Estate planning is the process of planning for the management and transfer of one’s assets before and/or after death during the person’s lifetime, while considering ways to limit income, gift, inheritance, and estate taxes.
Estate planning is regulated by state laws, and this causes a disparity in how estate planning should be viewed and carried out. There are various things to consider while estate planning, such as probate, taxes, inheritance laws and intestacy, and all these are individually affected by state laws. To have a good grasp of Florida estate planning, you may need to consider hiring a Florida estate planning attorney for professional assistance in creating an effective plan that conforms to Florida laws, while satisfying your wishes and minimizing taxes.
Things to consider when planning your estate in Florida
A will is an estate planning document by which you can transfer assets to your named beneficiaries after your death. In writing your will, you must name your beneficiaries, what assets or funds they are to receive, and as well name an executor to carry out the instructions on your will. Note that in Florida, a will cannot be used to address the transfer of insurance proceeds, retirement accounts, and accounts with TOD clauses.
Requirements for writing a valid will in Florida
The legal requirements to write a valid will in Florida are consistent with those of other states. They are as follows:
- The individual must be 18 or older
- They must be of a sound mental capacity at the time the will was created
- The will must be in writing
- It must bear the signature of the testator along with those of at least two witnesses who must be present at the time the testator signs the will
- Each witness must also witness the signature of the other witness(es).
Holographic wills are not acceptable in Florida.
The best way to avoid probate and all its complexities is by creating a trust. Assets held in a trust will go immediately to the beneficiary outside probate. This is because only assets held in your name (such as those addressed in the will) can be probated, and assets held in a trust assumes the name of the trust rather than the trust creator.
There are basically two kinds of trust: revocable living trust and irrevocable trust.
The revocable living trust, or simply a living trust, allows the trustor more freedom to access and use the trust assets to their own benefit. By naming yourself as the trustee of your trust, the assets will be used by you until death, after which your successor trustee then handles and transfer the assets to your beneficiary outside probate. However, assets held in a living trust are still subject to estate taxes since they are still being used by the trustor.
On the other hand, Irrevocable trusts offer full asset protection from tax and creditors because assets held therein permanently become the trust’s property, thus putting them out of the reach of the trustor.
Every written will in Florida is subject to probate. Probate is the legal process by which the probate court validates the will before it can be executed. Probate must be done in the same county where the decedent domiciled and/or owned assets, and often consumes a lot of time and money (payment of estate debts, court and attorney fees, etc.).
During probate, the estate taxes and debts must be paid from the estate purse before assets can be distributed amongst beneficiaries, and this usually takes months or even years depending on the value and complexity of the estate; therefore, beneficiaries may have to wait a long time before they inherit. If you desire for your loved to get their inheritance quickly after your death, consider minimizing the total value of assets you address with your will, or consider using a trust instead.
Disability and Incapacity planning
As one gets older, there is the fear of becoming incapacitated due to age or terminal disease. Accidents can also render one disabled and incapable of handling their affairs. In such a situation, one would need a trusted agent to look after their affairs on their behalf. You can plan for this by creating powers of attorney.
Financial power of attorney: this document allows you appoint an agent to handle your fiscal affairs and make financial decisions on your behalf when you become incapable to do so yourself.
Healthcare power of attorney: this document allows you to appoint an agent to make healthcare decisions on your behalf when you become incapable to do so yourself.
Estate tax is an amount required to be paid to the government from the estate purse before the estate can be inherited. In Florida there is no state estate tax, but every estate valuing over the federal estate tax exemption of $11.58 million in 2020 must pay tax up to a rate of 40%.
As these taxes can be huge, one can ensure that their total estate worth falls below this threshold by gifting or holding some valuable assets in an irrevocable trust.
There is intestacy when a person dies leaving no valid will or estate plan behind. Florida’s intestacy laws mandate that the surviving spouse inherits the entire estate if the deceased had no child or grandchild outside that marriage. If there are, then they will receive their share of the estate alongside the surviving spouse.
Get help from a Florida estate planning attorney
Estate planning is filled with a lot of legalities and one may be lost as to what legal requirements are required, or what options are available. It becomes important that you seek help by hiring a Florida estate planning attorney. Estate planning attorneys are well-versed in estate laws of the state in question, and will work with you, look into your financial situation, and come up with an estate plan that best satisfies your wishes. Contact us.