There Are Options In Estate Planning
By Joe Pippen
Q. What are my options in estate planning?
A. Everyone has three options in estate planning. Each option is discussed below.
OPTION I: DO NOTHING
The most popular option is to put off long enough hoping the need to plan will go away. This is clearly the worst option, although 60-70 percent of Americans choose this option.
If a person fails to plan their estate, the state they reside in plans it for them. Every state has written a Will for every person who fails to create their own. This is called a statutory Will. The statutory Will that the state creates for you
decides how your estate will be distributed and who will be named your personal representative. The state also decides who the guardian of minor children will be and makes many decisions that individuals should make for themselves.
Is it not strange that a person spends a lifetime accumulating assets but fails to spend a few minutes planning on what should happen to those assets upon their death? This is why getting it sorted well in advance can give you peace of mind in that such planning is not left up to the discretion of the state, but rather you decide who and where what you leave behind will go to. You may want to approach the likes of an estate planning Orange County lawyer to assist you with this process.
The option of not doing anything always reminds me of the story of the lady who woke me up on a Saturday morning and asked if I would come to the hospital to help her with her estate plan. She was very pleased that I would and told me that she would call back because she was “not sick enough to do her Will now.” She died about four months later never having been sick enough to do her Will.
OPTION II: WILL
The second option in estate planning is to have a Will. The positive aspects of having a Will are that Wills are inexpensive (approximately $50). You name the personal representative to handle your estate and you decide how the estate will be distributed. These are very positive things that everyone should take advantage of.
However, there are four negative things about just having a Will:
- All Wills go through probate with the average fee being anywhere from three to ten percent in attorney fees.
- The probate process continues anywhere from six to twelve months or longer, which means that your loved ones are entangled in a long, drawn out court process long after your death.
- Wills do not plan for incapacity, and if you only have a Will and become incapacitated, you will probably be declared incompetent and become a ward of the court. Guardianship proceeding are very expensive and costly with an annual expense.
- Wills are a public document upon death. Anyone can purchase a copy of a Will for a dollar or two per page.
Anyone looking for distressed property will search public records including foreclosure files on sites like Auction.com, bankruptcy files, divorce files, and even probate files. Planning your estate with a Will offers very little privacy.
OPTION III: LIVING TRUST
The Living Trust is in my opinion the best option in estate planning. The common myths and excuses not to do a Trust are not true. For example, many people believe you need a large estate before you consider a Trust before even thinking about any other factors, like revocable vs irrevocable trust options.
I recommend a Living Trust to anyone whose total estate is over $75,000.00. Seventy-five thousand dollars is the level at which the court requires a formal probate. Another myth is that real estate cannot be transferred to the Trust, and if the homestead is transferred to the Trust the exemption is lost. Any real estate can be transferred to the Trust, and the homestead will not be lost.
The biggest misconception about a Trust is that you have lost control of your assets if you place them into a Trust. You are the Grantor (the person who creates the Trust) and the Trustee (the person who manages the Trust), and the Trust is all for your benefit with no loss of control. Trusts also do not require a special tax number, as you use your social security number.
The advantages of the Living Trust are that you avoid probate because the assets are in the Living Trust (not in the name of the deceased person); your assets can be distributed quickly to your beneficiaries; you have provided a guardianship plan; and it is a private document. Living Trusts have been recommended in every major consumer publication for the past several years because of the advantages mentionedabove.
For a copy of Attorney Pippen’s book Ask an Attorney All About Florida Law, please send a check in the amount of $24.00 to Attorney Joe Pippen at P.O. Box 10005, Largo, Florida 33773