1. Most Estate Plans Don’t Work! How and when do we know if an estate plan worked? If we take a picture of the client's objectives, dreams and desires for the future use and distribution of their assets, on the day the plan was created, and we compare the picture to the reality of how assets were used and distributed after a triggering event, such as a mental incapacitation or death, then and only then can we answer the question if the client's estate plan worked. Most plans don't work because the plan was not properly designed in accordance with the client's objectives, dreams and desires, documents were not properly drafted or the assets were not properly titled to make the plan work.
2. Having a Will does not avoid Probate. Most individuals believe that Probate is only for those that do not have a Last Will and Testament. In reality, having a Last Will and Testament, and holding assets in an individual name assures that the assets will go thru Probate.
3. Having a Trust based Estate Plan does not result in loss of control of assets. Many individuals worry about using a Trust as a foundation of an estate plan because they are afraid of losing control of the assets. In foundational planning, a revocable trust is used to assure that the assets are controlled by the client as long as the client is mentally capacitated and detailed instructions are included to deal with situations in which the client may become mentally incapacitated or passes away.
4. Jointly owned property by spouse does not assure children will receive an inheritance. When assets are jointly owned by spouses and one spouse passes away, the surviving spouse has full use and control of the assets. This leaves the surviving spouse free to re-title the assets with another person (such as a new spouse), loose assets due to claims of creditors, or amend the plan to change the beneficiaries, including disinheriting a child.
5. A well designed Estate Plan involves a discussion about disability. Statistically, we are living longer. The longer we live, the higher the probability that we will face a disability before we die. Estate Planning should include a thorough discussion of issues dealing with mental incapacitation and physical disabilities.
6. A child’s inheritance may be subject to claims of creditors including a soon-to-be “ex spouse”. When a child receives an inheritance "outright" or outside of a trust, the assets inherited are not protected from the claims of creditors. It is possible to protect a child's inheritance by using a well thought out estate plan for the child's parents.
7: Estate taxes are only 1 of many reasons to engage in Estate Planning. Individuals sometimes believe that if they do not have to worry about estate tax issues, they should not engage in planning. There are many reasons to do estate planning such as disability planning, protections of assets for a surviving spouse, protection of inheritance for children, planning for family members with Special Needs or who may develop Special Needs in the future.
8. Life Insurance often plays a very important role in a well thought out Estate Plan. Life Insurance can provide liquidity for the payment of estate taxes, but can also be used for asset protection, for wealth replacement for children from a prior relationship, to compensate a family member that will not be receiving benefit from a family business or simply to assure that children will receive an inheritance.
9. Life Insurance benefits should pay out to a Trust to assure the protection of the death benefit from the claims of creditors of a beneficiary. In Florida, life insurance benefits are protected from the claims of creditors of the decedent. However, life insurance benefits are not protected from the claims of creditors of the beneficiaries. Trust Planning can accomplish the goal of keeping the life insurance benefits protected from the claims of creditors of a beneficiary.
10. A Durable Power of Attorney is not effective after death. A Durable Power of Attorney can be very useful during someone's life but cannot be used after the person giving the power dies. There are many planning considerations when using a Durable Power of Attorney especially in light of the fact that the Power is effective upon creation and cannot be limited to use only in case of mental incapacitation.
11. Estate Planning strategies and documents should be reviewed every 24 months and updated as necessary. Life changes, circumstances change and assets change. Reviewing an estate plan, including the design of the plan, the documents used and the funding of the plan assures that the plan will work as intended by its creator.
12. Having a good Estate Plan will not accelerate your date of death!