People hear the word “estate” and think that end of life financial planning is just for the extremely wealthy. They could not be more wrong. The extremely wealthy have the knowledge to surround themselves with attorneys and accountants that shield them from the perils of an improperly planned estate. The people most harmed by the probate process and the estate tax are the middle-class of this country.

I am married and I have a daughter who is almost two years old. I like in a house that used to have equity in it but it is mostly mortgage today. I lease my car, own a small business, and pay student loans for my wife and myself. We are a two-income household with a little bit of money in the bank but neither of us will be able to retire any time soon. If this scenario sounds similar to yours, you probably need a similar estate plan to the one I currently have in place. My estate plan includes the following:

Two Revocable Living Trusts – You and your spouse will both be co-trustees of each other’s trust. You will have the same access to your assets as you do right now. When the first spouse passes away, the maximum allowable tax-free distribution for the year of death will fund a newly created Bypass Trust. The remainder of the assets in the deceased spouse’s trust will fund a newly created Marital Trust. The surviving spouse will have access to all of the assets in the spouse’s own Living Trust, as well as the newly formed Bypass and Marital Trusts. By setting the trusts up in this manner, when the surviving spouse dies, we will be able to pass all of the assets to the children while only paying half (if any) of the estate tax. Using this technique will save your children over $500,000 in estate tax. In addition, the trust will avoid probate completely (saving tens of thousands of dollars) and provide your children with complete asset protection, which means that no one will be able to touch the assets you leave them, including divorce, creditors or even litigation.

Two Assignments of Property Into Trust – This document helps to fund the trusts. For all real estate, we will sign and record deeds. For all bank and brokerage accounts, we will change the title of the ownership. For personal property, however, we don’t have written title so we get the property into the trust and avoid probate by using an Assignment of Property into Trust.

Pour-Over Will – There are many negatives to distributing assets through a Will. First, all of the assets must be probated. Second, the Will offers no control over the distribution of the assets and offers no asset protection to your beneficiaries. Another disadvantage is that a Will becomes public record as soon as the person dies. Since the Will will be recorded and everyone will be able to view it, we like to make it as vanilla as possible. We simply state that a trust exists and that the distribution will be handled by the trustee. We also state that any assets that you forgot to put into the trust during your life should “pour over” into the trust immediately. The Will will also be used to name the guardian of your children.

Financial Power of Attorney – If you become incapacitated, either unconscious or mentally unaware, you need to determine who you want to handle your financial affairs. This document is very important to have on file considering that most married couples travel and vacation together. If an accident occurs for one of them, it usually occurs for both.

Designation of Health Care Surrogate – In a similar line of thought as the Financial Power of Attorney, if you become incapacitated, either unconscious or mentally unaware, you need to determine who you want to handle your medical decisions. In addition, the Designation of Health Care Surrogate should also state if you wish for your Surrogate to be able to view your medical records. Without this HIPAA language, the hospital will not allow your surrogate to view your records and make the informed decision.

Living Will – If you are in an “end-of-life” condition, meaning that you are only being kept alive by machines, the hospital will continue to keep you alive artificially no matter what your wishes are and no matter how much it costs your family, unless you have a correctly executed living will which would allow your health care surrogate to give the doctor the authorization necessary to “pull the plug.”

Execution and Funding – The biggest mistakes I see when I review plans drafted by other attorneys are will execution and funding. I will be there to make certain that all of your documents are correctly executed. I will have my staff act as the witnesses and I will act as the notary. After the documents are signed, I will scan them and keep them on my computer, as well as on my offsite server, so that you can get a copy of them whenever you should need to. I will also help you fund the trust. Creating the trust is similar to building a safe; it can only protect what you put inside of it. I will draft the deeds necessary and walk you through the transferring of personal accounts into trust accounts.

So many people wait until it’s too late. Tomorrow isn’t promised to any of us. If you truly care about your children and want to protect them both financially and emotionally after you are gone, it is imperative to get your estate plan in place as soon as possible.

For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com to schedule your free consultation. Let us protect what you value most.

1. Waiting too long to start planning. The longer your asset protection plan has been in place, the stronger it will be. It will also cost less to do the planning long before you have a problem. Once a lawsuit has been filed against you, any transfers you make can be overturned. In order to battle a lawsuit effectively, make sure you have an asset protection plan in place long before you need it.
2. Mistakenly committing fraudulent transfers. If you transfer assets to a friend or family member in order to avoid losing them during a settlement, you may find it does you no good. This is not illegal, but the courts can reverse the transfer and hold the transferee partially responsible.
3. Trying to hide your assets. This is no longer possible. Even moving assets offshore does not prevent them from being discovered. Eventually, lawyers will uncover the existence of the asset. In some cases, having the asset offshore may protect it, but it will not prevent it from being discovered.
4. Assuming you can outsmart the creditors. Those trying to collect their debt and the lawyers working for them have done this before. You will not figure out a way around the system.
5. Handing control of your assets over to someone else. Often called the “poor man’s” asset protection, signing over your wealth to another person is never a good idea, even if he is a trusted friend or family member. You may have to give up some control at some point, but deciding you will protect your assets by giving them over to a sibling or adult child is a mistake. Discuss your options with an experienced asset protection attorney before proceeding.
6. Assuming asset protection and estate planning are the same thing. Asset protection is part of any strong estate plan but they are not the same thing. It is important to remember a living trust does nothing to protect you from creditors.
7. Confusing bankruptcy law and asset protection law. In a state like Florida, newer bankruptcy laws do not affect the unlimited homestead exemptions. You have less protection in bankruptcy court, so filing for bankruptcy should be used as a last resort.
8. Assuming it is too late to establish an asset protection plan. It is never to late to do this. Doing something is better than just allowing the courts to have their way with you. At least make an effort to protect your assets. You never know when you may be faced with a situation where your assets are at risk.
9. Not getting your foundation estate plan in place as part of your asset protection plan.
10. Trying to do it yourself. You only have one shot at protecting your assets correctly. Be sure to use an attorney that specializes in asset protection.

The use of trusts is an essential tool in estate planning.  Trusts provide flexibility in arranging a client’s property for present and future disposition that otherwise may not be available.  The fliexibility provided by using valid trusts may be said to be limited only by the objectives of the estate owner.  Often these objectives are conflicting and subject to alternate solutions that offer both advantages and disadvantages.  For example, an estate plan designed primarily for tax savings may not produce the most desirable disposition of the property.  Tax considerations constitute an important phase of sound estate planning but should not control all decisions.  The use of trusts in estate planning is not limited to large estates that produce more complex tax considerations.

A trust will assure that the property will be used for the benefit of the beneficiary who the client wishes to favor without interference of the spouse of that beneficiary.

A trust will relieve the beneficiary from the burden of property management.

A trust will protect against the dissipation of the trust’s assets by limiting the interest of the beneficiaries and granting the trustee discretionary powers of distribution through spendthrift provisions.

A trust will allow you to control the ultimate disposition of the trust property by creating life estates with remainder interests.

A trust will allow you to retain uniform management and control of business interests or real estate.

A trust will avoid probate on the death of the life beneficiary.

For more on the use of living trusts and how they might be best used by you and your family, please contact the estate planning and asset protection experts of Wild Felice & Pardo, PA at 954-944-2855 or via email at info@wfplaw.com.  Let us protect what you value most.

Estate Planning Information for Cohabitating Unmarried Couples

Living together while remaining unmarried has never been more popular. Over 6.4 million opposite-sex unmarried couples currently live together.  This translates into 12.8 million people. There are an additional 750,000 same-sex unmarried couples in the United States which translates to an additional 1.5 million people. This is a whopping 92% increase since 1990. Over half of all unmarried households have children. If you are part of a cohabitating unmarried couple, it may be comforting to know that you have plenty of company. However, this doesn’t mean that you can ignore how the law affects your relationship. Here are some tools that unmarried and same-sex couples can use to avoid the “grave” danger of intestacy.

Domestic Partnership Agreements: Domestic partnership agreements set out the parameters of a relationship and specify the rights and responsibilities of each partner. They are similar to prenuptial agreements and are well-advised for unmarried couples who live together, be they same-sex or opposite sex.

Last Will and Testament: When you die without a formal will, the state of Florida will provide a will for you and distribute your assets as they see fit. This is known as “intestate succession” and it provides the least amount of protection to your family. Same-sex or unmarried couples are not recognized by Florida intestacy statutes. Thus, upon your death, your partner will have no rights to your estate. The chance for a will contest may be greater in same sex and unmarried relationships, as family members may not understand the choices you have made.

Revocable Living Trust: A living trust may be a good option for same-sex or unmarried couples, due to its private and expeditious nature. A living trust also helps to avoid probate in multiple venues if you own property in more than one state. A living trust can hold both individual and shared property and goes into effect as soon it is funded. In a revocable trust, you (as the “grantor”) retain control over the trust and its assets while you are alive. If you do not wish for creditors to access the trust assets, an irrevocable trust is a better option. A pour over can supplement a living trust and should be used to distribute any property not previously placed into the trust.

Durable Power of Attorney: A power of attorney for legal or financial matters allows you to appoint your partner to manage your affairs, should you become unable to do so. It is also helpful as evidence of your testamentary intentions and the nature of the relationship, in the event of a will contest.

Living Will and Health Care Surrogate: A living will specifies your wishes for medical care and artificial life support. Without specifically declining artificial life support through a properly executed living will, the hospital must keep you alive by any means necessary, no matter how much it costs or what your true desire is. A health care surrogate designation should accompany the living will because it appoints someone to make medical decisions on your behalf in the event that you are unable to communicate your wishes and specifies your wishes regarding artificial nourishment. It is crucial to have the health care surrogate in place because your partner will have no legal rights regarding your care without one.

Joint Tenancy: Same sex and unmarried couples can benefit from owning real estate together as joint tenants with rights of survivorship, which means that when one partner dies the other can take sole ownership of the property even without a will. This designation can avoid estate taxes, capital gains taxes, gift taxes, and probate.

For more information about the legal rights and protections of unmarried couples, please contact the estate planning attorneys of Wild Felice & Pardo, P.A. at 954-944-2855 or via email at info@wfplaw.com.  Let us protect what you value most.