.
Florida Statutes (Chapter 73b) govern revocable trusts and must be drafted by a licensed attorney. So, it’s vital to seek legal advice when setting up your trust or going through the trust administration process. Doing so will avoid any legal issues such as a trust litigation lawsuit which is a long drawn out legal process that can be quite costly.
Florida Law Regarding Trusts
Each State has specific statutes that apply to how to set up trusts. Florida does recognize the validity of a trust legally executed in another state; however, any trust written in Florida must follow certain laws which are governed under the Florida Trust Code.
The following facts apply to Florida Trusts.
- The purpose of a trust must be lawful and possible to achieve.
- A trust may be designed as a “charitable trust.”
- Some people set up trusts to care for living pets that is allowed under Florida law.
- A trustee may receive reasonable compensation for handling an estate.
- A trustee must follow the Florida Trust Code and the terms of the trust.
- A trust may avoid Probate Court if properly drafted and not contested.
- A revocable trust becomes irrevocable upon the death of the person who established the trust.
- Transferring homestead property to a trust is very tricky and requires expert legal advice.
Asset Protection
Every Florida resident with assets should consider ways to protect their cash, investments, businesses and other properties from debtors and lawsuits. Fortunately, Florida law provides legal means of asset protection. In fact, Florida has liberal asset protection laws and folks often move to Florida to take advantage of these friendly laws.
Perhaps the most well-known Florida asset protection statute involves property owners. Florida’s homestead exemption law protects folks from losing their homes when they are sued. Another commonly used asset protection device involves spouses.
Any property jointly owned by husband and wife is protected from creditors of either spouse. However, mortgages must be paid and a lien may be placed on the property if workers are not reimbursed for home improvements. Finally, limited partnerships and limited liability companies are set up to protect business or investment assets in Florida.
The best way to protect your assets is to establish legal documents BEFORE any problems arise. Asset protection planning is more difficult to pursue once you are being sued or a court case has been filed. For example, if the court freezes your assets it may be very difficult to transfer them to a trust. However, an attorney can help if you find yourself in legal trouble.
Sadly, folks may bring a fraudulent lawsuit against you; so, it’s important to protect your assets and business interests before any problems arise. Remember, prevention is the best practice; but, a skilled attorney will advise you of Florida’s asset protection laws at any time.
Power of Attorney
Power of Attorney (POA) delegates authority from one individual to another. Specifically, this document grants the right to make decisions on a person’s behalf as their acting agent. A power of attorney can make this authority specific or broad depending on the language used in the document. As a result, there are many legal aspects and questions regarding this document.
Here are different types of Florida Power of Attorney’s.
– General power of attorney. This gives the agent broad powers for financial decisions.
– Limited power of attorney. Limited the authority to certain types of transactions.
– Durable power of attorney. This POA is not terminated by the principal’s incapacity.
– Springing power of attorney. Doesn’t become effective until incapacity.
Health Care Advance Directives
Healthcare advance directives are also known as medical directives and involves the legal aspects regarding sudden illness or incapacity. In other words, what happens when someone is unable to make decisions due to changes in their physical or mental state.
Examples of illness or incapacity include:
- Alzheimer’s
- Dementia
- Brain damage
- Spinal damage
- Coma
There are specific legal documents you can establish to dictate your wishes in the event tragic event(s) such as these may occur. Once your primary physician determines you’re incapacitated, provisions contained within these documents can be enacted.
Here are the main types of Florida Health Care Advance Directives:
- Living Will
- Health Care Surrogate Designation
- Healthcare Power of Attorney
- An Anatomical Donation
Probate
Probate is a court-supervised process involved with verifying and distributing assets of a person after they pass away. Each state has their own individual legal requirements for probate. Florida probate laws mandate that every estate must go through probate court with very few exceptions. It’s also required that an attorney represents you throughout the probate process, again, with very few exceptions.
In cases where someone doesn’t have a legally valid estate plan at the time of their death, their property will enter a process known as intestate succession. This process is used to determine who should receive assets in the adsense of a valid will or trust. This can get quite complicated especially when there are children from multiple marriages, this is one of the many reasons why setting up a solid estate plan is so critical.
An attorney specializing in probate and estate planning can help minimize taxes, expenses, and help avoid legal issues in probate court.
Estate Planning Tips
1. Write down a list of important questions/concerns
When it comes to the inevitable end of someone’s life, there are many questions and concerns they may have. These questions may include:
Who is going to claim your body and address your last wishes?
To whom are you going to entrust your home?
Who will be responsible for raising your children?
Who is responsible for your pets and who will see to their needs?
These are just some of the concerns you need to be aware of and take care of while you can. That is why, as early as you can you should draft your will with your important concerns in mind.
2. Keep Records and Create a List
It is an emotional time when someone passes away. Such a time can be exacerbated when the loved ones of the deceased cannot find important documents, keys to safety deposit boxes, financial statements and other necessary information. It is essential to create a list of where all important information can be located and give the list to someone you trust and to keep extra copies of your important papers in a fire-proof box. Your lawyer should also have copies of all your pertinent documents.
3. Use an attorney specialized in estate planning
To avoid the long and drawn out procedure known as estate litigation, you must ensure that everything is done the proper and legal way.
Talk To An Estate Planning Lawyer
Di Pietro Partners, PLLC is a Fort Lauderdale law firm specializing in both estate planning and probate. We represent clients all over the State who are involved in Florida’s probate process and provide top quality estate planning to help avoid issues in probate court and plan a comfortable future.
If you’d like to learn more about setting up a plan for you or your family, call and set up a free and confidential consultation with one of our estate planning lawyers.