ESTATE PLANNING

Naples, Florida Estate Planning Lawyer

Much of our work for clients consists of what is commonly referred to as “estate planning.”  Estate planning is the process of implementing the proper legal and tax documents, coupled with the appropriate asset postures and ownership, so that one’s affairs are in order in the event of illness or death.

 

Our representation of an estate planning client typically begins with an initial meeting to collect information about the client’s family situation, assets and goals.  In this meeting, we advise clients about many important issues and options that pertain to the client’s unique situation, such as inheritance structures and death taxes.

 

Generally, by the end of the initial meeting, we are able to propose an estate plan that is tailored to meet the client’s specific goals and needs.

 

Once the client approves the proposed estate plan, we then draft the necessary legal documents, such as a Will, Revocable Trust, Powers of Attorney, and Health Care Directive, which serve to legally formalize the estate plan.

 

LAST WILL AND TESTAMENT 

 

A Last Will and Testament, or Will, is the legal document by which one identifies the heirs of the estate and designates the person (the Personal Representative) who will have responsibility for handling all aspects of the estate.  A comprehensive Will should address all issues and concerns pertaining to the estate, including the distribution of one’s heirlooms, instructions for beneficiaries who are minors or disabled and the payment of debts and taxes. 

 

Also, it is important to differentiate between a Will and a “Living Will” (discussed below).  The Will addresses the estate assets and heirs while the Living Will pertains only to health care matters. 

 

Further, many clients opt for a Revocable Trust based estate plan, rather than a Will based plan, in order to avoid probate.

THE REVOCABLE TRUST 

 

A Revocable Trust (or “RT”) is a common estate planning recommendation for a client who wishes to avoid a court probate of his or her estate at death and to allow his or her designee to manage his or her investments and property in the event of mental incapacity.  Also, the RT serves to implement the client’s testamentary wishes in lieu of a Will.  During recent years, RTs have gained popularity as a sound and legitimate technique for addressing probate and incapacity concerns.

Assets held in an RT will avoid a court probate at death.  The ability to avoid the necessity of a court probate at death generally is the most valuable feature of an RT.  Probate is the court-supervised legal process of transferring a deceased person’s property to his or her heirs.  Most people wish to avoid probate because it is a relatively expensive, time-consuming and inconvenient process.

 

Another benefit of the RT is that if the client (or the “settlor”) becomes mentally incapacitated, then his or her designee becomes the trustee of the RT.  Often the designee is the spouse or a child of the client.  Importantly, the assets held in one’s RT (as compared to assets titled in one’s own name) are not subject to a court guardianship proceeding.

In a typical RT, the person who creates the RT (a) is named as the initial trustee of the RT, (b) is the sole beneficiary during life, and (c) may revoke or amend the RT at any time.  Upon the settlor’s death, the RT then becomes irrevocable and the appointed successor trustee steps in as acting trustee.  At that point, the RT provides for the disposition of one’s property to designated heirs just like a Will.

 

Also, during the life of the settlor the RT does not result in any income tax consequences.  For federal income tax purposes, the RT is treated as if it did not exist.  Instead, all income and loss of assets held in the RT is reported on the settlor’s own tax return.

DURABLE GENERAL POWER OF ATTORNEY

A Durable General Power of Attorney is an essential component of any estate plan.  This is equally true for a multi-million dollar estate as well as for the humblest of estates.

The Durable General Power of Attorney (or “DGPOA”) is a document by which a client authorizes another person (the “Attorney-in-Fact”) to act in the client’s behalf.  The DGPOA is “durable” in that it lasts for the client’s lifetime, unless revoked, and it is “general” because it applies to all of the client’s financial affairs and property.  The DGPOA typically is used by the Attorney-in-Fact to handle a client’s ongoing personal affairs and needs – such as bill payment, preparation of tax returns and asset management – if the client experiences diminished capacity or mobility.

 

Perhaps surprisingly, the law does not automatically grant the spouse or a child of an incapacitated client the legal authority to handle finances and property.  Rather, if there is no DGPOA in place, the spouse or child must institute a court guardianship proceeding to have incompetency determined and then be appointed as the legal guardian.  Thus, implementing a DGPOA is highly advisable to avoid a court guardianship and to posture one’s life to continue as smoothly as possible in the senior years.

Importantly, although an Attorney-in-Fact has broad authority over a client’s property the Attorney-in-Fact is held to the same standard of conduct as a Trustee or Executor.  Therefore, if an Attorney-in-Fact mishandles funds or engages in impropriety, he or she is subject to both civil liability and criminal penalties. 

Further, there is no “one size fits all” DGPOA document.  Rather, a DGPOA must be tailored to the client’s particular situation.  Often mass-marketed DGPOAs – such as those available on-line or from office supply shops – come in either the “kitchen sink” variety that grant too many powers to the Attorney-in-Fact (such as the power to give money away to any descendant) or are streamlined to the point that important options are omitted – such as the authority to communicate with the client’s physician.

HEALTH CARE DIRECTIVE

The Health Care Directive (sometimes referred to as a Living Will) is the document by which one sets forth end-of-life directions.  A Health Care Directive is integral to a comprehensive estate plan since it serves as the means to implement your own decisions regarding care in the event of incapacity. 

 

Further, it serves to avoid putting these difficult decisions into the hands of one’s spouse or children who are already in distress.

Although the Health Care Directive instructs whether or not you are to remain on life-support, many other important elements are incorporated into it.  Examples include (a) organ donation, (b) autopsy authority, (c) permission to hire RNs and other health-care professionals, and (d) authority to make funeral and burial arrangements. 

As the years progress, we often provide a number of supplementary functions for clients, such as providing tax updates and making necessary adjustments to the estate plan as the law changes and as the client’s personal circumstances dictate.

ROBERT H. EARDLEY

PRINCIPAL ATTORNEY