Estate Planning and Administration
Estate planning and estate administration are two equally important parts of an estate plan.
With estate planning, you are making important decisions about how to protect your family now and in the future. Estate administration is all about how those estate planning wishes are carried out by others.
Florida Estate Planning
It may be true that death is one of the certainties in life, but in Florida, a person can plan for:
- The distribution of his or her assets
- Who will be responsible for settling his or her affairs and carrying out his or her intentions
- Estate taxes payable upon death
Planning with a Palm Beach County estate planning attorney can ease the burden on the survivors. Moreover, planning also involves determining who will make decisions while a person is alive with respect to the person’s health care, if the person is unable to make health care decisions for himself or herself, and establishing a process to manage the person’s assets in the event of incapacity.
Estate Planning Documents
The basic estate planning documents are as follows:
- A Last Will and Testament is operative at death and directs the disposition of assets titled in the testator’s individual name.
- A Revocable Trust is typically the residuary beneficiary of the will and directs the disposition of the trust grantor’s assets at death. Unlike the will, this document will not be filed with the court on death. By funding the revocable trust during life, the need for probate can be minimized and the grantor’s assets managed in the event of incapacity.
- A Designation of Health Care Surrogate document designates a surrogate to make health care decisions for the signer (principal) if the principal is unable to make such decisions.
- A Living Will sets forth the signer’s desires regarding life-prolonging procedures in the event the signer is suffering from a terminal illness or is in a vegetative state or has an end stage condition caused by injury, disease or illness. Typically, this document requests that life-prolonging procedures be withheld or withdrawn when such procedures would only serve to prolong artificially the process of dying. A living will can be customized to the signer’s wishes.
- A Durable Power of Attorney appoints an agent to exercise financial powers for the signer (principal). The principal may also authorize the agent to make decisions that can affect who benefits from the principal’s assets, for example, the power to make gifts or to change beneficiary designations.
Assets and Estate Planning in Florida
As part of this process, beneficiary designations for life insurance and retirement assets are also reviewed. Strategies may also be discussed to reduce or minimize estate tax, which may involve the current transfer of assets. While the minimization or elimination of estate tax is an important consideration, it is not the only consideration to be addressed. The asset and estate planning process is an opportunity for a person to determine who he or she wants to benefit from his or her assets and how the beneficiaries should receive such assets.
Often rather than leaving assets outright to a beneficiary, assets are left in trust to provide asset protection for the beneficiary, including protection from claims of former spouses; to ensure that the beneficiary does not receive assets until he or she has sufficient maturity to handle such assets; to ensure that assets stay in the family line; and/or take care of a beneficiary with special needs.
The Benefits of Creating an Estate Plan
The estate planning process is also an opportunity to determine who is best suited to carry out the estate plan. A well thought out estate plan will make estate administration easier.
Estate Administration in Florida
Estate administration involves the settlement of a decedent’s affairs and the transmission of the decedent’s property.
Settling the Estate
If the decedent had a will, the assets will be transmitted in accordance with the terms of the decedent’s will (except to the extent that the surviving spouse or children may be granted rights under Florida law which differ from the terms of the will), and the person designated by the decedent to carry out the terms of the will, known as personal representative, will be appointed by the court, assuming that such person qualifies to serve as personal representative under Florida law. (Oftentimes, the will provides that the assets are to be distributed to the decedent’s revocable trust to be distributed in accordance with the terms thereof.)
If the decedent does not have a will, the decedent’s property will be distributed pursuant to rules set forth under Florida law, and the person appointed as personal representative will be chosen in accordance with the preferences set forth under Florida law.
Thus, engaging in estate planning with the guidance of a Florida and Palm Beach County estate planning attorney can help ensure a smoother estate administration, the distribution of the decedent’s assets in accordance with the decedent’s wishes (rather than the rules set forth under Florida law) and the appointment of the person preferred by the decedent to serve as personal representative (and not necessarily the person granted preference by Florida law).
Estate administration involves the collection of the decedent’s assets and the payment of the decedent’s bills and the expenses of administering the decedent’s estate.
Required Tax Returns
The personal representative is required to file a final income tax return for the decedent, which may be a joint income tax return if there is a surviving spouse. The personal representative will also be required to file income tax returns for the decedent’s estate.
Further, if the value of the decedent’s assets, including assets titled in joint names or in a revocable trust, together with the sum of taxable gifts made by the decedent during lifetime, is at least $11,580,000 in 2020, then a federal estate tax return will be required to be filed.
Nonetheless, the fact that a federal estate tax return is required to be filed does not necessarily mean that estate tax will be owing. In addition, while Florida does not impose an estate tax, if the decedent owned real or tangible personal property in other states, estate tax may be owing to such states. Again, however, liability for federal and state estate tax may depend upon whether the decedent has engaged in estate planning.
Distribution of Estate Assets
The final step of estate administration after the decedent’s affairs have been settled, the decedent’s bill and the costs of administering the decedent’s estate paid, and required tax returns have been filed, is the distribution of the decedent’s assets in accordance with the terms of the decedent’s will or, in the absence of a will, Florida law.
Speak with a Florida and Palm Beach County Estate Planning Attorney to Get Started
Questions about any part of the estate planning or administration process? Speak with a Comiter, Singer, Baseman & Braun Florida and Palm Beach County estate planning attorney, either online or by calling us at 561-626-2101 or toll-free at 800-226-1484. We work with estate planning and administration clients throughout the state of Florida.