While many of us think of estate planning as primarily about death and taxes, estate planning encompasses far more. Estate planning ensures that those you love are provided and cared for after your death. It leaves a legacy for your heirs, which is ultimately what matters most.
Despite the nearly universal desire to leave a legacy and provide for your loved one’s after your death, most individuals are loathe to discuss death and, in turn, estate planning. As such, more than one half of all Americans do not have an estate plan, not even a will or medical directives. Sadly, it is the living that will suffer as a result of poor or nonexistent estate planning.
The following is a look at some common estate planning techniques that our experienced Gainesville, Florida estate planning attorneys offer our clients:
Perhaps the most well known and essential estate planning tool is the will. Your will stipulates who will receive your probate assets upon your death. Your will can additionally nominate an individual or multiple individuals to serve as your personal representative or executor. If you have minor children, your will can also be used to appoint a legal guardian in the event both parents become deceased.
Crafting a will can help ensure your wishes concerning your assets, personal representative, and guardian are clear and understood. However, wills do have certain drawbacks and can be used in conjunction with other estate planning tools to increase their functionality. Wills cannot override beneficiary designations in life insurance policies or retirement plans. Further, they do not avoid the potential delays and expense of the probate process. As such, a will is an important part of estate planning, but should not be the only estate planning device you utilize.
Revocable trusts, also known as living trusts, can act as a will substitute. A revocable trust functions in the same manner as a will in that using the trust you can specify who will receive what assets when you die. A revocable trust has some supplementary functions, however. You can specify more than just who receives your assets in a revocable trust. You can dictate where, how, and why as well. For instance, a revocable trust can state that the assets are to be used solely for college expenses of your children who are accepted to an accredited university. The trust can also create a schedule for distributions based on the age of your heirs or the number of years since your death. The possibilities are virtually endless and just depend upon your ultimate desires.
Revocable trusts also have the monumental advantage of avoiding probate and protecting your beneficiaries from creditors. You can amend the trust at any time and will have full access to the assets during your lifetime. The trust will require more paperwork and can involve more expense than a traditional will.
For clients with sizeable estates, it may be most beneficial to create an irrevocable trust which can shield assets from taxation along with creditors. Irrevocable trusts, unlike revocable ones, cannot be amended once established and you will not have access to the assets once placed in trust. There are, however, some ways to change dispositive provisions of the trust. Irrevocable trusts are complex and will require the assistance of an experienced and knowledgeable estate planning attorney to ensure your assets receive as much protection as possible.
Health Care Proxies and Durable Powers of Attorney
Each year, countless individuals lose their ability to make their own decisions, often due to complications associated with old age and ill health. Without a durable power of attorney or health care proxy in place, a family member will be forced to petition the court to be appointed guardian or conservator. This is a costly, lengthy, and unpleasant process. By executing a durable power of attorney or appointing a health care proxy, you can avoid this stress and uncertainty entirely.
A durable power of attorney nominates an individual or multiple individuals to make financial decisions on your behalf in the event you become incapacitated. Similarly, a health care proxy nominates an individual to make health-care decisions when you are unable to do so for yourself. Both of these are essential estate planning tools, ensuring seamless care of your finances and your person.
Standard retirement accounts, such as 401(k) plans and IRAs have numerous limitations and many regulations. IRAs, for instance, do not necessarily protect the funds from creditors of the beneficiary. Further, IRA beneficiaries can decide to take a lump sum upon your death, which has negative tax consequences. Due to these potential shortfalls of traditional retirement funds, one alternative is creation of a retirement trust.
A retirement trust is designated as the beneficiary of your retirement accounts. The trust can be written so as to stretch distributions over the life expectancy of each beneficiary, therefore optimizing tax savings.
Special Needs, Supplemental, and Medicaid Trusts
If you have a disabled loved one, special needs or supplemental trusts can offer vital financial benefits to your disabled family member. Special needs trusts place certain funds in the name of the incapacitated family member, but these funds will not be considered income or assets so as to render the disabled loved one ineligible for state and federal government programs, such as SSDI or SSI.
Medicaid trusts operate in a similar manner. Medicaid eligibility will require many elderly individuals to spend down their liquid assets or place a lien on their home. By placing assets in a Medicaid trust, you can protect your home and assets, passing your legacy on to your family.
Preserve Your Legacy
These are just some of the many estate planning tools at your disposal. A skilled state planning attorney will assess your individual situation and discuss the full panoply of estate planning devices available to you. Do not wait until it’s too late—start the process of protecting your legacy today.
For help with preparing your vital estate plan, retain the assistance of an experienced Gainesville Estate Planning Attorney. Call our law office today for your free consultation.