Divorce’s Impact on Your Estate Plan

Posted by on Jan 29, 2018 in estate planning, Family Law, Trusts, Wills |

Divorce is a bummer (or maybe not, depending on your situation). It impacts almost every area of your life, and your estate plan is no different. While estate planning might not be high on your to-do list during the divorce process, you should still take some time to consider which documents need to be updated.

Divorce laws vary based on your state, but, overall, the legal principle is the same: it is the termination of the marital bond and restructuring or canceling of martial obligations. Both the pre- and post-divorce phases require action on your part when it comes to your estate plan.

Before the Divorce is Final

There are several documents you need to

update before the divorce is final. These include your living trust, living will, Power of Attorney, and will. You cannot assume that the completion of the divorce will immediately terminate your ex-spouse’s involvement in your estate plan. While that may be the case for the will, it’s not always so for the others.

  • Living trust. Your trust will be interpreted based on whether it is revocable or not. A trust that is revocable at the time of your death, provisions in the trust regarding your ex-spouse will be invalid. But, if your trust is irrevocable and you die with the trust still naming your ex-spouse as beneficiary, he or she is going to get all your things. The law cannot help you in this situation.
  • Living will. Your living will concerns healthcare directives and other related issues. If you fall ill and are incapacitated, who is your agent? If it is your ex-spouse, you may want to change that. If you feel comfortable with the person you’ve just divorced making critical life-or-death decisions about your medical care, then you should keep them as your agent. If not, make the change. It is not always clear whether a state’s laws will automatically excuse your ex-spouse from his or her duties in your living will.

 

  • Power of Attorney. Generally, depending on the state in which you live, if your spouse is your power of attorney and you divorce him or her, this grant of power will be revoked once the action for divorce is filed. However, the whole power of attorney is not revoked in its entirety. Your spouse may still be named as guardian, and that will not be revoked until the final decree.

 

  • Will. Depending on when you made your will, the final decree of divorce will generally revoke any provisions in the will concerning your ex-spouse. This only applies to your ex-spouse. Your ex-spouse’s kids are not kicked off the will, so if that’s something you want to do, you cannot count on the rule of law doing it for you.

Post-Divorce: What You Need to Do

So, you’ve made it, and the final decree has happened. Now what?

Well, in your estate plan, you will likely have some gaps to fill, including power of attorney, agent, beneficiaries, and other roles from which you have removed your ex-spouse. You will need to restructure and re-do your estate plan to make sure those critical positions are covered. Schedule an estate planning consultation today, regardless of whether you are pre- or post-divorce.

 

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Start Anew, Update Your Estate Plan

Posted by on Jan 9, 2018 in estate planning, Family Law |

Start Anew, Update Your Estate Plan

There’s one New Year’s resolution you should definitely make and keep: updating your estate plan. With each year comes new considerations, and your estate plan should reflect these. You might be tempted to put off your estate plan updates, but you never know what will happen. It’s better to be safe than sorry, as the old saying goes.

Here are some examples of life changes and how you may want to update your estate plan to reflect them.

New Year, New Beneficiaries

Has there been a new baby in the family? Have you recently stumbled upon a new charity to which you want to donate? In order to do so, you will need to update your estate plan. This way, after you pass on, your assets will be transferred where you want them, including to the new beneficiary.

It’s important to get started on this now and updating your estate plan to reflect the new individual. People come and go in our lives, and you don’t want to miss your opportunity to include who you want in your postmortem plans.

Rethinking Guardianship

If you have minor children, you’ve likely included a guardianship instrument in your estate plan that designates who will be the legal guardian of your kids in the event of something happening to you. If you’re still happy with the legal guardian you’ve chosen, that’s great. However, if you are not, you don’t want to wait to have that switched.

Things happen, and if you have reason to doubt the competency of the guardian you’ve chosen for your kids, you do not want to take a chance and put off updating it. Worst case scenario, something happens and your kids are left with someone who cannot take care of them. If you have doubts about your chosen guardian, make sure to update your estate plan.

Family Feuding

Similarly, there may have been other developments in your family that warrant you rethinking your estate plan. Divorce is an example. You will want to make sure that the estate plan does not include your ex-spouse (or the ex-spouse of another family member), if you do not want it to. Also, if you feel like you want to disinherit someone, that is another reason to update your estate plan.

It is best to think of the estate plan as a living document. It reflects changes in your family; it is not stagnant, nor should it be treated as such. Families have their own feuds and fighting. An estate plan needs to keep up with the dynamics, if need be.

The Imminent Arrival of the 2018 Tax Code

The 2018 tax code is bringing some new changes with it. And by “some,” we mean a lot. Two of these changes have to do with the estate and gift taxes. By 2024, there will be no estate tax. But, for now, if your estate is under $22.4 million as a married couple, you get an exemption. And, since the estate tax is often unified with the gift tax, that further extends the exemption on money you can give away. This new update is another reason you will likely want to look at your estate plan.

New year, new updates! Consult your estate planner to make sure that your plans reflect any changes in your life during the past year.

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Trick-Or-Treat: Which One Will You Leave For Your Family?

Posted by on Oct 19, 2017 in estate planning, Family Law, Probate |

Some of the best Halloween memories come from trick-or-treating with your friends and family. When you go up to someone’s door and say, “Trick or treat!” you know that they will almost always give you candy, never a “trick” (unless you count getting raisins as a trick). When it comes to your family, you never want to leave them tricks either, but, unfortunately, that’s just what will happen if you die without an estate plan.

Probate court is the ultimate “trick,” and making your family go through that is not a fun surprise whatsoever. In this article, we’ll talk about what probate court is and how to avoid it, ensuring that your family will not get a nasty surprise after you die.

The “Tricks” in Probate Court

Estate planning has many benefits. It gives direction on where your assets should go when you pass on, and it allows you to take advantage of tax deductions and benefits so that you don’t saddle your family with the twin evils that are creditors and taxes.

Probate court is what happens when you die without an estate plan. The court manages the distribution of your assets and debts, often selling the former to pay the latter. Your family does not get anything and, if they do, they’re likely to not get it in the way in which you would prefer. Your creditors receive whatever it takes to pay off the debts. The point of probate court is to wrap an estate up by paying off debts, and it does so through an arduous, costly, and time-consuming process.

There is always the chance that the government will get your things as well, meaning that the state now owns your property and will likely sell it. These scary alternatives are what happens when you don’t have an estate plan.

Ramifications on Your Family

You may be wondering why you should care. You’ll be dead and won’t have to worry about any of this stuff; why not let the court just do it?

That’s where you’re wrong.

Your family and loved ones will be dragged into the probate process and saddled with court costs. Whoever is deemed administrator will be in charge of the process, which can take a long time. If you want to make sure that you don’t leave your family with a nightmare, create an estate plan that will give clear directions on how to manage your property, assets, and healthcare when you are incapacitated or dead. Save the tricks for Halloween, not your family.

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FOUR LEAF CLOVERS DON’T EQUAL FOUR YEARS OF COLLEGE

Posted by on Mar 9, 2017 in 529 Plan, Family Law, Trusts |

Image result for 4 leafed clover

FOUR LEAF CLOVERS DON’T EQUAL FOUR YEARS OF COLLEGE
It’s almost that time of year again: the 2015 NCAA tournament brackets will soon be set up, and you’ll be counting on the Luck of the Irish when you make your selections. While the function of college sports is high on the charts for education selection, that’s only half of the battle. What’s left? Funding. Fortunately, if you start planning early, you can ensure that the top four selection is your child’s greatest concern when it comes to a college education. Consider the following estate planning resource as a means of both providing for your child’s college planning, while maximizing tax savings. The Florida 529 Savings Plan allows any U.S. citizen to contribute to a savings account for the benefit of any other. The account is then managed by a professional fund manager who will invest according to your investment option of choice. All federal and state income taxes are then deferred until a withdrawal is made from the account. If such withdrawal is made for a “qualified higher education expense,” there are no income tax consequences. There is no set time for using the plan, and it can be rolled over from one beneficiary to another. Not only does the plan allow you to make monthly payments that are invested to create tax exempt income; you can also use it as a strategy to decrease your gross estate, and avoid gift and estate taxes. The 529-Plan allows the owner to maintain complete control over the account, including the right to terminate and withdrawal, while removing all of its contents from the owner’s taxable gross estate. As a result, it is an incredibly useful tool in reducing taxes, while maintaining control and investing in the future of a loved one It is important to consult with an estate planning attorney and/or financial advisor, as there are a variety of wealth management strategies associated with this plan, and it is important to ensure that such strategy compliments each estate plan.

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A NEW ADDITION TO THE FAMILY: ESTATE PLANNING FOR YOUR CHILD

Posted by on Jan 31, 2017 in 529 Plan, estate planning, Family Law |

Baby Feet Underneath a Blue Blanket

If January has brought you a winter baby, an important dimension has been added to your estate plan. It is critical to plan for the care of your child in case of parental incapacity or death. A guardian should be appointed to look after your child in the event something tragic happens to you or your spouse. If you are a single parent, this need becomes even more pressing.

Failure to select a guardian for your child will result in a lengthy judicial process to determine the guardianship of your little one. Undesirable candidates may become his or her new caregiver. Your little one might even become ward of the state.

There are two kinds of guardians to consider. The first is known as a guardian of the estate. This is someone who manages the money or assets held by a child. On the other hand, a guardian of the person, is someone who becomes a substitute parent for the child. For example, your accountant brother-in-law may be the ideal candidate as guardian of your child’s estate, but his unceasing workaholic nature may not make him the preferred choice for guardian of the person.When selecting a guardian for your child, consider the two types and select the ideal candidate with the skills and attributes that best suit those roles.

Another important matter to consider is protecting your minor child from probate and a hefty estate tax bill by establishing a contingent trust. Don’t risk having your little one left with nothing. Protect assets from any predators or even the whims of an immature child with a spendthrift nature by consulting with your South Florida attorney now.

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THE TRANSFER OF YOUR ASSETS: AS EASY AS PUMPKIN PIE

Posted by on Nov 27, 2016 in asset protection, estate planning, Family Law, Trusts, Wills |

Image result for pumpkin pie

THE TRANSFER OF YOUR ASSETS: AS EASY AS PUMPKIN PIE!

Using a Revocable Trust and other advanced planning techniques will assure your family an easy transition of assets upon your death

As you are preparing for this upcoming thanksgiving dinner, you may come to the realization that while pumpkin pie is a tad bit more complicated to bake than its kin, Apple Pie; it sure is easy to eat! The same rings true for an estate plan that uses advanced planning techniques to provide for an easy transition of assets upon your death. It may be easier to simply make a Last Will & Testament that states your wishes; however, that is going to result in a gruesome probate experience for the loved ones you leave behind.

So now you are wondering, what is so special about a Revocable Trust based estate plan? Let us answer this question with another question: If you became incapacitated or died, would you have the following benefits?

  • asset protection
  •  control over your assets
  •  protection for your loved ones
  •  preclusion of unnecessary taxes
  •  creditor protection
  •  limited/no transfer taxes for following generations
  •  probate avoidance

Absent a full trust-based estate plan, you answer will likely be “no.” A Revocable Trust based estate plan provides all of these benefits, and more. We have already discussed the documents that are imperative to prepare for incapacity (see “You Are What You Eat: Pass The Vegetables”). Now let us take a look at those that provide protection over your assets and their proper distribution.

Pour Over Last Will & Testament and Revocable Trust – The will coupled with a revocable trust effectively bypasses probate, which is the validation of the will — a process that is often incredibly time consuming and often expensive. The pour-over will takes all of the property that passes through the will, and funnels it into the trust. That property is then distributed to the trust beneficiaries pursuant to the terms of the trust. A pour-over will functions to ensure that all of the decedent’s property is transferred to trust. Think of the pour-over will as a safety net that catches all of the assets that were not properly transferred into trust. All the contents of the net are then poured into the trust, ensuring that all of the property is ultimately distributed through the living trust. Furthermore, all of the decedent’s property is distributed by the terms of one document alone (the trust), allowing for simplicity and clarity.

Assignment of Property to Trust – the assignment of property places all of your property into the trust. This avoids costs, loss of privacy, & headache associated with probate. Therefore, when all of your assets are distributed through the trust, there is nothing within the will to validate. As an alternative, you can merely assign property to the trust that you specifically want to preclude from probate, for the purposes of privacy.

For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.

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