Frequently Asked Questions

Basic information about estate planning

Thinking about one’s own death or disability are topics most people avoid as long as possible.  However, death and disability are two of the most important reasons for creating an estate plan to protect yourself and your loved ones.  With proper estate planning, you will not only be responsible for your finances during your lifetime, but you will be able to direct how your finances are to be handled upon your passing away or becoming disabled.  Such planning spares your loved ones much anguish over your affairs and spares them substantial expense, delay and frustration in settling financial matters on your behalf.

Click on the links below to read answers to our most frequently asked questions:

• What is estate planning?
• Do I need a will?
• Is it necessary for a lawyer to draft my will?
• What happens if someone dies without a will?
• What is a trust?
• What is the best way to avoid estate taxes?
• What type of property is not subject to probate?
• What is estate administration?
• What is the cost of probate and what is the length of the process?
• What happens upon mental incapacity or serious medical issues?
• Does the personal representative or trustee get paid for services rendered?
• Can minor children be protected?
• What are the duties and obligation of a personal representative?
• Can you contest a will or trust?

Have more questions?

Ask a Doane and Doane, P.A. attorney by calling 561-656-0200 or contacting us online.  With offices in North Palm Beach, West Palm Beach and Stuart, our law firm serves clients in the communities along Florida's Gold Coast and Treasure Coast, including Palm Beach, Broward, Miami-Dade, Indian River, St. Lucie and Martin counties.

What is estate planning?
Estate planning is the accumulation and disposition of an estate, typically to minimize taxes and maximize the transfer of wealth to the intended beneficiary.  Estate planning tools include the will, trust, power of appointment, power of attorney, medical power of attorney and living will.

Do I need a will?
A will protects your property and can especially be helpful if you want to distribute your property to people other than your relatives.  Without a will, state law dictates the distribution of your property.  The default plan normally distributes property to relatives.

Is it necessary for a lawyer to draft my will?
While it may seem straightforward for you to draft your will yourself, personally drafted wills tend to be incomplete and are, therefore, invalid under state law.  An attorney familiar with specific state laws can legally draft a will that is valid under state law.

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What happens if someone dies without a will?
State law uses a default will for anyone who dies without a will.  Typically, the spouse and children of the person who died take the property.  If there is no spouse and no children, the decedent’s parents take the property, followed by siblings, grandparents and children of the grandparents. If no close relation can be found, the property eventually belongs to the state. Note, though, that as part of the probate process, the decedent’s creditors lay claim to the property after certain allowances for spouse and children.

What is a trust?
In a trust, a party known as the trustee has legal ownership of property transferred to him by the person making the trust (the grantor).  Trust assets are invested and or managed for the benefit of one or more beneficiaries. A trust can be living, that is, established during the grantor’s lifetime, or testamentary, established in a will.  A trustee can be either an individual or an institution, such as a bank.

What is the best way to avoid estate taxes?
Despite paying taxes and then more taxes throughout your life, even after you have passed away, Uncle Sam still wants to do business with you.  At the very least, Uncle Sam wants to review your estate to ensure that you do not owe him one last time.

Since each state has their unique set of laws to govern estate and inheritance taxes, you should discuss your concerns with an attorney practicing in your state of declared residency.  With proper estate planning, you can implement many well-established strategies that will reduce or even eliminate death taxes.  However, you must start your estate planning as early as possible in order to take advantage of the many tax-avoidance strategies.

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What type of property is not subject to probate?
For the most part, probate is a process through which title is passed from the decedent to the beneficiaries.  There are certain types of assets that are considered non-probate assets, such as—

• Retirement accounts such as IRAs and 401(k) accounts where the beneficiaries have already been designated
• Any properties held as joint tenants with right of survivorship; this type of ownership allows the asset to pass to the co-owner who has survived without having to go through the probate process
• Life insurance policies
• Bank accounts that have been established as POD (paid on death) accounts
• Properties owned by a living or revocable trust; title to those properties passes to the successor trustees without having to go through the probate process

What is estate administration?
With the passing of a loved one, his or her estate will enter a court-managed process called probate or estate administration where the assets of the deceased will be managed and distributed.  If the decedent owned his or her assets through a well-written and properly funded living trust, it is likely that the heirs will be able to avoid the court-managed administration of the estate.  The successor trustee as appointed through the trust will be able to administer the distribution of the decedent’s assets as directed by the living trust.  The length of time to complete the estate administration is largely dependent on the size of the estate, the complexity of the estate and the local rules of the court.

While each estate administration is somewhat unique, most estate administrations would involve the following steps:

• Filing of a petition with the probate court
• Notice to heirs under the will and/or trust or to statutory heirs if no will or trust exists
• Petition to appoint personal representative
• Inventory and appraisal of estate assets by personal representative
• Payment of estate debt to rightful creditors and sale of estate assets
• Payment of estate taxes, if applicable
• Final distribution of assets to heirs

What is the cost of probate and what is the length of the process?
Both cost and duration of probate can vary substantially as a result of several factors.  Basically, the value of the estate and the complexity of the estate will determine cost and time frame.  If estate planning documents have been well drafted, well funded and are properly in place, the length of time to close the estate and distribute the assets will be shortened considerably.  If there are contests or disputes regarding the will amongst beneficiaries or creditors, the length of time to finalize the administration will be affected as well as the costs involved.

Common costs to settle an estate include personal representative or trustee fees, attorney’s fees, court fees, accounting fees and appraisal costs.   It is difficult to estimate the total of these expenses, but a normal range would be somewhere between two percent and seven percent of the total value of the estate.  The length of time to settle an estate may also vary significantly, but generally speaking most estates can be settled within a nine to 18 month time frame assuming there is no litigation involved.

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What happens upon mental incapacity or serious medical issues?
When you are mentally incapacitated, you are no longer able to manage your own financial affairs.  Many people presume that, if they are married and/or have children, that their spouse and/or children will automatically be able to handle such financial matters on their behalf.  That is not the case.  Without proper documents in place, one’s spouse or children would have to petition a court to have you declared legally incompetent, a process that is long, costly and stressful for all concerned.  Once declared incompetent, the court will appoint a person to handle your affairs.  Hopefully, that person will be someone whom you would have chosen.  The court may even require that the appointed financial manager may have to return to court yearly to account to the court for every penny that is being spent, invested, etc., resulting in more costs and frustration for your loved ones.

Proper estate planning can eliminate these problems and confusion.  If it is your desire that a certain member or members of your family should be able to immediately assume the responsibility of managing your finances if you are incapacitated, incompetent, or deceased, you may make the designation through various estate planning documents.  Your fiduciaries should be people whom you trust as they will have the authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, property, etc.  Since a will does not take effect until you die and a general power of attorney may not be sufficient, it is important that you discuss with an attorney what other documents you may need to accomplish your goals.

In addition to establishing a plan for your financial well-being, it is equally important that you establish a plan for your medical well-being.  The law also allows you to appoint a trusted person to make decisions on your behalf regarding medical treatment options if you lose the ability to decide for yourself.  Who will make decisions for you if you are unconscious as the result of an accident?  With the proper documents in place, you can select this person or persons yourself and prepare them for that responsibility well in advance of the dilemma.  Additionally, it is important to have a living will in place which informs others of your preferred medical treatment should you become permanently unconscious or terminally ill.  The presence of a living will at such a time is a comfort to your medical representative as they may rely on your stated wishes as to how you should cared for as the end of your life draws near.  With a living will in place, you spare those who love you the need for guesswork and controversy as to what is best for you.  You have already made the decision for them as stated in your living will.

Does the personal representative or trustee get paid for services rendered?
Normally, personal representatives or trustees of an estate administration are entitled to be reimbursed for any out-of-pocket expenses they may incur during the process of managing and distributing the decedent’s estate.  Additionally, they may be entitled to statutory fees that may vary according to locale and size of the estate.

The personal representative or trustee is expected to fulfill his or her fiduciary duties with the utmost integrity.  Failure to do so may result in his or her liability for mismanagement of estate assets.  It is advisable that the personal representative or trustee retain an attorney and an accountant to guide him or her through the somewhat daunting process of administering an estate.  Fees for attorneys and accountants would be paid from the assets of the estate and not personally.

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Can minor children be protected?
If you have minor children at the time of your estate planning, it is important that you address issues regarding their upbringing in the event of your incapacity or death.  If your children are young and your financial situation provides for advanced planning, you may want to implement a plan that will allow your surviving spouse to devote more attention to your young children without the burden of work obligations.  You may want to provide for financial counseling and resources to be available to your spouse in the event he or she lacks experience or ability to handle financial and legal matters.

If you and your spouse die simultaneously or within a short duration of time, you should have a contingency plan that would validate choices you both made regarding persons to manage your assets as well as a nomination of a guardian for the upbringing of your children.  It is not necessary that your financial manager and the guardian of your children be the same person.  Be assured, however, if you do not make the decisions yourself via estate planning documents, a court will decide how your finances are managed and who will raise your children, often with the undue burdens of reporting to the court and other court-designated restrictions.

Proper estate planning will afford you the opportunity to determine how your children receive your assets.  You may designate that the assets be distributed directly or alternatively placed in a trust to be distributed based on a number of factors which you designate, such as—

• Age
• Need
• Education
• Behavior
• Achievement

Placing the assets in a trust avoids the problem of children receiving substantial assets prior to achieving the level of maturity that will enable them to handle inherited wealth, and your legacy, properly.

When choosing a guardian to raise your minor children, you will want to designate a person or persons who share your values so that they will be instilled in your children accordingly.  Consideration should be given to the age of your selected guardian, their personal financial condition and any known child-rearing skills or lack thereof.  Be careful to review your estate plan so that you do not create an additional financial burden for the proposed guardian(s).

What are the duties and obligation of a personal representative?
The personal representative follows state law to wrap up the decedent’s affairs, including the following:

• Giving the proper notices to proper parties
• Collecting the decedent’s property
• Receiving claims against the estate
• Paying valid claims and disputing others
• Distributing estate property according to the will or state law
• Selling estate property to cover debts or allow for proper distribution if necessary

Can you contest a will or trust?
Yes, when the person who wrote the will or trust was forced, deceived, mentally incompetent or unduly influenced.

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