Basic Estate Planning Documents Explained

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Get to know the purpose of each document needed for Estate Planning

LAST WILL & TESTAMENT

A last will and testament is a written direction controlling the disposition of property at death. The laws of each state set the formal requirements for a legal will.

In Florida:

You, the maker of the will (called the testator), must be at least 18 years old.

You must be of sound mind at the time you sign your will.

Your will must be written.

Your will must be witnessed and notarized in the special manner provided by law for wills.

It is necessary to follow exactly the formalities required by Florida law for the execution of a will. To be effective, your will must be proved valid in and allowed by the probate court.

No will becomes final until the death of the testator, and it may be changed or added to by the testator by drawing a new will or by a “codicil,” which is simply a separately written addition or amendment executed with the same formalities as a will. A will’s terms cannot be changed by writing something in or crossing something out after the will is executed. In fact, writing on the will after its execution may invalidate part of the will or all of it.

REVOCABLE LIVING TRUST

A revocable trust is a document (the “trust agreement”) created by you to manage your assets during your lifetime and distribute the remaining assets after your death. The person who creates a trust is called the “grantor” or “settlor.” The person responsible for the management of the trust assets is the “trustee.” You can serve as trustee, or you may appoint another person, bank or trust company to serve as your trustee. The trust is “revocable” since you may modify or terminate the trust during your lifetime, as long as you are alive and not incapacitated.

During your lifetime, the trustee invests and manages the trust property. Most trust agreements allow the grantor to withdraw money or assets from the trust at any time, and in any amount. If you become incapacitated, the trustee is authorized to continue to manage your trust assets, pay your bills, and make investment decisions. This may avoid the need for a court-appointed guardian of your property. This is one of the advantages of a revocable trust.

Upon your death, the trustee (or your successor if you were the initial trustee) is responsible for paying all claims and taxes, and then distributing the assets to your beneficiaries as described in the trust agreement. The trustee’s responsibilities at your death are discussed below.

Your assets, such as bank accounts, real estate, and investments, must be formally transferred to the trust before your death to get the maximum benefit from the trust. This process is called “funding” the trust and requires changing the ownership of the assets to the trust. Assets that are not properly transferred to the trust may be subject to probate. However, certain assets should not be transferred to a trust because income tax problems may result. You should consult with your attorney, tax advisor and investment advisor to determine if your assets are appropriate for trust ownership.

MEDICAL POWER OF ATTORNEY ( with LIVING WILL)

A Florida Medical Power of Attorney form, also referred to as the ‘Florida Designation of Health Care Surrogate’or ‘advance directive’, allows a person to appoint a surrogate and an alternate surrogate to make health care judgments if the principal (issuing party) suffers a medical event where he or she is unable to communicate healthcare wishes to health care providers. This form allows the principal to appoint someone who knows his or her preferences for medical treatment and is able to step in when the need arises. This form is governed by Florida Statutes Section 765.203.

DURABLE GENERAL POWER OF ATTORNEY

A Durable General Power of Attorney, which remains in effect if the Principal becomes incapacitated, enables the Principal to appoint an “agent” or an “attorney-in-fact” to ensure that the Principal’s financial affairs are secure once they are unable to do so for themselves.

Matthew Staab