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Estate Planning for Florida Residents

Estate Planning for Florida Residents

placeFor Floridians, estate planning is more than just planning for the avoidance or reduction of estate, gift and generation-skipping transfer (GST) taxes, it is also the clear mapping out of the distribution and management of one’s wealth for generations to come. Among other things, a comprehensive estate plan should effectively:

  • Avoid the need for guardianship during one’s lifetime;
  • Avoid the need for probate administration after one’s death;
  • Plan for the uncertainties of changing estate and generation-skipping transfer tax law and reduce the potential estate-tax burden for an individual’s beneficiaries;
  • Appoint someone to act on one’s behalf in the event of illness or incapacity; and
  • Provide a clear set of directives about one’s wishes both during lifetime, during illness and after death.

The documents every individual needs, regardless of wealth, are as follows:

  • Last Will & Testament – An instrument executed by a person in the manner prescribed by the Florida Probate Code which disposes of the person’s property on or after his or her death.  Florida Statute §731.201(39)
  • Durable Power of Attorney – A written power of attorney by which a principal designates another as the principal’s attorney in fact. Florida Statute §709.08(1)
  • Health Care Surrogate – A written and witnessed document in which the principal’s desires concerning health care are expressed, which can include appointing someone to make medical decisions and deal with doctor’s on the principal’s behalf, make anatomical gifts upon the principal’s death, or “pull the plug.” Florida Statute §765.101(1)
  • Living Will (optional) – pull the plug!  This is a clear instruction that no life-prolonging procedures, including artificially-provided food and water, should be administered. Florida Statute §765.101(10)
  • Revocable (“Living”) Trust (optional)

For others, additional documents are recommended, for example:

  • Irrevocable Life Insurance Trusts
  • Family Limited Partnerships
  • Limited Liability Companies
  • Buy-Sell Agreements
  • Pre-Marital Agreements

Application of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 Since Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, there has been a great deal of confusion about the nature and extent of the tax relief afforded and how it impacts a person’s estate planning decisions. In that analysis, it is important to stress the following frequently misunderstood points: •The estate tax has not been repealed and it may not ever be repealed; •The law presently states that the estate tax will be repealed only for one year (2010), after which it will be reinstated permanently if both houses of Congress do not affirmatively pass legislation to repeal it permanently; •The estate, gift, and generation-skipping transfer tax (GST) exemptions have been substantially increased; •For most clients whose estates exceed the applicable exclusion amount ($1.5 million in 2004 and 2005, $2 million in 2006, 2007, and 2008, and $3.5 million in 2009), further revisions may be required even after the revisions being made now, depending on what steps Congress takes; •Certain issues cannot be addressed with any certainty, because the ultimate state of the law is unknown; •Good estate planning involves more than tax planning, and good estate planning is and will remain important, even if the estate tax is permanently repealed, in order to (1) assure the correct disposition of the client’s assets; (2) assure that a client’s assets are not left outright to spouses or children who are not capable of competently managing those assets; (3) assure appropriate management of the client’s assets in case of disability; (4) avoid unnecessary administration expenses by avoiding probate and guardianship; (5) maximize the federal and state benefits available to the client and potential beneficiaries, particularly in case of disability and old age; (6) limit the claims of creditors (including former spouses) of a beneficiary; (7) assure proper succession to the ownership of a closely held business.

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