Florida Asset Protection: What Is an Estate Plan?
An estate plan is not something that people think about every day. But, it's certainly an important part of effective financial planning. Estate planning is the act of making plans in advance, naming people and organizations that you want to receive your assets and other belongings after you pass away. Taking vital steps now will ensure that everything in your estate plan can be carried out effectively.
What Does an Estate Plan Include?
A good estate plan provides important detailed instructions that outline your plans when you pass away or if you are incapacitated. While there are a variety of things that can be included in your estate plan, there are certain things to consider in order for your estate plan to be effective. This includes:
- A will
- A trust
- A living will
- A trusted power of attorney
- Beneficiary designations
- A letter of intent
Will vs. Trust
A will is a legal document that helps individuals communicate their wishes clearly. A will includes a variety of important information, including who the executor of the will is, a list of beneficiaries, how these beneficiaries will receive the assets upon your death, and the names of guardians if there are any minor children. But a Will still requires going to Probate Court.
A trust is a fiduciary relationship that enables a designated trustee to have the right to hold title to a property or assets for the benefit of the beneficiary. Ultimately, trusts are used to establish legal protection for the grantor’s assets (by avoiding probate in Florida), to provide asset protection for the grantor’s heirs (depending on how the revocable trust is drafted) and to ensure that those assets are distributed according to the trustor's wishes.
Often, a will and a trust are used hand in hand. A will can be used to dictate what you want to have done with any assets not named in your trust.
A Living Will
Another vital document to include in your estate plan is a living will, which includes a set of instructions that specifies the kinds of medical treatment you want or don't want in the event that you are incapacitated. It's important to note that a living will is typically used with a healthcare power of attorney and is beneficial in situations such as when a person is in a coma. In this case, this type of will can detail whether you want to be kept on life support or not.
Power of Attorney
Another important aspect of your estate plan is establishing the power of attorney. The POA gives legal authorization to an individual who can act on behalf of another person. This person may be able to make decisions about a variety of things, such as property, finances, investments, or medical decisions, depending on what is outlined.
Your estate plan should also include beneficiaries, which are those who will gain a benefit from your estate. A beneficiary may be named specifically, but they can also be made eligible when certain stipulations have been met.
Letter of Intent
A letter of intent is something left to the executor of your estate. The letter of intent will communicate to your executor an overview of your wishes for your assets and your family after your death.
The Purpose of an Estate Plan
Ultimately, an estate plan gives you total control over your assets during your lifetime and even after death. When individuals avoid creating a proper estate plan, their assets go through a probate process, which is designed to distribute their assets upon death. Probate isn't just expensive, it's a long process and doesn't ensure that your loved ones receive your assets upon death.
Benefits of an Estate Plan for Your Assets
Establishing an estate plan offers the best protection and long-term benefits for your assets in Florida. Here are three reasons why having an estate plan is crucial.
1. Asset Protection
Having an estate plan, that incorporates an irrevocable trust, can play a vital role in protecting your assets in Florida. Without an estate plan, you are putting your assets at risk. With an effective plan in place, individuals can preserve the value of their assets, simplify disbursement, and ensure their legacy is carried out as expected. In addition to this, an estate plan can protect your wealth from seizure, taxes, and other losses, such as from a creditor.
2. Control Over Who Receives Your Assets
Another benefit of an estate plan is that it gives you control over who receives your assets. An estate plan enables you to name your assets, beneficiaries, and executors. This ensures that your wishes are carried about after you pass away.
3. Control Over Who Makes Decisions
In addition to this, an estate plan will give you control over who makes decisions in regard to your assets. This is because most estate plans include a durable power of attorney and a healthcare proxy, which ensures that everything within your estate is carried out in the way that you want.
With a durable power of attorney, someone will be appointed to manage your legal and financial affairs, while a healthcare proxy will give someone permission to make decisions regarding your healthcare on your behalf.
An Estate Plan Is for Everyone
If you're an individual in Florida looking to protect your assets, establishing an estate plan is a top priority. An estate plan doesn't just prepare you for the future, it gives you control over who receives your assets, helps you avoid probate, and ensures your legacy is protected.