The purpose and importance of estate planning can never be overemphasized. There are so many benefits estate planning offers, and, when done right, can provide you asset protection, help minimize tax, prepare for incapacity, keep your minors properly cared for after you’re gone, ensure your loved ones receive exactly what you wish for them, and keep your wealth and legacy within your family for generations.
It is possible you wish to keep your valuable assets and funds beyond the reach of your creditors and taxes. Through proper estate planning, you can obtain asset protection by transferring such valuable assets into an irrevocable trust. An irrevocable trust is a kind of trust which once funded, takes a holistic ownership of the assets thus placed. This means such assets are no more associated with your name and consequently, cannot be taxed along with your estate. Also, assets in an irrevocable trust are completely inaccessible even by you the trustor, therefore you cannot use such funds for debt payment. At your death, the full value of the trust assets passes to your beneficiary outside probate. This is what asset protection entails.
Minimizing or avoiding estate tax
Estate tax are payable to the government out of the estate purse before the estate can be inherited. Only assets that are in your name may be taxable at death. In Miami, FL, there is no state estate tax imposition no matter the value of the estate, but the US federal estate tax will be imposed if the estate values over the tax exemption of $11.58 million in 2020. This means that when a person dies in 2020 leaving an estate worth more than $11.58 million, a federal estate tax reaching up to 40% must be paid to the government before the estate can be inherited. Through proper estate planning with the legal assistance of a Miami estate planning attorney, you can either minimize the estate tax payable, or otherwise keep the estate value below the exemption limit (through gifting, use of trust, etc.) in order to avoid estate tax.
Estate planning helps ensure your loved ones receive what you want for them
In Miami, the estate laws make provisions for default heirs-at-law when you fail to create an estate plan before you pass away. Your heirs-at-law are your survivors closest to you by blood. Without an estate plan, your surviving spouse is your only heir if you do not have a descendant outside that marriage (i.e. your surviving spouse inherits all of your estate even when you have kids through that spouse). If you have descendants outside the marriage, they share with your surviving spouse. This may not be what you want. You may desire for a loving friend, nephew, niece, or charity to get a part of your estate. All this you can make possible by naming them as beneficiaries in your will or trust.
Helping you prepare for incapacity
Through incapacity and disability planning, you can avoid expensive and time-consuming guardianship proceedings when you become disabled or incapacitated. Although this status is unpleasant and no one wish it for themselves, there is likelihood of falling victim as one gets older. When you become incapacitated and unable to handle your affairs yourself, you would need someone to do that for you. You can prepare for this by:
- Creating a living trust and naming a trustee: When you become incapacitated, the trustee steps in immediately to handle your financial and personal affairs on your behalf according to your instructions laid down in the trust.
- Creating powers of attorney: By creating a financial power of attorney, you appoint an agent who would handle your financial affairs on your behalf whenever you become incapacitated. For your healthcare and medical decisions, you can appoint an agent by creating a healthcare power of attorney.
Minimizing the stress and cost of probate
Probate is the legal process by which your will is validated in a law court, your estate gets appraised before being distributed to your beneficiaries. In Miami, probate is simplified for estates valuing below $75,000. Beyond this value, probate is often highly expensive and can take years to complete before your loved ones can inherit.
To ensure probate goes as smooth and short as possible, an estate planning attorney can help plan to reduce the value of assets being probated, and also assist your executor in probating the estate.
Guardianship for minors
To ensure your minors get the care you desire for them, you can appoint a Guardian for them in your will or leave funds in a trust for them. If eventually you pass away before they come of age, the Guardian or trustee (as the case may be) is bound by law to perform their fiduciary duty to your children as you have instructed in your estate planning document.
Contact an estate planning attorney Miami
To get the best and ensure that you tie up every loose end in your estate, contact an estate planning attorney Miami for legal assistance.