Everyone has an estate. Your estate is comprised of everything you own such as your car, home, checking and savings accounts, stocks, bonds, cash, investments, IRA, life insurance, personal property, furnishings and furniture. An estate plan is established so your assets will be distributed in accordance with your wishes upon your death. If you become incapacitated, your estate and healthcare will be managed by the person you appoint and not a court-appointed guardian. For young married couples, an estate plan includes the appointment of a person to care for their minor children and manage their assets in the event of their death or incapacity. It is important for everyone to have an estate plan.
The estate plan may include a will, trust, beneficiary designation, joint account and other similar instruments, power of attorney, healthcare directive and living will. An improperly drafted estate plan or the failure to have one in place may result in unintended consequences.
At Lyons, Beaudry & Harrison, P.A., our Florida, board-certified attorneys in wills, trusts and estates will draft and administer your estate plan so your expectations and wishes are upheld.
Every person, regardless of size or complexity of his or her estate, needs a will. A will, at its most basic level, is a written document that expresses your wishes as to whom should inherit your estate. The will names the personal representative, that is, the person who will manage your estate after your death. A will can create trusts called testamentary trusts and provide for a wide range of distribution options. A will is effective only upon your death.
You can create a revocable trust (also known as the “Loving Trust”, “Living Trust” ). The creator of the trust is known as the settlor or grantor. The trust agreement appoints a “trustee” to administer the trust assets according to the trust terms. The terms can vary to a wide degree and greatly affect the administration of the trust and any litigation involving the trust. Normally, you are the initial trustee of your own revocable trust and appoint a person to act as the successor trustee upon your death or incapacity. Unlike a will, a trust is effective immediately. The transfer of your estate to the trust may avoid probate, but the trust assets still must be administered.
During your lifetime, you can add or withdraw assets from the trust and make any trust decision. Basically, you can do whatever you want despite the trust terms. However, upon your death or incapacity, the successor trustee must follow the terms of the trust and may be subject to personal liability for the breach of his or her duties to the trust and beneficiaries. This can create unintended consequences for you, your trustee and your beneficiaries.
A properly designed will and trust can avoid these unintended consequences, keep your family members from fighting over your belongings during an emotional time and lessen the chance of probate litigation or trust litigation. Whether you have a will or a trust, it is important to have a power of attorney, healthcare directive and living will in place.
Not long ago, estates worth more than $600,000 were subject to federal estate taxes. The federal government exempted estates with less than $600,000 from the federal estate tax. Your estate plan may have been drafted with these federal estate tax exemptions in mind. If so, your estate plan should be reviewed and updated.
As of January of 2013, the federal estate tax exemption is $5.25 million and will be adjusted for inflation. Under certain circumstances, the federal government permits a surviving spouse to use the exemption of his or her deceased spouse (This is called “portability”). Therefore, a married couple can currently transfer $10.50 million to their heirs without incurring any federal estate tax. However, portability is only available if properly elected.
As we all know, the federal government can reduce these exemptions at any time. Therefore, it is important that your estate plan be flexible to adjust to any future changes in the federal estate tax law.
Our attorneys can create estate plans that allow you to take advantage of the federal estate tax exemption and provide flexibility for any future estate tax changes.
In addition to revocable trusts, an estate plan can consist of irrevocable trusts to take advantage of the federal estate tax exemption and other estate taxes, income tax and estate planning advantages. Irrevocable trusts cannot be amended or revoked.
At Lyons, Beaudry & Harrison, P.A. we can work with you to create trusts for estate, income tax, and charitable planning, including:
Most individuals have an IRA or some type of retirement plan. All of these plans provide you with the opportunity to designate a beneficiary. Retirement plans, such as an IRA, may make up a significant portion of an individual’s estate. It is important to properly designate the beneficiary of the plan. In most instances, the designated beneficiary will be a spouse or a child. Such a designation may have income tax advantages. There are disadvantages in naming your will or estate as a beneficiary. If you intend to designate a trust as a beneficiary of a plan, the trust must be carefully drafted.
If not properly handled, the IRA can cause adverse income tax or estate tax consequences and become subject to your creditors. At Lyons, Beaudry & Harrison, P.A. we can work with you to make sure that you can take full advantage of the tax and creditor benefits of the retirement plan and coordinate these benefits with your overall estate plan.
Work with a good estate planning attorney to make sure you get what you need out of this process.
The team at Lyons, Beaudry & Harrison helps with your will, trust and estate planning issues. Call us at 941-444-6407 or contact us online to make an appointment today. We’re ready to meet with you in our office on Main Street in Sarasota.