October is Estate Planning Awareness Month, and we are pleased to feature Joe Boyles of Boyles & Boyles, P.L.L.C. who is sharing some important tips regarding estate planning essentials for families.
Preparing a Will
For many young parents, getting a will is one of those “adulting” things that they promise to get around to… eventually. For older parents, there is maybe a plan made years earlier and there’s a sense that it’s “fine.”
Many people are reluctant to talk about a will, feeling morbid, as if acknowledging or talking about it might manifest its necessity, tempt fate. To these folks, I simply advise that the legislature has already written a will for you in Chapter 732 of Florida Statutes. It’s not too bad for a married couple without kids or with grown children: all of your possessions, property, etc. are passed to your spouse or divided summarily among your children.
But for a blended family, parents with young children, or anything out of the ordinary– such as a child with special needs or a business with joint ownership, property holdings out of state– it can be a disaster.
Proper estate planning puts you back in the driver seat instead of relying on the “defaults” drafted in Tallahassee. A will, often titled “Last Will and Testament,” is simply a legal document in which you, the testator, declare who will manage your estate after you die. A will allows you to choose who gets your “stuff” when you die, but it does a lot more too.
Choosing an executor (also called “personal representative”) to manage your affairs and tie up loose ends is quite important. Perhaps more so is to name a proposed guardian for your child(ren) in the event that no parent survives. Yes, that’s a hard thing to consider, but who better to consider it than you? While this choice is reviewable by a judge within twenty days of death, it will be confirmed unless the named guardian is found unqualified (felony convictions, for example).
What is a Trust?
In addition to picking “your people,” an estate plan utilizing a trust can also help you lay out how you want your beneficiaries to receive their inheritance. Without a trust, a minor child will receive 100% of their inheritance as soon as they turn 18 years old. While some kids are wise and responsible beyond their years, this could also lead to a “distracted” freshman year of college… and a broke sophomore year. By using a trust, you can ensure that a child’s needs are taken care of (medical and educational, but also clothing, travel, and even expenses like a car) while still protecting the money from the child–and vice versa!
A trust is basically a legal entity (like a corporation or LLC) where one person (a trustee) holds assets for another person’s benefit, the beneficiary. It’s a “box” that holds money or property for somebody else. Like a box, there is a lot of different stuff that you can put into it, and, like some boxes, there are instructions on the outside telling you what to do with the contents.
A trust can be drafted to reward certain behaviors of the trustee (education) while discouraging others (drug use, gambling, wastefulness). A well-drafted trust can also protect a young beneficiary’s inheritance in a blended family from an ex-spouse or a surviving spouse unrelated to the child.
For parents of minor or adult children with disabilities, a supplemental needs trust (SNT) can allow the individual to qualify for a range of government entitlements and benefits such as Medicaid and SSI while still having access to funds for expenses not covered by those programs, including:
-Medication and medical equipment not covered by Medicare or Medicaid
-Insurance premiums (health, life, dental, auto, renter’s, etc.)
-Personal assistance
-Home renovations to improve accessibility
-Entertainment or recreation tickets
-Furniture and home appliances
-Clothing
-School or camp tuition
-Telephone service and Internet access
The important thing with all of these trusts is that they only work when they are funded properly. Even if your will leaves your child her inheritance subject to the trust, if an insurance policy has the child’s name as a beneficiary (rather than the trust), the child will get that money directly, negating much, if not all, of the careful planning.
What is a Power of Attorney?
A Power of Attorney is a document that allows you to name a person or persons to make business, financial, property, and/or personal decisions for you. The document lays out the powers granted along with any restrictions on those powers. The person that you name does not have powers greater than you (i.e., they do not have power “over” you), and these powers can be revoked at any time (as long as you are then competent to revoke them). Naming a spouse or a trusted friend or family member allows another person to handle your finances, pay your bills, and keep your household running.
Similarly, a Designation of Health Surrogate allows someone to make medical decisions for you. This allows you to pick the person you believe would best follow your desires for medical treatment in a scenario where you cannot make those decisions due to mental or physical incapacity. The designation is often combined with a Living Will (a poor name as it is not a Will and actually lays out how you wish to die), which conveys your desires for your end of life treatment. This allows you to tell your medical providers if and when you wish for medical treatment to be withdrawn if such treatment will only prolong the process of dying. Making those difficult decisions in advance relieves your relatives of the exacerbated burden of making such decisions while mourning your loss.
The final gift we offer our family is how we leave our affairs. They will no doubt lament our loss, question a million things, and wonder what “might have been,” and probably have lots of opinions on it all. Good planning will prevent the scenario of leaving them to wonder what needs to be done or in a situation that might compromise the family relationships.
Each of us can plan for a legacy; failure to do so is often a guarantee for a mess.
Joe Boyles went to Birmingham Southern and the University of Alabama. He has been very active in the community since he moved back to Pensacola to practice law, involving himself in many local organizations over the years including the Manna Food Bank, Five Flags Rotary, and Alzheimer’s Family Services. He has been a member of LEAP and was selected as a Rising Star in 2010 by Pensacola Independent News.
