Estate Planning

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Twelve “Must Know” Facts About Estate Planning

1. Most Estate Plans Don’t Work!

How and when do we know if an estate plan worked? If we take a picture of your objectives, dreams and desires for the future use and distribution of your assets, on the day the plan was created, and we compare the picture to the reality of how assets were used and distributed after a triggering event, such as a mental incapacitation or death, then and only then can we answer the question if your estate plan worked. Most plans don’t work because the plan was not properly designed in accordance with the client’s objectives, dreams and desires, documents were not properly drafted, or the assets were not properly titled to make the plan work.

2. Having a Will does not avoid Probate.

Most individuals believe that Probate is only for those that do not have a Last Will and Testament. Having a Last Will and Testament, and holding assets in an individual name assures that the assets will go thru Probate.

3. Having a Trust based Estate Plan does not result in loss of control of assets.

Are you worried about using a Trust as a foundation of an estate plan because you are afraid of losing control of the assets? In foundational planning, a revocable trust is used to assure that the assets are controlled by you as long as you are mentally capacitated and detailed instructions are included to deal with situations in which you may become mentally incapacitated or die.

4. Jointly owned property by spouse does not assure children will receive an inheritance.

When assets are jointly owned by spouses and one spouse dies, the surviving spouse has full use and control of the assets. This leaves the surviving spouse free to re-title the assets with another person (such as a new spouse), lose assets due to claims of creditors, or amend the plan to change the beneficiaries, including disinheriting a child.

5. A well designed Estate Plan involves a discussion about disability.

Statistically, we are living longer. The longer we live, the higher the probability that we will face a disability before we die. Estate Planning should include a thorough discussion of issues dealing with mental incapacitation and physical disabilities.

6. A child’s inheritance may be subject to claims of creditors including a soon-to-be “ex spouse”.

When a child receives an inheritance “outright” or outside of a trust, the assets inherited are not protected from the claims of creditors. It is possible to protect a child’s inheritance by using a well thought out estate plan for the child’s parents.

7: Estate taxes are only one of many reasons to engage in Estate Planning.

Are you putting off your planning because you think your estate is not large enough? You may be thinking that if you do not have to worry about estate tax issues, you should not engage in planning. There are many reasons to do estate planning such as disability planning, protections of assets for a surviving spouse, protection of inheritance for children, planning for family members with Special Needs or who may develop Special Needs in the future.

8. Life Insurance often plays a very important role in a well thought out Estate Plan.

Life Insurance is sometimes used for the payment of estate taxes, but can also be used for asset protection, for wealth replacement for children from a prior relationship, to compensate a family member that will not be receiving benefit from a family business or simply to assure that children will receive an inheritance.

9. Life Insurance and asset protection.

In Florida, life insurance benefits are protected from the claims of creditors of the decedent. However, life insurance benefits are not protected from the claims of creditors of the beneficiaries. Trust Planning can accomplish the goal of keeping the life insurance benefits protected from the claims of creditors of a beneficiary.

10. A Durable Power of Attorney is not effective after death.

A Durable Power of Attorney can be very useful during your life but cannot be used after you die. There are many planning considerations when using a Durable Power of Attorney especially in light of the fact that the Power is effective upon creation and cannot be limited to use only in case of mental incapacitation.

11. Estate Planning strategies and documents should be reviewed every 24 months and updated as necessary.

Life changes, circumstances change and assets change. Reviewing an estate plan, including the design of the plan, the documents used, and the funding of the plan assures that the plan will work as intended by its creator.

12. Having a good Estate Plan will not accelerate your date of death!

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