Estate Planning

protect your family's future with ESTATE PLANNING services

There are many strategies and solutions used in estate planning, including wills, revocable living trusts, irrevocable trusts, durable powers of attorney, living wills, advance health care directives, and many others. Many people neglect this fundamental step in planning and protecting their family’s financial future. Preparing a well thought out estate plan puts you ahead of many of those who fail to plan at all. Many people are surprised to learn that if they fail to prepare their estate plan, the laws of Florida will decide what will happen to their assets after their death, and often the State’s plan is not the plan they would have chosen! A properly drafted estate plan will replace the State’s plan with your own.

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YOUR LAST WILL AND TESTAMENT

Your last will and testament is just one part of a comprehensive estate plan. If a person dies without a Will they are said to have died “intestate” and state laws will determine how and to whom the person’s assets will be distributed. Some things you should know about wills:

  • A will has no legal authority until after death. So, a will does not help manage a person’s affairs when they are incapacitated, whether by illness or injury.
  • A will does not help an estate avoid probate. A will is the legal document submitted to the probate court, so it is basically an “admission ticket” to probate.
  • A will is a good place to nominate the guardians (or back-up parents) of your minor children if they are orphaned. All parents of minor children should document their choice of guardians. If you leave this to chance, you could be setting up a family battle royal, and your children could end up with the wrong guardians.

  • TRUSTS: REVOCABLE LIVING TRUSTS, IRREVOCABLE TRUSTS, TESTAMENTARY TRUSTS, SPECIAL NEEDS TRUSTS, ETC.

    Trusts come in many “flavors,” they can be simple or complex, and serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity with at least three parties involved: the trust-maker, the trustee (trust manager), and the trust beneficiary. Oftentimes, all three parties are represented by one person or a married couple. In the case of a revocable living trust, for example, a person may create a trust (the trust-maker) and name themselves the current trustees (trust managers) who manage the trust assets for their own benefit (trust beneficiary).


    Depending on the situation, there may be many advantages to establishing a trust, including avoiding probate court. In most cases, assets owned in a revocable living trust will pass to the trust beneficiaries (or heirs) immediately upon the death of the trust-maker(s) with no probate required. Certain trusts also may result in tax advantages both for the trust-maker and the beneficiary. Or they may be used to protect property from creditors, or simply to provide for someone else to manage and invest property for the trust-maker(s) and the named beneficiaries. If well drafted, another advantage of trusts is their continuing effectiveness even if the trust-maker dies or becomes incapacitated.

  • POWERS OF ATTORNEY

    POWERS OF ATTORNEY

    A power of attorney is a legal document giving another person (the attorney-in-fact) the legal right (powers) to do certain things for you. What those powers are depends on the terms of the document. A power of attorney may be very broad or very limited and specific. All powers of attorney terminate upon the death of the maker and may terminate when the maker (principal) becomes incapacitated (unable to make or communicate decisions). When the intent is to designate a back-up decision-maker in the event of incapacity, then a durable power of attorney should be used. Durable Powers of Attorney should be frequently updated because banks and other financial institutions may hesitate to honor a power of attorney that is more than a year old.


  • HEALTH CARE DOCUMENTS (OR ADVANCE DIRECTIVES)

    An advance directive is a document that specifies the type of medical and personal care you would want should you lose the ability to make and communicate your own decisions. Anyone over the age of 18 may execute an advance directive, and this document is legally binding in Florida. Your advance directive can specify who will make and communicate decisions for you, and it can set out the circumstances under which you would not like your life to be prolonged if, for example, you were in a coma with no reasonable chance of recovery. 


    A document that goes hand-in-hand with your advance directive is an authorization to your medical providers to allow specified individuals to access your medical information. Without this authorization, your doctor may refuse to communicate with your hand-picked decision maker.

ADDITIONAL ESTATE PLANNING RESOURCES

Family Action Plan

Living Will, Health Care Directives, Etc.

PLANNING FOR MINOR CHILDREN IN FLORIDA 

It is an unfortunate fact of life: airplanes plummet, trains derail, ships sink and automobiles crash. Sometimes there are survivors, sometimes there are no survivors. What is left when a tragedy claims both parents of minor children? Orphans and assets.

 

Children are a family’s greatest treasure. Think of all the precautions taken to safeguard young children – from the first purchase of an infant car seat to the compulsory swimming lessons and even driver’s safety instruction. Yet, most parents leave their children completely unprotected from one of life's most crushing blows – being orphaned upon the loss of their parents.

GREAT EXPECTATIONS

While every parent expects to rear their minor children to adulthood, life may throw any of us an unexpected curve ball in the form of a fatal injury or illness. Are you, and your children, prepared for that curve ball? Who would you legally appoint to serve as their back-up parents to fulfill your prenatal responsibilities? Your answer may depend on how family is defined for you. Is yours a single-parent family, a blended family or a traditional family?

  • SINGLE PARENT FAMILIES

    If you are a single parent, then the surviving biological parent automatically remains the natural guardian, unless proven unfit. Without contrary legal arrangements, the surviving parent likely will manage your children’s inheritance until each child reaches adulthood (under Florida law, age 18). Your children will receive whatever is left of their inheritance without guidance or restriction. If both you and the other parent are deceased, what happens? In that instance, if there are no proper legal plans in place, a judge will select back-up parents (i.e., guardians) for your minor children and see that the inheritance is distributed outright at the age of majority.

  • BLENDED FAMILIES

    When the minor children in the household may be yours, mine and ours, how do you select the back-up parents … especially when the children consider themselves to be one family? Should the minor children remain together, if possible? If not, then with whom should they be placed and should legal arrangements be made to facilitate their ongoing contact? While you may not be able to stop a determined natural parent with intact parental rights from taking custody, you can use your estate plan to inform the Court of your desires, and why they are important and should be considered.

  • TRADITIONAL FAMILIES

    If yours is a traditional, nuclear family, then the whole matter seems rather simple, doesn’t it?


     The surviving parent remains the natural guardian. However, what if both parents are deceased? Will your children be reared by their paternal or maternal side of the family? That is when things can get complicated. In our mobile society, both sides of the family may not know one another and may even live on opposite coasts even if they do. Alternatively, perhaps you would rather your children be reared by good friends in a stable marriage who share your values and lifestyle? These are your children and it is your decision to make as to is the best person or persons to raise you own children. Don’t let that opportunity be wasted. Let your plans be known.

SOME POINTERS

  • As you can see, every family situation is different. Nevertheless, here are some general guidelines for your consideration when selecting guardians for your minor children:
  • Select guardians who share your religious beliefs, core values and life priorities and already have an established, positive relationship with your children;
  • When selecting a married family member, appoint the family member only, not their spouse, in case they divorce or your family member predeceases;
  • Ensure that your legal plans provide for compensation of the guardians, or at least that assets are available from your children's inheritance to cover all expenses incurred on their behalf; and
  • Obtain permission of the selected guardians before appointing them in your legal plans.

  • INHERITANCE PLANNING

    Once these guardians are appointed, great care must be given to any inheritance left to your children. Now, let’s turn our attention to some methods for managing any inheritance left to them. We will review a common default method provided under the laws of many jurisdictions, a method of providing multiple opportunities for inheritance success or failure and a method that seems complex at first blush, but really may be the simplest method of the three.

  • OUTRIGHT DISTRIBUTIONS

    In the absence of any legal arrangements, the laws of most jurisdictions provide for the outright distribution of an inheritance to a child who is at or beyond the age of majority (e.g., age 18 in most jurisdictions). Children who are under the age of majority receive their lump sum inheritance upon reaching that age. Bottom line: Following an outright distribution to your children, the full inheritance may fall prey to such common threats as divorces, lawsuits, bankruptcies or squandering. If you worked hard to accumulate your wealth, then you may want to protect any inheritance both for your children and from them.




  • STAGGERED DISTRIBUTIONS

    Although a bit more complex than the outright distribution approach, the staggered distribution method holds the inheritance of a child in trust until such time as outright distributions are triggered by such terms as you may determine. Oftentimes, parents will designate multiple distributions of a percentage or fractional share upon a child's attaining certain ages or reaching certain goals set by the parents. Regardless, at some identifiable point the trust share of the child is terminated and the entire inheritance is distributed to them. Contrasted with the outright distribution method, this arrangement with its staggered distribution provisions provides increased protection from the common threats described above. For parents seeking even greater protection of the inheritance and their children, yet another method warrants serious consideration.

  • DISCRETIONARY TRUSTS

    Both the outright distribution and the staggered distribution methods share an apparent attractiveness: Simplicity. But complexity has a tendency to sometimes masquerade as simplicity. For example, of what value is an inheritance if it is taken or lost unnecessarily? Alternatively, an inheritance may be held in a long-term discretionary trust to protect it both for and from your child, regardless of their age. In such a trust, you set the terms under which the inheritance is available for your child. Moreover, if properly constructed, a discretionary trust may own assets for the use and enjoyment of your child and even their children for generations … without the risk of loss between generations to divorces, lawsuits, bankruptcies or squandering. In short, great flexibility, creativity and control are made available through discretionary trust planning.

  • FOSTER CARE

    While every parent expects to rear their minor children to adulthood, life may throw any of us an unexpected curve ball in the form of a fatal injury or illness. Are you, and your children, prepared for that curve ball? Who would you legally appoint to serve as their back-up parents to fulfill your prenatal responsibilities? Your answer may depend on how family is defined for you. Is yours a single-parent family, a blended family or a traditional family?

PREPARING YOUR FAMILY ACTION PLAN

WHAT HAPPENS TO YOUR KIDS ON DAY ONE, IF SOMETHING HAPPENS TO YOU?

If something happens to you and you haven't made a plan for your kids, they will go to foster care. But, you can choose who takes care of your kids by making a plan. The Gegan Law Office can help you prepare documents and a family action plan to choose a guardian and alternate guardian for your children. It is important to pick people who live nearby and who your children already know and trust. These people can take care of your kids right away, while the courts decide on a permanent guardian.


To make sure your family action plan works, you need to talk to your emergency guardians, give them a copy of the Childcare Power of Attorney, and create an emergency contact list with their contact information. Also, make a "Need to Know" list for each child that has important information like medication and food allergies. Keep these documents in a safe place and let babysitters and police officers know where they are. Making a plan is very important because it ensures your children will be taken care of by people they know and trust right away if something happens to you.

Creating a Family Action Plan with Gegan Law Office for Emergency Preparedness

It's time to take action to protect your children in case of an emergency. Start by talking to your chosen emergency guardians and letting them know your plan. Give them a copy of your Childcare Power of Attorney and create an Emergency Contact List, as well as a "Need To Know" list for each of your kids. By taking these simple steps, you can ensure that your children are provided for on Day One, no matter what happens. Don't wait until it's too late. Contact the Gegan Law Office today to start putting together your Family Action Plan and give yourself peace of mind.

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THE LIVING WILL 

The Living Will, Durable Power of Attorney (or Revocable Living Trust, if you have a Trust based estate plan) and the appointment of a Healthcare Surrogate are the core documents in your Estate Plan which protect you and your family while you are still alive, but unable to make or communicate your decisions because you are “incapacitated”. That might result from a temporary condition, such as unconsciousness or a stroke which prevents you from being able to communicate, or a permanent condition such as a permanent vegetative state or the last stages of dementia. This outlines some of the issues you should think about when considering how your attorney should draft these documents for you.

  • HEALTH CARE SURROGATE

    You can appoint someone to be your agent to make health care decisions for you with either a medical durable power of attorney, or an advance healthcare directive. You can choose an alternate, but the Florida statute does not provide for picking “co-agents”. This may cause conflict if you have to choose between several family members.


    A Surrogate only can make decisions for you after a determination is made that you are “incapacitated” by your attending physician, and ceases automatically when you recover your capacity. Your Health Care Surrogate is guided by your wishes and instructions as laid out in your Living Will, and both documents are meant to work hand in hand. If your family feels the Surrogate is not abiding by your wishes as expressed in your Living Will, they can go to the Probate Court and rely upon your written instructions. Think of it this way. The Advance Healthcare Directive appoints your agent, and your Living Will gives them your instructions or wishes.

  • DURABLE POWER OF ATTORNEY

    A “durable” power of attorney is a document which allows your appointed agent to make a variety of financial decisions for you, from day to day tasks like paying your bills, to more complicated tasks like buying and selling investments, running your business, or making gifts. If you have a Revocable Living Trust based estate plan, you may not need a durable power of attorney, because your Trust likely has already appointed successor Trustees to handle the trust assets, which presumably would be sufficient to make sure the lights are kept on and other financial matters are attended to.


    Florida does not recognize “springing” durable powers of attorney, which are powers of attorney which “spring” to life only upon your incapacity. That means whomever you appoint as your agent has the powers you designate right away. So, you must choose someone you trust, and even then should limit their powers to just those they need to have to “take care of things” when you cannot. This danger should be seen in contrast with using a Revocable Living Trust, which allows you to choose a successor trustee who only can assume responsibilities upon a determination that you are incapacitated, and you get to decide how that determination is made (ex. upon advice of a physician and a family member).


    Powers of attorney are one of the most abused of estate planning tools. It is not unheard of for the chosen agent to abuse their power and authority and start diverting the principal’s assets toward themselves or their families, or deprive a disfavored family member from participating meaningfully in the principal’s financial matters. So, the person you select not only should be someone you trust, but someone everyone else in the family trusts as well.


     


    A power of attorney allows you to grant as many powers as you wish, or restrict those powers to just a few categories. Often powers of attorney are signed which simply permit all kinds of transactions indiscriminately. Consider limiting the powers of your agent to just the things you reasonably think they need to do.

  • MISCELLANEOUS ISSUES

    a. The withholding or withdrawal of life prolonging procedures pursuant to a Living Will or other Advance Directive will not affect payment of any life insurance policy. So, you don’t need to worry about any decisions affecting your beneficiary’s rights under such a policy, even if your beneficiary is also your chose agent to make medical decisions.


    b. Consider changing your Health Care agent or durable power of attorney agent when appropriate. For example, if you have filed for divorce you should remove your soon to be ex-spouse as an agent. Florida law will automatically void the selection of an ex-spouse after a divorce is final, but not before that point (such as during the divorce action, or during a period of separation).


    c. Consider choosing different people to be in charge of your finances and in charge of your medical care. Not all personalities and skill sets are appropriate for both financial decisions and medical decisions. Selecting different people also insulates your agents from potential conflicts of interest, and allows more members of your family to feel that you have “involved” them.


    d. Anyone who destroys or alters or conceals any kind of Advance Directive and thereby causes life prolonging procedures to be withheld or withdrawn, hastening death, commits a second-degree felony. These are important legal documents and should be respected. Your Advance Directive will not apply to the following situations unless you specifically address them: Abortion, sterilization, electro-shock therapy, psychosurgery, unapproved experimental treatments, and withholding procedures from a pregnant patient prior to viability of the fetus. Consider your position on these issues, and then have your attorney address them specifically.

CHARITABLE PLANNING

At Gegan Law Office, we encourage and assist the tradition of giving to charitable causes. In addition to the many personal rewards inherent in making a charitable gift, most gifts also provide a current charitable income tax deduction. Some charitable giving strategies also save capital gains taxes, increase income, and provide you, or whomever you designate, with an income for life. Additionally, these types of gifts may provide an estate tax deduction — an important consideration in planning your estate.

  • MAKING THE MOST OF YOUR CHARITABLE GIVING

    If given the choice between paying taxes (involuntary philanthropy), or making a charitable gift (voluntary philanthropy), most people would choose the latter, because it gives them the benefit of knowing who the money will benefit and how it will be used. The same cannot be said for money paid to the U.S. Treasury. We help clients make charitable gifts and practice good stewardship in the most tax-efficient manner.

  • THERE ARE MANY DIFFERENT WAYS TO MAKE CHARITABLE GIFTS:

    A charitable remainder trust or a charitable gift annuity will give you an immediate income tax deduction, a lifetime stream of income, and a waiver of capital gains taxes owed on contributed property.

    A charitable lead trust creates an income stream to charity for a term of years with the remainder of the trust going to your children without any estate or gift tax consequences.

    A private foundation offers you the considerable freedom to control amounts given by placing restrictions on how your gifts are used by charities.

    A donor advised fund allows you to maximize your income tax savings on your regular monthly or weekly contributions to church or charities.

    This has been a very general overview of a very complex subject matter. If there are causes or organizations you would like to support, while also maximizing your tax-saving strategies, please contact us to explore your options.

ESTATE TAX PLANNING

Historically speaking, the federal estate tax is an excise tax levied on the transfer of a person’s assets after death. In actuality, it is neither a death tax nor an inheritance tax, but more accurately a transfer tax. There are three distinct aspects to federal wealth transfer taxes that comprise what is called the Unified Transfer Tax: Estate Taxes, Gift Taxes, and Generation-Skipping Transfer Taxes. Legal planning to avoid or minimize these transfer taxes is both a prudent and an important aspect of comprehensive estate planning.

 

The most recent iteration of the federal estate, gift, and generation-skipping transfer tax was signed into law by President Trump on December 22, 2017, as part of the Tax Cuts and Jobs Act of 2017 (TCJA 2017). There are a few things you ought to know about this law which took effect on January 1, 2018. Specifically, you should know the “numbers” governing transfers subject to estate, gift, and generation-skipping transfer taxation.

  • FEDERAL ESTATE TAX EXEMPTION

    A $5 million exemption, as indexed for inflation, was signed into law on December 17, 2010, under the Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010 (TRA 2010). By 2017, the federal estate tax exemption had risen to $5.49 million per individual due to the inflation feature (and a nearly “automatic”* $10.98 million for married couples who follow very specific requirements at the death of the first spouse). With the stroke of his pen on December 22, 2017, President Donald Trump increased this exemption to $11.2 million per individual (and $22.4 million for married couples). The tax rate for amounts above what can be exempted remains at 40%.


     *See “Portability” below for more on this.

  • LIFETIME GIFT TAX EXEMPTION AND ANNUAL GIFT TAX EXCLUSION

    The TCJA 2017 continues the concept of a unified exemption that ties together the gift tax and the estate tax. This means that, to the extent you utilize your lifetime gift tax exemption while living, your federal estate tax exemption at death will be reduced accordingly. Your unified lifetime gift and estate tax exemption in 2017 was $5.49 million and is now the same as the federal estate tax exemption of $11,200,000 per individual (and $22,400,000 for married couples). Likewise, the top tax rate is 40%. Note: Gifts made within your annual gift exclusion amount do not count against your unified lifetime gift and estate tax exemption.


    So, how much is this annual gift exclusion?


    The annual gift exclusion has increased to $15,000 due to its inflation adjustment. This is up from $14,000 for 2017. Married couples can combine their annual gift exclusion amounts to make tax-exempt gifts totaling $30,000 to as many individuals as they choose each year, whether both spouses contribute equally, or if the entire gift comes from one spouse. In the latter instance, the couple must file an IRS Form 709 Gift Tax return and elect “gift-splitting” for the tax year in which such gift was made.

  • GENERATION-SKIPPING TRANSFER TAX EXEMPTION

    So, what is this GSTT? Basically, it is a transfer tax on property passing from one generation to another generation that is two or more generational levels below the transferring generation. For instance, a transfer from a grandparent to a grandchild or from an individual to another unrelated individual who is more than 37.5 years younger than the transferor.


    Properly done, this can transfer significant wealth between generations.


    The amount that can escape federal estate taxation between generations, otherwise known as the Generation-Skipping Transfer Tax Exemption (GSTT) is unified with the federal estate tax exemption and the lifetime gift tax exemption at $11,200,000 per individual (and $22,400,000 for married couples, subject to certain specific requirements). As with estate and gift taxes, the top GSTT tax rate is 40%.



  • *“PORTABILITY”

    The American Taxpayer Relief Act of 2012 (ATRA 2012), made “permanent” a new concept in estate planning for married couples, ostensibly rendering traditional estate tax planning unnecessary. This concept, called “portability,” means that a surviving spouse can essentially inherit the estate tax exemption of the deceased spouse without use of “A-B Trust” planning. As with most tax laws, however, the devil is in the details. For example, unless the surviving spouse files a timely (within nine months of death) Form 709 Estate Tax Return and complies with other requirements, the portability may be unavailable.


     In addition, married couples will not be able to use the GSTT exemptions of both spouses if they elect to use “portability” as the means to secure their respective estate tax exemptions. Furthermore, reliance on “portability” in the context of blended families may result in unintentional disinheritances and other unpleasant consequences.


    If you are concerned about how your current estate and gift planning may function in light of recent changes in the law, and thereafter, then we encourage you to schedule a consultation.

  • FLORIDA ESTATE TAXES

    Florida’s estate tax system is commonly referred to as a “pick up” tax. This is because Florida picks up all or a portion of the credit for state death taxes allowed on the federal estate tax return (federal form 706 or 706NA). Since there is no longer a federal credit for state estate taxes on the federal estate tax return, there is no longer basis for the Florida estate tax. Florida has neither an estate tax – a tax paid by the estate, nor an inheritance tax – a tax paid by a recipient of a gift from an estate.

Contact Our Team Today For More Information

at 813-248-8900 or fill out the form below! 

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