Cooking Up an Estate Plan

by Daniel Bechtold and C. Kelley Corbridge, esq.

Estate planning is an opportunity for people to consider their lifetime goals and needs. It is also an important tool that can be used to determine how their assets will be transferred during their lifetime and at death.

Planning for your incapacity and eventual death involves a series of documents that are effective both during your lifetime and at the time of your death. This article will attempt to give you a menu of the basic estate planning documents that you should either have or consider.

Durable Power of Attorney (DPOA)

Naming an individual “attorney-in-fact” gives that person authority to act on your behalf to do things that you cannot do for yourself, due to incapacity, absence or convenience, including arranging for medical care, purchasing and selling assets, filing tax returns and paying bills. In the event you become unable to manage your personal affairs, without a valid DPOA, no one has legal authority to represent you with the IRS, insurance companies or financial institutions. Accordingly, a primary purpose of the DPOA document is to avoid the need of a guardianship in the event of your incapacity.

Living Will

The living will indicates that you do not wish to be kept alive artificially in the event you are diagnosed as “terminal,” “end stage condition” or “persistent vegetative state” (all terms defined by Florida Statutes). This may include a blanket direction to withhold artificial food or hydration, or may allow one or both for all of the statutory conditions.

Health Care Surrogate

This document names one or more individuals who may make medical decisions on your behalf in the event your doctor determines that you are incapable of making your own medical decisions. This may include the authority to enforce the living will or to arrange for organ donations.

Last Will and Testament

Your Will identifies who will receive what at the time of your death and who will be in charge. The Will appliesto anything in your sole name at the time of your death and does not apply to assets with joint owners, valid beneficiary designations or pay-on-death accounts. If you have a trust, your Will typically only applies to things you forgot to title in your trust named (a “Pourover” Will) and your tangible personal property (furniture, jewelry, autos, etc.). A frequent misconception is that a Will avoids probate. Instead, the Will provides the roadmap for probate.

Revocable Living Trusts

During your lifetime, you are typically your own trustee until death or incapacity. The trustee’s duty is to use your trust assets for your care and benefit during your lifetime. Upon your death, the trustee is charged with managing your assets and distributing them to your heirs (either outright or continuing in trust to be managed for their benefit). For married couples with larger estates, trusts frequently split into two at the first death—a marital trust (taxable at the second spouse’s death) and a credit shelter trust (tax exempt).

Appointment Options

You may name one or more individuals as your fiduciary in these documents. These individuals may be named in succession (i.e. if daughter cannot act, then son may act), jointly and severally (i.e. they may either act together or independently), or jointly-only (i.e. they must act together).

Florida Documents

If you are a Florida resident, you should have the Durable Power of Attorney, Living Will and Health Care Surrogate documents prepared under Florida law. These documents are very specific to each individual state’s laws and you do not want a question of interpretation to arise at a time of crisis. In general, Florida will honor wills and trusts from other states if they were validly executed under that other state’s laws. However, frequently, there are reasons to update these documents to Florida law as well, including more efficient administration or changed circumstances.