November 11, 2024
By: John Paul "J.P." Bratcher and Amy Hogue
One common misconception about Estate Planning is that it only involves creating a Will. Although making a Will is extremely important, allowing you to direct today where and to whom your estate assets go after your death, there is so much more to estate planning than having a Will.
Everyone has an “Estate” upon death. An estate consists of everything you own in your individual name without a beneficiary designation: car, home, real estate, checking/savings/investment accounts, furniture, and personal possessions. A well thought-out, drafted, and executed estate plan will provide protection and support for you and your loved ones by conveying your healthcare wishes and directing the management/distribution of your assets (1) in the event you become disabled or incapacitated and are unable to make decisions on your own; and (2) upon your death.
Some basic estate planning documents that everyone should have in place, regardless of the size of their estate are the following:
Health Care Surrogate and Power of Attorney
A Health Care Surrogate and Power of Attorney names someone you trust as your agent to express your wishes and make health care decisions for you if you are unable to do so yourself. These documents are typically used if you are incapacitated and unable to communicate due to a temporary or permanent illness or injury. For example, if you are involved in a serious car accident and are unable to communicate your medical wishes, your health care agent can make those decisions for you on your behalf.
Living Will
A Living Will is a document whereby you clearly indicate your intentions for end-of-life medical care and treatment in the event you become unable to verbalize your decisions. It speaks to a person’s wishes regarding life-prolonging procedures and treatment in the event you are determined to have terminal conditions, end-stage conditions or determined to be in a persistent vegetative state. For example, if you are involved in a serious accident and the doctors have determined that you are in a persistent vegetative state due to the injuries you received, a Living Will can dictate whether you should be kept on life support, thereby removing this burden from your loved ones.
HIPAA Authorization
In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was signed into law. This authorization allows a medical provider to share private health information with a designated third party that you select without violating federal HIPAA regulations. For example, you might authorize your medical providers to share your medical information with a family member, such as an adult child, so that they might help you with a prescription or other medical needs. Often, any individual designated in a fiduciary role under your estate plan documents is someone to be authorized to receive and discuss your medical information.
Power of Attorney
A Power of Attorney is the legal authorization for one person, the attorney-in-fact, to act on behalf of another person, the principal. A Power of Attorney is automatically terminated upon your death, or sooner if revoked or otherwise provided for in the document or by a court order. Under Florida law, a Durable Power of Attorney (DPOA) takes effect immediately upon your signature and allows your attorney-in-fact to continue acting on your behalf even when you are incapacitated; however, a DPOA executed before October 1, 2011 that is contingent on the incapacity of the principal (sometimes called a “springing” power of attorney) remains valid but is not effective until the principal’s incapacity has been certified by a physician.The DPOA will terminate only upon your death or when revoked.
Will or Last Will and Testament
The most common (but not common enough!) estate planning document is the Will or Last Will and Testament. One misconception about a Will is that a person only needs a Will if he or she is wealthy or has a large number of assets. Another misconception is that by having a Will, that person’s assets are not subject to court administration and settlement (“probate”) upon his or her death. Here are just a few things that a will can address in your estate plan:
- Appoint a Guardian – If you have minor children, you can name a trusted individual in your Will to care for and raise them in the event you pass away.
- Appoint a Personal Representative/Executor – The Personal Representative (a/k/a Executor in many other states) of your estate is the person appointed by the court with the legal authority to administer your estate and distribute your assets and pay expenses and claims, if any. In your Will, you can designate one or more individuals and/or qualified institutions as Personal Representative. Without a designation of who to appoint, the court will name a personal representative based on state statutes designating an order of priority, which could be someone much less qualified or appropriate than you would have otherwise chosen.
- Select your Beneficiaries – Every state has intestacy laws dictating who is to receive the decedent’s assets when the decedent dies without a valid Will. Dying without a valid Will is referred to as “intestate.” Choosing the beneficiaries of your estate under a Will is especially important for people with no spouse, a prior marriage, no children, stepchildren, and many other non-traditional and unique family circumstances.
By creating a Will, you may name as your beneficiary anyone you choose. You can even specifically exclude someone that you do not want to get anything (subject to Florida Constitutional and Statutory restrictions regarding spousal inheritance rights and homestead).
- Makes the Probate Process Smoother – ALL estates will go through the probate process, whether or not there is a valid Will. Probate is the court administration process to ensure the decedent’s assets, creditors, tax, and other legal matters are addressed, the estate is administered, and the assets are distributed according to the decedent’s will or the state’s intestacy laws if there is no Will. With a Will, however, the process can be more efficient than without a Will, potentially saving money for the beneficiaries.
- A Will Doesn’t Have to be Complicated: Although a Will can serve many other functions (planning for estate and gift taxes, creating a testamentary trust, etc.), a Will does not have to be a complex document.
The Bottom Line
Having a valid will in place is highly recommended in order to help ensure that your heirs and beneficiaries receive your probate assets according to your wishes. You should also consider implementing the other documents described above to assist your loved ones in the event you are incapacitated and relieve them of some of the burden of making those decisions without your documented direction and intent. Regardless of which documents you choose, be sure to reach out to a professional that is adept in estate planning and familiar with the laws of your state.
Questions?
Contact GrayRobinson Attorney Amy Hogue or another member of the Private Client Services Section.