Estate Planning
Estate planning is a term that simply means how do you what to be cared for in the final stages of your life, and who do you want to get your assets after you die. Estate plans can be simple for the small estate, or can be very complex for the large estate. But, regardless of the size of the estate, it is very important to have a plan, otherwise the State of Florida will make those decisions for you, and maybe differently then you would have wanted.
Estate planning can encompass a wide range of documents, each with its own specific purpose. Living wills, declaration of health care surrogate, pre-need guardian, and a power of attorney are for final stages of life planning, while a last will and testament, and a living trust are for directing how assets are distributed after death. Please read the links to the various estate planning tools so you can become more familiar with each type of document, and its purpose, so you may have a better idea how you can achieve the estate plan that will accomplish your goals.
Last Will and Testament
A will is simply a document that tells the Court how a person wants their belongings to be distributed after they die and, with the exception of certain limitations that we can explain to you more in-depth, a person can generally direct who they want to receive their assets. If a person dies with a will, they are referred to as being “testate”.
However, if a person dies without a will, or “intestate”, their assets will be distributed according to a formula set out in the Florida Statutes. Often times the formula set out by law is not what the person wants. Unfortunately, over seventy per cent of Floridians over the age of sixty do not have a will. Even fewer people under age sixty have a will. Therefore, to avoid the State deciding who gets your assets, you must have a will so the Court will know how your assets should be distributed.
Wills can be simple or complex depending on what the person is trying to accomplish. Simple wills are relatively inexpensive and they can be done rather quickly, while complex wills take more planning and are more expensive.
Regardless of whether a person dies “testate” or “intestate”, if the person does not have a living trust a probate estate will have to be opened with the Court so the assets can be distributed.
People often wonder about the difference between a will and a living trust. They are quite different and, since each can have a profound effect on your estate planning, you should consult an attorney for more detailed information of each.
Living Trust
Although it is a good idea to have a simple will, for many people a living trust may suit their estate plan even better. One of the major differences between a will and a living trust is that a person may be able to avoid probate. Both probate and living trusts have the purpose of transferring the assets to the persons of their choice after death. However, probate may be more time-consuming, it may be more expensive, and it is a part of the public record and is available for inspection to anyone.
A probate estate may take anywhere from 6 to 12 months to administer, while an average living trust may be administered in a month or less. Some advantages to a trust may be the decedent’s assets are available almost immediately to pay for expenses such as funeral and burial expenses or house and vehicle payments. If there is real estate, it can be immediately transferred to the heirs or sold. However, some disadvantages may be the loss of the stepped up basis in real property, and no Court supervision if family relations are strained.
Currently, basic attorney fees for probate average about 3% of the net estate worth. Also, court costs and other expenses for a probate average about four hundred dollars. Therefore, the probate fees and costs on a $100,000.00 estate will average more than $3,000.00. Depending on the complexity, a living trust can cost substantially less.
Whatever estate plan a person chooses, it is important to have a plan, otherwise the State will make those decisions for you.
Durable Power of Attorney
You actually have two (2) Durable Powers of Attorney. One is your Initial Durable Power of Attorney for the first person whom you have selected, and the second is the Alternate Durable Power of Attorney for the second person, who is to serve if the first person dies, becomes incapacitated, or resigns or declines to serve in that capacity.
A Power of Attorney is "Durable" when it specifically includes language stating that the Power granted shall "be durable" during periods of your "incapacity". This is lacking in a "regular" Power of Attorney (or as I call it, a "bookstore power of attorney") which is not durable. A "regular" Power of Attorney becomes useless when you do become "incapacitated" as the law revokes it for you because you have lost the capacity to revoke it yourself. Proper drafting is extremely important. For several years, Florida only allowed "family members" to hold your "Durable Family Power of Attorney", but that restriction has since been dropped. But remember, the Durable Power of Attorney can be revoked by the Court, and is automatically revoked by the Guardianship Court upon the appointment of a Guardian. That is why I do not like designations of health care surrogates tucked inside of vulnerable Durable Powers of Attorney. However, I do give the directions in the Durable Powers of Attorney directing the payment of medical bills committed to by the Health Care Surrogate.
In both Durable Powers of Attorney, you appoint someone (first, the person designated in your Initial Durable Power of Attorney and, second, the other person as the alternate) who will have the right and the authority to sign documents, checks, stocks, bonds, enter safety deposit boxes, modify or make demands on insurance policies, prepare and sign income tax returns, deal with Social Security, and take other legal and financial actions on your behalf.
Please note that the person serving in the capacity as your Durable Power of Attorney can do these things or take these actions even before you are incapacitated. Therefore, only appoint someone you trust to serve as your Durable Power of Attorney. This is another reason that Florida required a "family member" to serve in capacity, as well as having requiring notifications to be sent to certain relatives. However, both of those requirements have been dropped. You may have someone else hold the document giving them the authority to act until such time as the need arises. Also, remember that if you are the subject of a guardianship proceeding, during that proceeding the Durable Powers of Attorney are "suspended" ("goes on hold") and will be revoked altogether by the Court if the Guardianship is imposed on you. Until the Court actually decides whether or not you must have a guardian, the person holding the Durable Power of Attorney can only act with Court's permission. This is another reason to consider having a Living Trust.
Once the Court decides you must have a guardian, then the person selected as the "guardian over your property" would serve in lieu of the Durable Power of Attorney appointee. This is why you have also named the same people in the same order to serve as the "guardians over your property". (See Pre Need Guardianship Designation).
Another common misconception with regards to Durable Powers of Attorney is that the "Attorney-in-Fact" who has been granted the power can take care of matters for you after you die. The fact is that the right to act for you under your Durable Power of Attorney dies with you. Nor is the grantee automatically chosen as your Personal Representative under your last Will & Testament. You have to appoint those persons to serve on your behalf in your Will or Living Trust.
Health Care Surrogate Designation
In this document, you have appointed one person to serve first in that position, and have also named an alternate person if the first one dies, becomes incapacitated or cannot or will not serve. The person serving as your Health Care Surrogate shall have the authority to make health care decisions for you at any time you are unable to make those decisions yourself, or when you are unable to communicate your decisions. However, there will still be the necessity for certification by your doctor that you are unable to make your own decisions and communicate them as to your own health care.
Actions taken by your Health Care Surrogate do not require that you be in a "terminal condition" like the Living Will. See the discussion about the Health Care Surrogate document under paragraph #1, Living Will.
Pre-need Guardianship
This document is your notification to the Guardianship Court as to whom you would want the Court to select as your Guardian, IF YOU BECOME INCAPACITATED AND HAD TO HAVE SOMEONE APPOINTED BY THE COURT AS YOUR GUARDIAN. You have selected one person to serve initially as the "guardian of your property" and another to serve initially as the "guardian of your person". Then you have selected alternates to serve in the event that the initial persons have died, become incapacitated, have quit, or were unwilling to serve in the first place.
Please notice that the persons serving for you as "guardians over your property" would be the same persons selected as your Durable Powers of Attorney. Also, please notice that the persons serving for you as "guardians over your person", are the same persons selected by you as your Health Care Surrogates.
As explained above, it is necessary to designate the "guardians of your property" because the Durable Powers of Attorney are terminated by the Court at a certain point in the Guardianship proceedings. However, the naming of the "guardians over your person" is not as necessary, but is done anyway, because the Health Care Surrogates named in that document are still allowed to serve for you, even in the event if the Court imposes a Guardianship upon you.
The Court will appoint a Guardian of "your property" and a Guardian of "your person". You have chosen to PRE-select these people yourself, recommending them to the Court. This avoids the Court appointing strangers because it didn't know who you would have selected! Persons selected must be qualified to be your Guardians, which would normally require that they be Florida residents. However, if they are closely related to you, a non-resident may be allowed to serve if qualified.
Conclusion
This has been a rather long and complicated explanation of your documents, but it is really necessary so that you understand why you have different documents, and the fact that each one is designed for different circumstances. Also, it is important for you to see that some of these documents pick up where other ones leave off or are terminated by Court action.
Again, it is important that you do not confuse these documents with the necessity and/or advisability of having a Last Will & Testament or, when the circumstances dictate, a Living Trust. These Advanced Directives and/ or Ancillary Documents are things that everyone who lives in Florida should have, whether they are married or single, whether they are widowed or divorced, whether they are 20 years old or 90 years old, and whether they are wealthy or poor.
Congratulations in taking these steps for your own protection. There are very few people that have done so to the extent that you have prepared yourself and your family for adversity. Very few of your relatives, neighbors, and friends have Health Care Surrogate Designations, and hardly any at all have preselected their guardians, if ever faced with that dilemma. Many may have Durable Powers of Attorney, but few have "backup" provisions in the event of common disasters.
Many people have Living Wills yet have not appointed Health Care Surrogates to stand up for them if they cannot communicate with the doctors and/or hospital administrators. Those people are at risk. With all five of these documents no one can say that of you.
