What Are The Three Documents A Responsible Adult Cannot Live Without?
Every responsible adult should complete the three basic estate planning documents which include a will, power of attorney and health care surrogate designation/living will. While most everyone recognizes the need to complete some form of estate planning, according to some studies nearly half of all Americans have not completed even the most basic estate planning documents. This basic planning requires only a few short meetings with an experienced estate planning attorney and can cost as little as $350.00, but the peace of mind you will feel and the expense and heartache you will save yourself and your family are impossible to calculate. Importantly, having these documents prepared properly will help reduce the chances that your estate will be involved in costly, time consuming probate litigation after your death
The Will
We’re all familiar with the old adage, “You can’t take it with you when you die.” Having said that, most people fail to consider the heartache they create for friends and family when they do not provide specific direction on how one wants his or her property to be distributed at death. A large part of my practice involves situations where a deceased failed to prepare a will or, even worse, prepared a will that was invalid and not legally sufficient. A properly-prepared will makes your intentions clear and saves your friends and families the tremendous heartache that occurs when they try to make decisions about your property after your death. As indicated above, a properly prepared will is very inexpensive and can save your family a lifetime of heartaches when it is prepared properly.
LIVING WILL/HEALTH CARE SURROGATE
Residents of Florida and Pinellas County are undoubtedly all too familiar with the intense and bitter court battles surrounding the Terry Schiavo case. Terry Schiavo entered a coma in 1990 and her husband and family fought bitterly for more than 15 years over whether life support should be withdrawn. The real tragedy represented by this case is that if Ms. Schiavo had created a living will / health care surrogate her intentions would have been made clear and she would have saved her family 15 years worth of heartache and millions of dollars in legal fees. A properly-executed Living Will / Health Care Surrogate directive makes your intentions regarding the use of life-prolonging medical intervention clear and prevents your loved ones from fighting over what they think you would have wanted when you are incapacitated and unable to make your wishes known. Don’t put the burden of expressing your intentions on your family, save them the excruciating heartache and make your intentions clear.
POWER OF ATTORNEY
A power of attorney is an incredibly important document that can be used should you become unable to act for yourself, either for medical reasons or if you are unable for convenience purposes, to attend to your affairs. One of the most frustrating things your friends or family will experience should you become incapacitated for even a brief period of time are the very simple and mundane things that we all take for granted. A properly executed power of attorney gives someone you trust the legal authority to speak and act on your behalf, allowing them to communicate and act in concert with your banks, creditors, employers and importantly, your insurance companies and attorneys. Without a properly-prepared power of attorney, your friends and family can be frustrated to no end by trying to accomplish the simplest of tasks like keeping the power turned on in your home and making sure your banks, attorneys and insurance companies are working on your behalf.
DO I REALLY NEED A WILL OR CAN I AVOID PROBATE WITH PROPER PLANNING?
“Probate” or “Estate Administration” refers to the process whereby the court supervises the distribution of a person’s property after death. While you can take steps to simplify the process and save time and money in doing so, the reality is that even the best planning can never prepare for every situation. By taking time to prepare the basic estate planning documents, you will help to ensure that your wishes are carried out and that the probate process is as easy on your friends and family as possible.
DO I NEED AN ATTORNEY TO PREPARE A WILL?
The easy and emphatic answer to this question is ABSOLUTELY, you need an attorney to prepare your will. While the language required in a will is relatively simple, the devil really is in the details when it comes to preparing a will correctly and those details are very easy for a lay person to get wrong. In the ten years I’ve spent practicing estate law, the most heart wrenching and tragic cases by far have been those where a decedent attempted to make his or her intentions clear, but because they did not consult an attorney, their attempts were not clear or legally valid. These really are the cases where the fighting and heartache is most intense for the surviving family and friends because the survivors feel entitled or obligated to fight for what they believe the deceased wanted. Over the years I have had clients show me official looking attempted estate planning documents they have purchased online or from some person unqualified to give proper estate planning advice. Many times these forms or documents are just plain wrong on their face. Other times, the wishes the testator expresses in the documents can lead to real trouble when their beneficiaries start fighting over trying to carry out their wishes. As detailed above, the costs to have an attorney prepare your documents is very small compared with the headaches you can cause by going it alone. Save your friends and family the heartache and consult with an attorney.
DOES A WILL INCREASE PROBATE EXPENSES?
No. If there is property to be administered at your death or taxes to be paid or both, the existence of a will does not increase probate expenses. If there is real or personal property to be transferred at your death, the probate court will have jurisdiction to ensure that it is transferred properly, either according to your will, or, if there is no will, in accordance with the inheritance statute. Thus, even if you have no will, your heirs must go to court to administer your estate, obtain an order determining your legal heirs, or obtain a determination that administration is unnecessary. These procedures are often more expensive than administering your will, since a properly drawn will names the beneficiaries and delineates procedures to simplify the administration process.
ARE ESTATES BY ENTIRETIES OR JOINT TENANCY WITH RIGHT OF SURVIVORSHIP SUBSTITUTES FOR A WILL?
Joint tenancies with rights of survivorship can be established when two or more persons title bank accounts and other assets in their multiple names with the intent to have ownership pass directly to the surviving named owners when one dies. A "tenancy by the entireties" is much the same but involves only married persons. These forms of joint ownership can avoid probate of the account or other asset when an owner dies. While this can be very efficient in some cases, use of joint ownership can be fraught with problems at death and cause more problems than it solves. Among other unforeseen problems, indiscriminate use of joint ownership can cause an increase in estate taxes over the joint lives of married persons, force double probates in the event of simultaneous deaths, create unfairness as to who pays for funeral expenses and claims against the decedent, raise undesired exposure during life to the debts of co-owners, and cause a shortage of funds for payment of estate taxes which can cause litigation with the taxing authorities.
IS A LIFE INSURANCE PROGRAM A SUBSTITUTE FOR A WILL?
No. Life insurance is only one kind of property that a person may own and a will is necessary to dispose of other assets that a person owns at death. If a life insurance policy is payable to an individual, the will of the insured has no effect on the proceeds. If the policy is payable to the estate of the insured, the disposition of the proceeds may be directed by the will. Life insurance can be useful in providing cash at death for payment of taxes and expenses, but like most strategies for insurance, the careful person will consult a lawyer, a life insurance counselor, and a financial advisor. Mistakes in ownership and beneficiary designations in these policies can cause great increases in estate taxes owed.
IS A TRUST A SUBSTITUTE FOR A WILL?
No, in most situations. A trust may be used in addition to a will. This is because a trust can handle only the property that has been put into it. Any property of a person that is not placed in the trust either during life or at death in most instances escapes the control of the trust. It is the will that controls all property in a decedent's name at the time of death if the will is drafted properly. Trusts can be helpful to speed administration and save taxes if they are drafted properly and funded during life with the property intended to be transferred by the trust. Often, however, improperly drafted or incorrectly funded or administered trusts can add to the cost of settling estates, not lower it. Furthermore, it is the probate of the will that can clear creditors' claims, which is not possible with just a trust administration.
DO YOU HAVE TO GO TO COURT TO PROBATE A WILL?
No, personal court appearances are usually not needed to probate a will. However, documents must be filed with the court to procure a probate order and administer estates. In most counties, neither the estate attorney nor the interested persons ever appear in the courtroom.
CAN A WILL REDUCE TAXES?
A well-drawn will can reduce estate and income taxes that may arise when someone dies. Estate taxes are often by far the largest cash expense an estate can have. There is also the possibility that Congress may increase the impact of the estate tax in the future. In addition, proper planning must be made for income tax advantages. Proper planning with a will is indispensable in taking these benefits in the tax codes.
DO YOUR ESTATE PLANNING NOW!
The time and money you invest in executing the basic estate planning documents described above will pay incalculable benefits to your friends and family after your death. Take the time to contact me directly at 727/894-3159 to schedule an appointment! Matthew D. Weidner is a Florida-licensed attorney with a practice that focuses on estate planning, probate, real estate and general civil litigation.
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1229 Central Avenue
St. Petersburg Florida 33705
Phone: 727-894-3159
Fax: 727-213-6235
E-mail: weidnerlaw@yahoo.com
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