Estate planning 101

UPDATED 8/10/17

Many people assume that if they do not have substantial wealth, they do not need a will or a revocable trust.

If your wishes are completely in line with Florida’s intestate provisions you might not need a will. However, if your wishes differ in any way, large or small (which is almost always the case), a will or a revocable trust is likely the only way to guarantee that your wishes will be fulfilled.

Estate Planning 101 - GunsterDo you have minor children? If the answer is yes, then you need a will now! A guardian should be named for your minor children. You do not want a court to choose a guardian for your children if you have and know a viable choice.

Remember, your will and revocable trust do not cover all of your assets. You must name beneficiaries under life insurance policies, retirement plans, IRAs and pension plans. These interests do not pass by will or revocable trust and play an important part in your planning strategy.

You may want to consider holding your insurance policies in an irrevocable life insurance trust and not in your own name. Otherwise, the insurance proceeds will first be taxed to your estate, thereby reducing the amount distributed to your beneficiaries.

Also, it may be advisable to take advantage of annual and lifetime gift exclusions (the annual exclusion is $14,000 for 2017 and the lifetime gift exclusion is $5,490,000 for 2017, and both exclusions are annually indexed for inflation). If you can afford to do so, this is an efficient way to reduce your taxable estate. Further, you can make unlimited gifts as direct payments for school tuition and medical expenses. These gifts do not require use of the annual exclusion.

Title your assets properly. You need to title or own your assets in proper form to fund your lifetime estate tax exemption, take advantage of mechanisms like bypass trusts, and avoid assets being subject to the claims of certain creditors. For example, if your bank accounts are held jointly with an adult child (i.e. to allow an adult child to make withdrawals on your behalf), the law will presume that your child owns half the funds in the account and, as a consequence, your child’s creditors can attach half of the account.

Be sure to plan for the possibility that you may become incapacitated and unable to make medical or financial decisions for yourself. Again, if you do not execute the proper documents authorizing an agent to make these decisions for you, court intervention will be required to appoint a guardian. Guardianship proceedings in these, or any, circumstances can be both financially and emotionally costly.

Do you own or have an interest in a family business? If yes, you should create a comprehensive business succession plan to document, among other things, the terms of future business ownership, management roles, investment strategies, and exit plans for heirs unwilling or unable to continue the business.

Lastly, make sure to schedule periodic reviews of your estate plan to make adjustments for changes in law, finances, or family structure and the inevitable occurrence of unanticipated events.

Image courtesy of Mister GC / FreeDigitalPhotos.net.

8/10/17 UPDATE: annual gift exclusion year changed from 2015 to 2017 (no change in amount); lifetime gift exclusion changed from $5,430,000 in 2015 to $5,490,000 in 2017.

Our attorneys keep clients in the know when it comes to how the law affects business. Read Gunster’s blog for timely and important updates on legal and business matters, straight from our attorneys to you.

Recent Posts

Popular Categories

Jump to Page

Gunster Cookie Preference Center

Your Privacy

When you visit our website, we use cookies on your browser to collect information. The information collected might relate to you, your preferences, or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. For more information about how we use Cookies, please see our Privacy Policy.

Strictly Necessary Cookies

Always Active

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.

Functional Cookies

Always Active

Some functions of the site require remembering user choices, for example your cookie preference, or keyword search highlighting. These do not store any personal information.

Form Submissions

Always Active

When submitting your data, for example on a contact form or event registration, a cookie might be used to monitor the state of your submission across pages.

Performance Cookies

Performance cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.

Powered by Firmseek