What Is Estate Planning?

Estate planning is “peace planning.” Effective planning empowers every day people to direct how the assets that they’ve earned will be managed and distributed after their passing. An effective plan will also provide protection in the event of an unexpected incapacity during a person’s lifetime, including allowing them the ability to appoint trusted loved ones to make important decisions about healthcare, access and management of financial affairs, and by providing for the guardianship and maintenance of care for minor children and/or special needs or vulnerable adult children. Below are some key and common documents that may be included within a comprehensive estate plan.

Last Will & Testament

Commonly referred to simply as a “Will.” A Will is a legal document that outlines how your assets will be distributed upon your death. A Will-based plan requires a probate case to be filed in Court. With Court supervision, your appointed executor or personal representative handles the administration of your probate estate, which includes distributing assets as you have designated within your Will.

When someone passes without a Will, they are said to have passed “intestate.” Distribution of their probate estate follows Florida law to determine who is entitled to inherit and his or her percentage of interest in the estate property.

Having a properly designed and executed Will ensures that the distribution of your probate estate assets aligns with your wishes.

Trust

A trust is a legally created ownership entity where you, as the trust maker, often referred to as the settlor, transfers ownership of property or assets into the trust during your lifetime. Generally, the trust is managed by a trustee who has a fiduciary duty to manage and distribute trust assets in compliance with the provisions of the trust and for the benefit of the designated beneficiaries. With a Revocable Living Trust, for example, the trust maker is the trustee during his or her lifetime. Effective trust-based estate planning avoids the probate process, which can be costly and lengthy, provides privacy, and can provide asset protection and limit tax liability depending upon the nature of the trust assets and how distributions are made. Trust-based planning also helps protect the trust maker in the event of incapacity during his or her lifetime. Many view trust-based estate planning as a key component of generational wealth building.

Common forms of trusts:

Revocable Trusts: Can be changed or terminated during your lifetime.

Irrevocable Trusts: Once established, they generally cannot be modified, offering potential tax benefits.

Special Needs Trusts: Created to provide for a loved one with disabilities and/or special needs without affecting their eligibility for government benefits. This may also be a useful tool to help protect financially vulnerable family members from creditors or predators.

Probate

Probate is the court-supervised legal process that validates a Will, considers and resolves claims made by creditors, and ensures the transfer and distribution of probate assets to the appropriate beneficiaries. If an individual passes without a Will, the probate court supervised process follows state law in deciding who gets what and the percentage of the probate estate to which they are entitled. Probate administration can be lengthy and costly. There are a variety of strategies that can be used to eliminate the need to probate an estate, including having an effective trust-based estate plan.

Why Is Estate Planning Important?

Estate planning provides peace of mind that one’s wishes will be honored and their loved ones cared for during perhaps the most vulnerable of times. Without a clear plan in place, one leaves important decisions in the hands of the court, which can lead to delays, unnecessary expenses, and potential disputes among family members and loved ones..

  • Avoid Probate (saves time and money);

  • Limits the financial and/or tax liability of the estate;

  • Allows for the appointment of trusted individuals to manage and/or disburse hard earned assets;

  • Determines how, when, and to whom assets are distributed (the Florida legislature will decide for you if you don’t);

  • Provides protection in the event of incapacity, including instructions for designated individuals to make medical decisions and manage financial accounts;

  • Lightens the burden on grieving loved ones by providing a road map;

  • Ensures gifts to minor children or loved ones with special needs are protected;

  • Contributes to peace of mind by planning for the unpredictable and inevitable.