Estate Planning Topics

COMPREHENSIVE PLANNING

Comprehensive estate planning includes considerations affecting both spouses as well as your family. First let us discuss planning for problems that can arise while you are still alive, such as problems that result from incapacity or other diminished ability to function. As a routine matter we like to address revocable living trusts, powers of attorney, living wills, and designations of health care surrogate and preneed guardians when we are drafting wills and other estate planning documents for our clients.

There are numerous mechanisms designed to deal with some or all of the problems of incapacity: such as (i) revocable living trusts; (ii) powers of attorney; and (iii) "advance directives" (living wills and designations of health care surrogate and preneed guardian). Generally, our clients wish to avoid costly and emotionally-trying court procedures if at all possible, and the recommendations in this article are designed to allow you, rather than a court, to clearly plan and direct who should do what in the event of your incapacity.

These alternatives require you to choose a substitute decision-maker; however the choice of a substitute decision-maker, whether by a court or by you, is not foolproof. In order to use these alternatives, you must trust the chosen fiduciaries and understand that there are always risks, especially when money is involved. One has to balance the costs and inconveniences of accountings required in guardianships against the likelihood of greed and mismanagement if protections such as court supervised accountings are not acceptable or preferable. While both approaches have their drawbacks, most clients trust their families to do the right thing and choose as many options as possible to make the burden of acting as substitute decision-makers during their lifetime, and after death, as easy and inexpensive as possible.

LAST WILL AND TESTAMENT

Generally Florida Wills provide that you may use a writing separate from the Will for the disposition of your personal effects. The advantage of the separate writing is that it does not have to be executed with the formalities of executing a codicil, and may be changed as often as you wish.

The law specifically identifies the types of tangible personal property which can and which cannot be disposed of by a separate writing or memorandum. Tangible personal property which may not be disposed of by a separate writing or memorandum includes money, evidences of indebtedness, documents of title, stocks, bonds, securities, property used in a trade or business, and other tangible personal property specifically disposed of by your Will. All other types of tangible personal property, such as jewelry, silverware, antiques, stamp collections, china, glassware, furniture and furnishings, and other items of tangible personal property may be disposed of by a separate writing or memorandum.

Other requirements in order to use a separate writing or memorandum are:

  • The memorandum or list must be in your handwriting, and should be signed and dated by you; or if typed or not in your handwriting, the memorandum or list must be signed and should be dated by you. Your signature need not be witnessed.
  • The memorandum or list must describe clearly each item so that a particular item will not be confused with any other similar item.
  • Your Will must specifically refer to the fact that you may be disposing of tangible personal property by a separate memorandum or list. If your Will does not mention a memorandum, discuss with us how to make sure that it does. NEVER make any change in your Will by yourself.
  • The memorandum or list may be completed prior to or after the date of signing of your Will.
  • The memorandum or list, to be effective, must be in existence at the date of your death and found by your Personal Representative. Therefore, keep it in a place where it can be easily found. Advise your Personal Representative of its existence and location. In the event we are requested by you to hold your Will in safekeeping, we strongly recommend that you send us the original to be kept with your Will.
  • You should clearly identify the beneficiary who is to receive each item by their proper name and relationship to you. Also, list the address of the beneficiary if the beneficiary is not a close relative.
  • From time to time, you may change the beneficiaries or items of property listed in the memorandum, or you may revise or revoke the memorandum. However, NEVER make changes by marking or altering the memorandum. Prepare a new memorandum and destroy the old one.

Wills govern any property held in your individual names at death. They provide for the administration of that property and direct the distribution of whatever remains after the payment of your debts, expenses of administration and estate taxes.

DURABLE POWER OF ATTORNEY

A "power of attorney" is a written document by which one person (as the "principal") appoints another as his or her agent (the "attorney in fact") and confers upon him or her the authority to perform certain specified acts or kinds of acts on behalf of the principal. A power of attorney creates an agency relationship pursuant to which the attorney in fact is able to act on behalf of the principal. The instrument creating this relationship defines the scope and duration of the powers conferred upon the attorney in fact and establishes to third parties the authority of the attorney in fact to step into the shoes of the principal for designated transactions.

There are three different kinds of powers of attorney commonly used in Florida:

  • A "limited" power of attorney, which usually allows the attorney in fact to perform acts only with respect to certain of the principal's assets or special transactions. A common form of a limited power of attorney is one with respect to real estate owned by the principal.
  • A "general" power of attorney, which, as its name implies, gives a broad range of powers to act in the principal's stead in all matters.
  • A "durable general" power of attorney, which is a general power of attorney with "durability" language. Generally, a power of attorney is deemed to become ineffective upon the incapacity of the principal, unless the power of attorney document contains certain specified language. This "durability" language allows the principal to designate the individual(s) desired to help manage his or her affairs in the event of incapacity, rather than having a court make that decision in adversarial guardianship proceedings.

A durable power of attorney ceases to be effective as of the earlier of (i) the revocation by the principal, (ii) the death of the principal, or (iii) under certain circumstances, the formal adjudication of total or partial incapacity of the principal. It is also suspended upon the filing of a petition to determine capacity, and generally remains suspended until there is an adjudication by the court.

Basically, a durable general power of attorney gives a broad range of powers to act in the principal's stead in all matters and such powers survive the subsequent incapacity of the principal. Given the broadness of such a power of attorney, many clients are reluctant to turn over the original to the attorney in fact unless they are expected to act immediately. A practical means of securing the power of attorney until such time as the attorney in fact is expected to act is to have our firm hold the originals with instructions to turn them over to the attorney in fact upon the happening of certain events. The letter from you to me authorizes me to hold the originals of the above durable powers on your behalf. The letter states that we are holding the durable powers as an accommodation to you, which will allow me to make reasonable inquiries to see if the powers should be released, although you are specifically relieving me of responsibility for not doing so or if we err.

ADVANCE DIRECTIVES

Advance directives address the issue of substitute-decision making with respect to medical treatment, including the withdrawal or withholding of life-prolonging procedures. "Advance Directive" is a term of art and as used by the law means a health care surrogate and living will. Health care advance directives allow a person to plan for later incapacity and to prevent the loss of control over the course of his or her own medical treatment by designating another person to intervene in the event of incapacity.

Health Care Surrogate

The law provides for the appointment of a health care surrogate who can act on behalf of a declarant. The powers that can be delegated to the surrogate include general authority to act for the declarant; to make decisions in the health care area; to provide informed consent for health care; to be provided access to the declarant's medical records; to apply for benefits on the declarant's behalf; and to authorize the admission or transfer of the declarant to or from a health care facility.

A designation of health care surrogate, in which a surrogate is named to make all decisions concerning health care on the declarant's behalf, ensures that someone will be authorized to make decisions. It can be used alone, leaving all health care decisions within the full and complete discretion of the named surrogate, or it can be used in conjunction with a living will. Probably the best approach is to execute both types of directives. Even the most detailed directive cannot anticipate every circumstance in which a decision must be made; accordingly, the exercise of the surrogate's individual judgment should be authorized to make the necessary decisions.

Having a living will giving a clear indication of the declarant's intentions can serve to relieve any burden of guilt from family members and others who must make difficult health care decisions. Also, if the surrogate is not available for some reason, and an alternate has not been designated or is also unavailable, the document may serve as a guide for the family and medical personnel as to the declarant's wishes.

Living Will

A living will is generally a declaration directing the providing, withholding, or withdrawal of life-prolonging procedures in the event a person suffers from a terminal condition. A living will may be made by a competent adult at any time, and can be either (i) a witnessed document in writing, voluntarily executed by the declarant in accordance with the law, or (ii) a witnessed oral statement made by the declarant expressing the declarant's instructions concerning life-prolonging procedures.

A living will can outline the basic treatment philosophy and objectives of the declarant regarding life-prolonging procedures, or identify at length and in very specific detail the declarant's specific wishes regarding the provision, withholding, or withdrawal of any form of health care, including life-prolonging procedures.

BENEFICIARY DESIGNATIONS

As part of your estate planning process, you need to coordinate the various beneficiary designations with your estate plan. Beneficiary designations are contractual arrangements whereby certain accounts are transferred to the beneficiaries you have chosen. These beneficiary designation forms are typically associated with pension, life insurance and/or annuity accounts. If you fail to designate a beneficiary of these types of accounts, the account is usually transferred to your estate in the event of your death. In such a case, these accounts may end up going to your creditors at your death as opposed to your family members. It is essential that you review your beneficiary designations and coordinate them with your estate plan to make sure that the right party receives these accounts in the event of your death.