Estate planning are the plans one makes during life, to ensure assets are disposed of and wishes followed at the time of one’s death or incapacity. Estate planning also incorporates documents critical to ensuring another individual can make decisions on your behalf during your lifetime, should your health interfere with your ability to make these decisions for yourself. Estate planning therefore typically utilizes a combination of documents, including, but not limited to, last wills and testaments, revocable living trusts, various types of irrevocable trusts, durable powers of attorney, and health care advance directives (i.e., designations of healthcare surrogates and/or living wills).

LAST WILLAND TESTAMENT

A last will and testament is only one piece of a comprehensive estate plan, but a last will has no legal authority until after death, and therefore, a will does not help manage a person’s affairs if he/she becomes incapacitated. Furthermore, and contrary to common belief, a will does not help an estate avoid probate.

For parents of minor children, a will is a critical document, as it can be used to nominate the guardians of your minor children, should they be orphaned. All parents of minor children should document their choice of guardians. Without doing so, it is possible to cause family infighting, or to leave your children in the care of the wrong guardians. But, because your will has no legal authority until after death, it also is not effective to name guardians of minor children in the event that both parents are incapacitated. Therefore, it is recommended that parents of minor children also execute a designation of pre-need guardian for each of their minor children, which, as opposed to a last will and testament, is effective immediately upon its execution.

TRUST

Trusts can serve a variety of legal, personal, investment or tax planning purposes. At the most basic level, a trust is a legal entity, which involves at least three parties: the trust-maker (known as the grantor or settlor), the trust manager (the trustee) who holds legal title to the trusts’ assets, and the trust beneficiary, the one for whose benefit the trustee is holding the assets.

Sometimes, all three parties are the same person. In the case of a revocable living trust, a person may create a trust (the grantor) and name himself or herself as the current trustee to manage the trust assets for his or her own benefit (the beneficiary). In the case of an irrevocable trust, all three parties (i.e., the grantor, the trustee and the beneficiary) are typically different.

There are many advantages to creating a trust. One significant advantage is the avoidance of probate upon the grantor’s death, but another significant advantage is the ability to avoid the burdens and aggravation of a guardianship in the event that the grantor becomes incapacitated. Generally, assets owned in a revocable living trust will pass to the trust beneficiaries 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 beneficiaries. Trusts may also 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 properly drafted, another advantage of trusts is their continuing effectiveness, even if the trust-maker dies or becomes incapacitated.

POWER OF

ATTORNEY

A power of attorney is a legal document giving one or more persons (the agent or attorney-in-fact) the legal authority to do certain things on behalf of another person (the principal) who grants them those powers. 

A power of attorney may, depending on the situation, be very broad or may be very limited and specific. All powers of attorney terminate upon the death of the principal, and may, depending on how the document is drafted, terminate when the principal becomes incapacitated. 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. A durable power of attorney is one that continues to be effective even after the principal becomes incapacitated. Durable powers of attorney should be frequently updated, because banks and other financial institutions may hesitate to honor a power of attorney that the institution considers to be too old.

HEALTH CARE

ADVANCE DIRECTIVE

A Health Care Advance Directive is a document by which a person appoints one or more individuals, known as a health care surrogate, to make health care decisions for them in the event that they are incapacitated. 

Anyone over the age of 18 may execute a Health Care Advance Directive, and this document is legally binding in Florida. In addition, a Living Will, which may be included in the Health Care Advance Directive or done as a separate document altogether, is an important document that sets forth one’s desires with respect to end of life decisions in the event that they are incapacitated and (i) have a terminal condition, (ii) are in an end-stage condition, or (iii) are in a persistent vegetative state, and there is no reasonable medical probability of recovery from such condition.