Author Topic: Estate Planning Questions (Florida)  (Read 4017 times)

FLBiker

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Estate Planning Questions (Florida)
« on: June 28, 2017, 01:19:44 PM »
We've been meaning to do our wills for a couple of years (have a 2 yo daughter) and my wife found someone (referred by a friend) who will do revocable/living trusts, pour over wills, living wills and designations of health care surrogates, and durable powers of attorney for both me and my wife for $325.  My only reservation is the fact that we don't have so much that would go in the trust.  We've got ~$500K in retirement accounts and ~$400K in life insurance that would be outside of the trust.  Inside the trust would just be $60K in a joint Vanguard account and our house (~$190 w/ a $100K mortgage).

Thus, it seems like the most important thing is having the correct beneficiaries on our retirement / life insurance accounts and taking care of guardianship of our daughter.  The living trust seems less important.

In terms of trustees, if both my spouse and I died, my brother is the first trustee and my sister would be the alternate.  They are also who we'd like as the guardians of our daughter.  We trust both of them completely.  They're not super financially savvy (but not bad) so I'm planning to write up some explanatory materials about the different types of holdings / accounts.  Our investment strategy is quite simple, though, so it's not hard to explain.

Also, we have an EAP program at work that offers a free hour w/ a lawyer, so I was thinking that, after we got these docs made up, we could get a second opinion on them.

My specific questions:
1) Does this seem like a good plan (given our asset makeup)?
2) Is it a pain to have your primary residence in a revocable trust?  (ie when it comes time to sell, claiming homestead tax exemption, etc.)
3) Is there any reason (taxes, convenience, etc.) NOT to have our Vanguard account in a trust?

If any additional info would be helpful, please don't hesitate to ask.  Thanks!

Catbert

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Re: Estate Planning Questions (Florida)
« Reply #1 on: June 28, 2017, 03:09:58 PM »
Based on your situation, I wouldn't do a trust.  You've identified the most important things:  guardians for your daughter in the unlikely event you both die and beneficiaries and alternates for your accounts.

Trusts can be a PITA.  Moving accounts into them.  Moving real estate into and out of them (lenders get hinky about loans for property in a trust) when you buy or re-fi.  Then laws will change and you'll want/need to get a new trust.  I have one but I have more significant and complicated assets.

TVRodriguez

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Re: Estate Planning Questions (Florida)
« Reply #2 on: June 29, 2017, 11:51:13 AM »
General comments from a Florida estate planning attorney:
1. $325 is incredibly cheap to set up an estate plan for a married couple.

2. You can use a living/revocable trust to own your homestead in Florida.  Your county may require you to confirm that you are still the beneficial owner to keep your homestead exemption.  This is not a big deal.  I don't usually recommend putting homestead in trust unless there is only one owner, who then puts the home in her/his revocable trust.  I don't do joint trusts.  When a married couple owns their home, I usually leave it that way until the first death; then the survivor puts it in her/his rev trust.

3. Probate in Florida can be long, tedious, and expensive.  Some of this depends on your county, and based on the fee you got quoted, your county might be simpler in probate than others.  I recommend avoiding probate in Florida whenever possible.  Yes, setting up your accounts in the title of your trust may be a small hassle.  You are trading that hassle for the hassle and expense (and delay) your loved ones would go through if they have to deal with Florida probate when you die.

DISCLAIMER: THIS IS GENERAL INFORMATION.  I AM NOT PROVIDING SPECIFIC LEGAL ADVICE TO YOU ON YOUR PERSONAL SITUATION.  THERE IS NO ATTORNEY-CLIENT RELATIONSHIP OR PRIVILEGE CREATED BY THIS MESSAGE BOARD POST.

FLBiker

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Re: Estate Planning Questions (Florida)
« Reply #3 on: June 29, 2017, 12:31:29 PM »
Thanks all for the feedback, I really appreciate it!

I think we'll go ahead with the plan, but if the trust proves to be a pain, we might just leave it empty.  I feel like, for the price, I'd be happy even just having the will, durable POA, and living wills.

FLBiker

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Re: Estate Planning Questions (Florida)
« Reply #4 on: June 29, 2017, 12:51:53 PM »
I don't do joint trusts.

Can I ask why?  I ask because both of the assets we'd be putting into trust (the taxable mutual fund account and the house) are jointly owned.
« Last Edit: June 29, 2017, 12:55:45 PM by FLBiker »

TVRodriguez

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Re: Estate Planning Questions (Florida)
« Reply #5 on: June 30, 2017, 12:15:31 PM »
I don't do joint trusts.

Can I ask why?  I ask because both of the assets we'd be putting into trust (the taxable mutual fund account and the house) are jointly owned.

I know it's going to sound like I'm punting, but I'm finding it difficult to put into a short post the answer to this question.  I will say that it's not what I consider to be best practice.  I know some attorneys who do it, but it can be a minefield, and the document must be drafted with great care.  Additionally, your bank/brokerage house must be attuned to it and treat it properly--not all do.  I've seen "joint trusts" that become irrevocable at the death of either spouse--that's not what you want!  Florida law used to have issues with rev trusts owning homestead property, and while that's now fairly settled, it is settled with respect to single rev trusts, not joint trusts.

In a situation where a couple owns most assets jointly, I still set up a trust for each, and it's ready and waiting to receive the property at the death of the first spouse.  The transfer of title later on is pretty simple, and at least both spouses have thought through the plan together in advance.

TVRodriguez

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Re: Estate Planning Questions (Florida)
« Reply #6 on: June 30, 2017, 12:27:06 PM »
General comments from a Florida estate planning attorney:
1. $325 is incredibly cheap to set up an estate plan for a married couple.

2. You can use a living/revocable trust to own your homestead in Florida.  Your county may require you to confirm that you are still the beneficial owner to keep your homestead exemption.  This is not a big deal.  I don't usually recommend putting homestead in trust unless there is only one owner, who then puts the home in her/his revocable trust.  I don't do joint trusts.  When a married couple owns their home, I usually leave it that way until the first death; then the survivor puts it in her/his rev trust.

3. Probate in Florida can be long, tedious, and expensive.  Some of this depends on your county, and based on the fee you got quoted, your county might be simpler in probate than others.  I recommend avoiding probate in Florida whenever possible.  Yes, setting up your accounts in the title of your trust may be a small hassle.  You are trading that hassle for the hassle and expense (and delay) your loved ones would go through if they have to deal with Florida probate when you die.

DISCLAIMER: THIS IS GENERAL INFORMATION.  I AM NOT PROVIDING SPECIFIC LEGAL ADVICE TO YOU ON YOUR PERSONAL SITUATION.  THERE IS NO ATTORNEY-CLIENT RELATIONSHIP OR PRIVILEGE CREATED BY THIS MESSAGE BOARD POST.

I defer to your opinion as an estate lawyer in Florida, but since the OP has $900k that would be outside the trust and $150k that would be in it, I don't forsee much hardship to the beneficiaries while the $150k goes through probate as they have $900k to use.  If things change down the road and they have several hundred thousand in the Vanguard account, maybe then it would make more sense.

You may not consider it a hardship, but a probate in Florida can cost thousands of dollars and easily take up to 2 years.  Florida law requires that a lawyer be hired for any but the simplest estates.  The hardship is not to the decedent, who will not be around, but it's the family who will be left holding the bag and waiting and waiting and waiting for assets to clear probate for distribution.  And most attorneys I know require payment either up front or along the way from the family, because they don't want to wait two years to be paid.  Unscrupulous attorneys sometimes tell their clients that they only need a simple will and that they'll handle the probate when the time comes.  Of course they will!  They'll be paid ten to twenty times more for the probate!  Personally, I do my best to avoid probate for my clients.

FLBiker

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Re: Estate Planning Questions (Florida)
« Reply #7 on: June 30, 2017, 12:33:55 PM »
Thank you both for your comments.  I provided the lawyer with some more details as to our situation, and she agrees with basically everything that's been said here -- no joint trust, keep the house (owned jointly) out of the trust, etc.  Really, it looks like the trusts will just be set up and kept empty until we have some assets that make sense to put in them.  Thanks again for the feedback!

Roots&Wings

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Re: Estate Planning Questions (Florida)
« Reply #8 on: July 01, 2017, 06:00:34 AM »
General comments from a Florida estate planning attorney:
1. $325 is incredibly cheap to set up an estate plan for a married couple.

2. You can use a living/revocable trust to own your homestead in Florida.  Your county may require you to confirm that you are still the beneficial owner to keep your homestead exemption.  This is not a big deal.  I don't usually recommend putting homestead in trust unless there is only one owner, who then puts the home in her/his revocable trust.  I don't do joint trusts.  When a married couple owns their home, I usually leave it that way until the first death; then the survivor puts it in her/his rev trust.

3. Probate in Florida can be long, tedious, and expensive.  Some of this depends on your county, and based on the fee you got quoted, your county might be simpler in probate than others.  I recommend avoiding probate in Florida whenever possible.  Yes, setting up your accounts in the title of your trust may be a small hassle.  You are trading that hassle for the hassle and expense (and delay) your loved ones would go through if they have to deal with Florida probate when you die.

DISCLAIMER: THIS IS GENERAL INFORMATION.  I AM NOT PROVIDING SPECIFIC LEGAL ADVICE TO YOU ON YOUR PERSONAL SITUATION.  THERE IS NO ATTORNEY-CLIENT RELATIONSHIP OR PRIVILEGE CREATED BY THIS MESSAGE BOARD POST.

For #2 above about real estate, do you ever recommend Lady Bird deeds that allow a beneficiary designation for FL real estate to avoid probate?

I've read a little bit about them (some articles below), and apparently it allows stepped up cost basis and doesn't impact homestead exemption if properly drafted, supposedly less expensive than a trust (or probate). Curious about anyone's experiences with these?

http://articles.sun-sentinel.com/2001-09-17/business/0109140530_1_lady-bird-life-estate-deed-property
http://beamanlaw.blogspot.com/2012/10/florida-lady-bird-deed-enhanced-life.html
http://www.clearwaterfloridalawyer.com/lady-bird-deed/
https://www.floridaestateplanninglawyerblog.com/2009/05/lady-bird-deeds-and-stepped-up-basis-florida-enhanced-life-estate-deeds.html

Dee18

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Re: Estate Planning Questions (Florida)
« Reply #9 on: July 01, 2017, 09:36:21 AM »
I had my will, etc, done when my daughter was a toddler.  The lawyer advised, and I agreed, that I wanted my assets (including investments and retirement accounts) to go to her through the trust with gradual payouts so that she would not have access to all the money the day she turned 18.  You might want to discuss that with your attorney.

TVRodriguez

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Re: Estate Planning Questions (Florida)
« Reply #10 on: July 03, 2017, 09:25:37 AM »
General comments from a Florida estate planning attorney:
1. $325 is incredibly cheap to set up an estate plan for a married couple.

2. You can use a living/revocable trust to own your homestead in Florida.  Your county may require you to confirm that you are still the beneficial owner to keep your homestead exemption.  This is not a big deal.  I don't usually recommend putting homestead in trust unless there is only one owner, who then puts the home in her/his revocable trust.  I don't do joint trusts.  When a married couple owns their home, I usually leave it that way until the first death; then the survivor puts it in her/his rev trust.

3. Probate in Florida can be long, tedious, and expensive.  Some of this depends on your county, and based on the fee you got quoted, your county might be simpler in probate than others.  I recommend avoiding probate in Florida whenever possible.  Yes, setting up your accounts in the title of your trust may be a small hassle.  You are trading that hassle for the hassle and expense (and delay) your loved ones would go through if they have to deal with Florida probate when you die.

DISCLAIMER: THIS IS GENERAL INFORMATION.  I AM NOT PROVIDING SPECIFIC LEGAL ADVICE TO YOU ON YOUR PERSONAL SITUATION.  THERE IS NO ATTORNEY-CLIENT RELATIONSHIP OR PRIVILEGE CREATED BY THIS MESSAGE BOARD POST.

For #2 above about real estate, do you ever recommend Lady Bird deeds that allow a beneficiary designation for FL real estate to avoid probate?

I've read a little bit about them (some articles below), and apparently it allows stepped up cost basis and doesn't impact homestead exemption if properly drafted, supposedly less expensive than a trust (or probate). Curious about anyone's experiences with these?

http://articles.sun-sentinel.com/2001-09-17/business/0109140530_1_lady-bird-life-estate-deed-property
http://beamanlaw.blogspot.com/2012/10/florida-lady-bird-deed-enhanced-life.html
http://www.clearwaterfloridalawyer.com/lady-bird-deed/
https://www.floridaestateplanninglawyerblog.com/2009/05/lady-bird-deeds-and-stepped-up-basis-florida-enhanced-life-estate-deeds.html

Ladybird Deeds are more often used by Elder Law attorneys because, I understand that they don't get treated as a gift for the Medicaid snapshot lookback rules. 

Ladybird Deeds must be drafted properly.  Even so, one drawback can be if the home is mortgaged or needs to be mortgaged in the future--some banks may require the contingent beneficiaries to sign mortgage documents.  They shouldn't b/c the enhanced life estate is supposed to allow the life estate holder to have full rights over the property during life as if it were in fee simple.  But banks sometimes don't care and still want anyone with any interest in the property to sign off on a mortgage.  If the owner has listed her adult child as the contingent beneficiary, and if the owner's kid refused to sign the refi/mortgage papers, the owner can be in a lurch.  Calling on an attorney to assist may be possible, but that's not free, either. 

Personally, I don't handle Elder Law, so I don't draft Ladybird deeds.  I also don't recommend putting anyone's name on the title to your assets unless you're willing to give them that asset or hand the asset over to their creditors if they should develop creditors in the future.

TVRodriguez

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Re: Estate Planning Questions (Florida)
« Reply #11 on: July 03, 2017, 09:27:05 AM »
I had my will, etc, done when my daughter was a toddler.  The lawyer advised, and I agreed, that I wanted my assets (including investments and retirement accounts) to go to her through the trust with gradual payouts so that she would not have access to all the money the day she turned 18.  You might want to discuss that with your attorney.

YES!  Staggered payouts are common (e.g., a 1/3 of the total at ages 25, 30, 35), as is naming the child as co-trustee upon reaching a certain age and allowing the child to dismiss all other co-trustees upon reaching an even later age.

cchrissyy

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Re: Estate Planning Questions (Florida)
« Reply #12 on: July 03, 2017, 11:23:43 AM »
I don't understand why you want the $900k from life insurance and retirement accounts to not go in the trust.

I recently did all the estate planning stuff (lawyer cost several times what yours did, FYI) and my major goal was so that my retirement accounts and life insurance would pay into the trust and not go directly to the kids, and not have to go through the cost and hassle of probate.   

Like others said, I didn't want kids having access to that kind of money too young. Rather, it goes to them at age 25, and until then it is managed by a person I trust (not the same person who would be their legal guardian. That was my other huge priority for why I set up a trust).