Who Needs an Estate Plan?

When you hear the term “estate planning,” your mind might conjure images of the elderly preparing to pass a life’s worth of assets and heirlooms to the next generation, or a wealthy couple setting up trust funds for their children and trying every trick in the book to minimize their tax bill. You might even visualize an individual who knows death is imminent and wants to make their final wishes known to those they’ll leave behind.

These individuals would obviously benefit from an estate plan, but they are by no means the only ones. In this entry, we seek to answer the question, “who might benefit from a well-crafted estate plan?” (Hint: the short answer is just about everyone). To understand why, let’s briefly review the common elements of an estate plan and what functions they serve.

Estate Planning Basics

Though estates can vary in value and estate plans in their complexity, all thorough estate plans generally consist of a handful of documents: (1) Last Will & Testament; (2) Durable Power of Attorney; (3) Designation of Health Care Surrogate; and (4) Living Will. A fifth document, known as a Declaration of Pre-Need Guardian, is also generally advisable.

Last Wills & Testaments

A Last Will & Testament directs the distribution of an individual’s assets upon that person’s death and nominates someone (or multiple individuals) to handle the administration of the estate.

A common misbelief is that if you have executed a Will, you can rest assured that everything you own at death will pass according to the directions in your Will.  This is not always the case.  Your Will only controls those assets that are in your name only at the time of your death. There are probate assets.  Assets which have a named beneficiary or assets which are jointly owned with another person with right of survivorship are not subject to probate and, therefore, not controlled by the Will.   Joint assets pass to the surviving owner.  Assets that have a designated beneficiary are distributed directly to the beneficiary.

Upon the death of the individual, the nominated personal representative of the estate offers the Will to the appropriate probate court for administration. A Will is only effective once it has been admitted to probate by the court.

In Florida, Wills must be prepared and executed with strict conformity to statutory requirements. When properly drafted and executed, however, the planning techniques offered by Wills can be both flexible and powerful, allowing experienced attorneys to draft documents that meet each client’s unique needs.

One such planning tool is the use of testamentary trusts. Testamentary trusts are trusts contained within a Will which only go into effect after a Will is admitted to probate. Testamentary trusts can be particularly useful when the testator wants to provide for a beneficiary without giving assets to that beneficiary outright. These are common when a beneficiary is a minor, or when a beneficiary is receiving some kind of public benefits. Florida law even permits individuals to create trusts to provide care for their pets!

Wills are carefully drafted to meet the specific needs of an individual at the time they are drafted. Consequently, it is important that Wills be reviewed periodically to ensure that the terms of the document reflect the individual’s intent amidst changes in their personal lives and the evolution of law.

Powers of Attorney

A Power of Attorney allows the principal (the person granting the power) to delegate the power to make certain decisions on the principal’s behalf to an agent (sometimes called an attorney-in-fact). A principal may nominate a single agent or multiple agents who serve simultaneously. Powers of Attorney typically grant the powers to manage the principal’s assets, enter into contracts, and make other decisions related to finances—essentially, everything but health care decisions. Powers that a principal might grant to an agent include—but are not limited to—the powers to:

• Manage bank accounts;
• Invest and manage investments;
• Buy and sell real property;
• Sell assets;
• Create trusts; and
• Apply for public benefits.

It’s important to note that an agent must act only within the scope of the powers granted by the document.

Perhaps the most important decision in granting power of attorney is the selection of the agent. Agents have broad powers over their principal’s assets, and therefore should be responsible, competent, and trustworthy. A power of attorney is effective immediately upon its execution, so great care should be given to the selection of the agent.

A common misconception with powers of attorney is that married individuals have no need for one because their spouses can handle everything on their behalf. In reality, a power of attorney would be required to enable one spouse (the agent-spouse) to control the assets of the other (the principal-spouse) which are owned solely by the principal-spouse, to sell jointly owned property, to enter into contracts or apply for public benefits on the principal-spouse’s behalf.

Health Care Surrogates

Florida law permits the appointment of a surrogate to make health care decisions on behalf of the principal in the event that the principal can no longer make or communicate those decisions due to incapacity. A health care surrogate is only empowered to make those decisions when the principal is incapacitated, such as when the principal is unconscious, undergoing surgery, under anesthesia, or unable to communicate their wishes.

Individual adults can appoint a health care surrogate to serve on their behalf, and parents of minor children may also designate a health care surrogate to make health care decisions for their children when the parents are unable to do so.

Living Wills

Having a living will allows you to make decisions concerning potential end-of-life care before that time comes and you are still capable of making such decisions. Generally, a living will directs whether you want artificial nutrition provided or withdrawn or withheld if it would only serve to artificially prolong your life if you are at the end of a terminal illness or in a persistent vegetative state and doctors agree you are unlikely to recover from that state.

The decisions you make in your living will are not ones that should be taken lightly. The terms of your living will only become relevant when you are incapacitated and unable to express your wishes in the moment, so it is critical that you carefully consider your wishes and keep those documents updated if your end of life wishes evolve over time.

Pre-Need Guardian Declarations

A final piece of the estate planning puzzle—and one that inexperienced estate planners often overlook—is a pre-need guardian declaration. Pre-need guardian declarations allow the principal to designate which individual (or individuals) you would like to serve as the guardian of your person, property, or both in the event a court had to appoint a guardian for you in the future.

There are two main types of guardians under Florida law: guardians of the property and guardians of the person. Guardians of the property are charged with securing, safeguarding, and prudently managing the ward’s assets. This might include managing finances, paying the ward’s expenses, investing the ward’s money, and seeking public benefits for the ward. Guardians of the person must ensure that the ward’s physical, mental, and social needs are met and will often make medical decisions for the ward.

A ward may have a guardian of the person, guardian of the property, or both. A single individual might serve a ward as guardian of both person and property, or multiple individuals may serve in those roles separately or concurrently (i.e., two individuals may respectively serve as guardian of the person and guardian of the property, or two individuals may serve as co-guardians of both person and property).

Certified elder law attorneys see firsthand the strife that guardianship proceedings can cause. Selecting your guardian or guardians ahead of time can prevent contentious battles amongst your loved ones during what will already be a stressful situation for all involved.

Trusts

When clients bring up the topic of trusts, they seem to fall into one of two mindsets: (1) that everyone should have a revocable trust to avoid probate, or (2) that trusts are only for those with great wealth, who seek to avoid taxes or pass wealth to the next generation. Frankly, neither of these camps have it exactly right.

While revocable trusts might afford some added privacy in the probate process, they may not allow for probate to be avoided entirely. Any assets not in the trust will still require the decedent’s will to be admitted to probate. Trusts are also not only for the wealthy—in fact, many trusts are most useful for those who have fewer assets. Examples might include a qualified income-only trust (QIT) or a special needs trust (SNT), both of which may aid in an applicant’s qualification for Medicaid benefits.

Trusts are often highly specialized tools designed to meet a specific need. You should consult with your attorney to determine whether a trust is advisable in your unique situation.

Everyone Could Benefit from an Estate Plan

The variety and flexibility provided by modern estate planning—combined with the increasing complexity of law and taxation—means that just about everyone can benefit from at least some estate planning. A designation of health care surrogate, power of attorney, and pre-need guardian declaration are pretty much universally advisable. We will all be touched by illness, old age (hopefully) or some degree of incapacity during our lifetimes, and these documents allow trusted people to act on your behalf when you are unable to do so yourself.

Estate plans are by no means limited to the elderly, or those who are “established” in their lives and careers. Take, for example, a young couple with minor children. The parents should consider creating a trust to receive and manage assets for the minor children if the parent passes away during the child’s minority. Through estate planning documents, parents may also designate a guardian for their minor children.

Couples who have children from previous relationships have unique estate planning needs.  Decisions are needed regarding how assets will be distributed to the next generation when both spouses are deceased.  How the assets are titled and the provisions in their Last Will & Testament need to be consistent with their desires and plan.  The attorney can help identify the areas of needed decision-making and guide them through the process.

Estate plans are similarly not limited to the wealthy. Individuals wanting to qualify or remain qualified for public benefits may be advised to create qualified income trusts or special needs trusts. Trusts like these are highly specialized and must comply with strict state and federal law, so a certified elder law attorney should be consulted in their planning, creation, and administration.

Ready to Prepare Your Estate Plan?

Solid estate planning is about more than deciding what happens with your home and your money. The certified elder law attorneys at the Elder Law Firm of Clements & Wallace, P.L. know well that aging can be challenging and complicated and have the experience necessary to address common issues before they become problems. Preparing an estate plan that addresses the often-intricate needs of modern families is no simple task—that’s why it’s important to choose an attorney with the knowledge, experience, and foresight necessary to help you find peace of mind in a world that’s growing ever more complex.

Editor’s Note: This post was originally published in May of 2022 but, as of September 2023, has been edited for accuracy and comprehension