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Estate secrets

No one plans to die, but being prepared for the unfortunate event of your death can make it easier on your family and friends.

Published February 15, 2004

Are you prepared to die?

This isn't about the state of your soul but about the state of your legal and financial affairs. If you leave them in disarray, you will be leaving your family with one big headache and maybe even a bitter family feud.

"People are left sorting through mail for months, trying to find out where the bank accounts are, where the safe deposit box is, whether they filed their income taxes and who their CPA is," Seminole lawyer Sandra Diamond said.

You don't have to be a millionaire to need an estate plan. If you have any assets at all, you should at least have a will to determine who gets your property when you are gone plus a durable power of attorney to allow someone else to handle your affairs if you become ill. A properly documented plan is especially important if you are in a second marriage, your children are minors or if you have a partner in life to whom you are not married.

The more money you have and the more complicated your situation, the more likely that you also could benefit having a lawyer draw up a trust for you. A trust is simply a legal entity that can hold title to your property. Through the trust document, you give the trustee the power to buy, sell and manage your assets. You also specify how you want the assets distributed after your death.

The most popular type of trust is a revocable or "living" trust that allows the creator to serve as trustee as long as he or she is able. The trust becomes irrevocable when the creator dies.

"A great advantage of a living trust is that it can be drafted to address the particular concerns that person has," Port Richey lawyer Wayne Coulter said. "Maybe they want money paid out over a period of years for particular purposes. They can specify how their pets are to be cared for or treated. A lot of people want to be sure their grandchildren have an opportunity for advanced education."

Trusts also can be created through wills, which makes them "testamentary" trusts. This is a popular option for parents who want to provide for their young children.

Knowing you should have a plan and actually putting one in place are two different things. Most people have no plan, or they have one that has become outdated by changing circumstances or that has been haphazardly cobbled together.

For real estate and bank and brokerage accounts, how you hold title to the property is critical to its eventual disposition. A trust applies only to property titled in the name of the trust.

A will applies only to property that passes through probate. That's a legal procedure used to administer an estate, paying debts and transferring property to those named in your will or, if you have no will, to your relatives in the order spelled out in state law.

However, there are lots of ways around probate. If you name "payable on death" beneficiaries on all your accounts and insurance policies or if you hold everything in joint ownership with your spouse, your will might become little more than a vehicle for passing along your coin collection and your grandfather's antique walking stick.

Diamond said she recently reviewed a will that specified multiple cash bequests to children and grandchildren. However, the client's money was all in joint accounts with her children that would flow to them automatically when she died.

"She said, "Am I going to be sure that my grandchildren get this money?' and I had to say, "No, not really. There are no assets from which to pay the bequests."'

Diamond said well-meaning bank tellers and brokers recommend "payable on death" accounts because they bypass probate and go directly to the beneficiaries. However, she says the accounts should not be used if the estate is large enough to be taxable or if a person has multiple beneficiaries. Naming different beneficiaries on different accounts is likely to lead to an inequitable distribution of assets.

Some people have estate plans but focused on the wrong things in setting them up, Largo lawyer Bruce McManus said. Often plans are designed to save taxes and avoid probate even though most people have estates smaller than $1.5-million, which means there will be no estate taxes, and probate is not necessarily a big problem.

"What they're not accomplishing is benefits for their family that might otherwise be available through discussion and a thoughtful approach," he said.

McManus favors using trusts that either dole out money to beneficiaries on a scheduled basis or allow a trustee to decide if a distribution is appropriate. Lump-sum distributions have a way of getting spent quickly or being lost to creditors or divorcing spouses, he said.

He said the trustee might be a family member or two family members who share the role. Families who want a third party involved might consider using a professional guardian as trustee, he said. Banks and trust companies also serve as trustees, but management is expensive, a particular issue for smaller trusts.

Lawyers' fees to create an estate plan vary considerably, but you might expect to pay $250 to $1,000 for a simple package. Legal costs for trusts are higher, especially if they are complicated and require a lot of the lawyer's time.

Keeping an estate plan up to date can be a struggle since life is so full of changes. Documents should be reviewed if you marry or divorce, have a child, are widowed, move to a new state or change your mind about your beneficiaries. A valid out-of-state will is valid in Florida, but some provisions may need to be changed. The personal representative or executor you appoint must either be a relative or a Florida resident.

Changes can be made with a "codicil," essentially a P.S. added to the will, though sometimes a new will is best.

Many lawyers favor using a separate sheet of paper to list bequests of personal property to avoid the need for frequent changes to the will. The will must simply refer to that document, which then can be rewritten at any time without legal help, as long as it is signed and dated.

A big part of getting your affairs in order is keeping a good record of what you own. Books and software programs are sold just for that purpose, or the records can be assembled in a notebook or file cabinet. It is vital to leave clear information regarding your assets and debts, including the location and account numbers for financial accounts, the location and key for any safe deposit box, legal documents, deeds and insurance policies.

This is also a good place to put funeral instructions and names and contact information for your lawyer, your accountant and anyone you want notified of your death. Also consider writing down some family history and any information about your life that you would like included in your obituary. Without your help, your family may not remember some of the things you think are important. They might even get your birthdate wrong on your grave marker.

Clear instructions can head off at least some family disagreements. Surviving children often have different ideas about what mom or dad would have wanted.

One way to look at estate planning is to try to imagine yourself in your family's place. Think about the tasks family members will face after your death and ask yourself how you can help make them easier.

Be sure that you have at least one bank account that someone else can use right away to write any checks that will need to be written. Otherwise, all your money may be inaccessible for several weeks, while your survivors wait for copies of the death certificate and probate documents.

Leave instructions for care and maintenance for any of your possessions that may require special treatment. If you have a valuable collection or antiques, suggest an expert who could give your family an appraisal.

Good estate planning also involves planning for the possibility that you will be disabled for a period before you die.

"More than 50 percent of people today before they pass away go through a long-term period of incapacity," lawyer Coulter said. "For some it is the last four to five months of life and for some the last four to five years of life. In either event, it is important to have a plan set up as to who is going to be in charge of their affairs and how their affairs are to be managed."

With a revocable trust, someone else can take over as trustee if you are no longer capable. However, even if you use a trust, it is not likely to cover every asset you own. By setting up a durable power of attorney, you can give someone else the power to make decisions for you, such as buying and selling property.

Setting up the right legal documents also can make it more likely that you will get the kind of medical care you would choose for yourself if you were able.

A durable power of attorney can be used to permit someone else to get private medical information about you. Designation of a health-care surrogate gives that person the right to make decisions on your behalf when you are incapacitated. A living will allows you to say whether you want life support measures to be used if doctors agree that you have no chance of meaningful recovery.

Lawyers say your decisions about your estate should not be a surprise to your family after your death.

"It's one of those subjects that people don't like to confront, but ideally family members should participate in these discussions as they are going on," lawyer McManus said. He said family members who will be given responsibilities under the plan can be helped to prepare for them.

"Most people have never thought about how the money will be handled after their lifetime," he said. "That doesn't take care of your family very well."

- Helen Huntley can be reached at or 727893-8230.

On the Web

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[Last modified February 15, 2004, 05:59:27]

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