What is the Importance of Estate Planning?
Many individuals assume that estate planning is a preserve for the wealthy or that it entails writing wills and establishing a trust. That couldn't be further from the truth, as there is much to do to ensure your wealth is protected and handed over to your designated beneficiaries when you die.
Besides, estate planning is an opportunity to consult skilled Florida personal and bankruptcy lawyers if you’re deep in debt and wondering what might happen to your estate. They can provide legal counsel on protecting what’s left of your estate and the estate planning tools to incorporate in your planning.
With that said, estate planning isn’t a one-document affair. Incorporating multiple estate planning tools can make the process more comprehensive, providing the peace of mind and assurance you need that your family’s future is secure. Here’s a look at the components of a comprehensive estate plan:
Wills
A Will is a crucial document that determines who will step into your shoes after your demise to take over your estate. The person is your representative and will pay your outstanding bills and debts and distribute the remaining assets to your beneficiaries.
Secondly, a Will instructs the personal representative how to distribute the estate. Without a Will, state laws kick in, and your estate will be subject to probate rules. Experienced estate planning attorneys in Florida can provide an overview of the probate process, which is something you may want to protect your loved ones from going through.
Trusts
Trusts are separate legal entities through which a trustee (another person or an institution) holds legal property titles on behalf of a beneficiary. Trusts have one set of beneficiaries who benefit during their lifetime and another group who only benefits from the trust once the first set of beneficiaries dies.
Revocable and irrevocable trusts are among the most effective ways to help your loved ones avoid probate after your demise. A revocable living trust, for example, terminates when you die, and the property passes to the beneficiaries immediately, saving them time and money. Your estate planning lawyers in Florida can guide you on other types of trusts you can set up.
Durable Power of Attorney
A durable power of attorney is a person who acts on your behalf when you can no longer do so. Without this designation, the court may have to decide who acts on your behalf if you become incapacitated or mentally incompetent, which may be against your wishes.
The document grants your agent authority to enter into financial transactions, transact real estate, and make legal decisions as if they were you. You can revoke the POA at any time of your choosing.
Living Wills and Healthcare Directive
Healthcare directives are legal documents specifying your medical care preferences if you’re terminally ill, in a coma, or seriously injured and unable to make those decisions yourself. A living Will can ensure you get the medical care you need while protecting you from treatments you don’t want.
With the document in place, your family members will be free of the burden of decision-making to minimize and eliminate confusion and disagreement over what you would choose if you could.
Beneficiary Designation
Beneficiary designations are the people who directly benefit from your estate upon your demise. In creating a Will, for example, you can designate your children, spouse, or anyone else as the beneficiary, specifying what you’d like them to receive from your estate.
In some cases, you may be able to name beneficiaries in a registered retirement plan so that they receive the assets upon your death. Examples of assets you can designate beneficiaries for are:
- Registered Retirement Income Funds (RRIFs) – You can choose a successor annuitant or holder
- Registered Retirement Savings Plans (RRSPs) – One or more beneficiaries
- Registered Education Savings Plans (RESPs) – Only one beneficiary designation
- Tax-Free Savings Accounts (TFSAs)- You can choose a successor annuitant or holder
- Locked-in accounts such as Locked-in Retirement Accounts (LIRA), Life Income Funds (LIF), and Prescribed Retirement Income Funds (PRIF)
Reviewing and updating your beneficiaries for these account types is crucial if you experience life changes. For example, you may want to replace your former spouse with another beneficiary in case of a divorce. Skilled Florida estate planning lawyers can review your documents to ensure they're up to date and don't have mistakes that could invalidate them.
Tax Planning
In planning your estate, your lawyers will advise you on the tax contingencies you may need to anticipate. These include income taxes payable at death under territorial probate taxes or disposition rules. Designating your spouse as the RRSP or RRIF beneficiary can allow them to transfer the assets into their accounts without tax liability.
Florida estate planning attorneys can also advise you to consider gifting assets to your heirs during your lifetime to cover taxes that may be due when you pass on. Consider charitable donations in your estate plan to realize valuable tax benefits. Talk to your lawyers to learn more about how to reduce the tax burden on your estate.
A Skilled Estate Planning Lawyer Helping You Plan Your Estate
Many people shy away from estate planning as they think it is only for those with vast wealth. In truth, every adult should have a comprehensive estate plan to protect the wealth they have worked so hard to acquire when they die. Skilled estate planning lawyers can oversee the process to ensure the documents reflect the estate owner's wishes.
If you’re considering planning your estate but need clarification on the types of tools to use, we can help you. Our personal injury, bankruptcy, and estate planning attorneys serving Tampa, Naples, Port Charlotte, Orlando and Fort Myers residents can work together to help you create a comprehensive estate plan. Call the Dellutri Law Group at 800-391-4337 to schedule a complimentary strategy session.
