Estate Planning FAQ

“So, a living will is basically a document, and it needs to be a document. It has to be in writing, and it addresses three separate conditions that we find in medicine. The first condition is a terminal condition, and a terminal condition is basically if you are at the end of your life and the doctor has diagnosed you with a particular condition, usually cancer, and says, “You have X number of months to live,” and it’s very definite that your life is at the end, in that situation, you have to make a decision. Do you want to be resuscitated during that time? Do you want artificial hydration and nutrition to be options for your decision maker to withdraw? That’s basically Part 1 of a living will.

Part 2 of a living will is an end-stage condition. So, if you are at the end of your life, but the doctor doesn’t know what’s going to kill you. Maybe you have heart failure, maybe your liver’s not working right, your kidney’s not working right. You’re sick, and you’re at the end of your life and they know you’re at the end of your life, but they can’t tell you what it is that’s going to kill you. That is called an end-stage condition. Again, the question during that time is, ‘Do you want to be resuscitated? Do you want your life artificially prolonged, like on a ventilator? Do you want to have the option for your health care surrogate to be able to withdraw artificial hydration and nutrition?’

Third condition is persistent vegetative state, and that is the Terri Schiavo situation. Basically, what we see in that case is that there is no brain activity. So, when the physicians tell you, ‘There’s no brain activity for your mother,’ the question is, ‘Do you have a living will so that you can withdraw artificial hydration if you don’t wish for that person to continue in that state?’ Sometimes, people leave that person in that condition for a while to see if there’s recovery. But, without a living will, you don’t have discretion to withdraw artificial hydration and nutrition in Florida. So, we encourage everybody: Have a living will.

“You can list more than one person as your health care surrogate. Legally, there is no prohibition from doing that. But, technically, it can be a little bit tricky because if you name two people to be your health care surrogate, then technically the doctor is supposed to talk to them and get informed consent from both of them. What if they don’t agree? It can just make it challenging. So, we typically say that you name one person, first, to be your health care surrogate, and then name a backup so that if the doctor can’t get in touch with that first person or they’re unwilling to give consent, then you have someone named who can be the backup person for your doctor to talk to.”

“We have in Florida what’s called a health care proxy statute, and it is a statute which states the order of preference and priority that a doctor is going to talk to if you have not named someone. So, for example, it would name a guardian first, then a spouse, then a child. If you don’t trust your spouse’s judgment or your child’s judgment, you may want to name someone else. You can name anyone you want to on your health care surrogate form. So, you can name a best friend who’s a nurse and you trust her judgment, and then that person would have priority over the normal list the doctors typically go by.”

“Power of attorney is a document that is so powerful. We say that you only should sign a power of attorney if you trust the person you’re naming 110 percent, because what it does…as soon as you sign a power of attorney, it’s effective immediately.

In Florida, we no longer have a springing power of attorney. That was taken away in October 2011. As soon as you sign a power of attorney it’s immediately effective and it grants power as broad or as narrow as you give, but it can be extremely broad. It can allow the person to manage every financial decision that you can manage.”

“Right now we have a $5.1 million exemption for estate tax purposes, and that also includes generation-skipping tax as well as gift tax. What it basically means is during 2012, during this particular year, we have this coupon from the IRS that allows us to transfer moneys either by virtue of dying…If you have $5 million and you die, you get to use your coupon as you check out to leave money to others without paying any estate taxes. The same is true for if you’re going to give money to a grandchild or if you’re alive and you decide to give your money away.

During 2012 we have this beautiful exception to many of the other estate planning rules that we’ve had in the past that basically allows us to give money away without paying estate taxes. In 2013, January 1 of 2013, although no one can predict whether or not there will be a change in the federal legislation that we have right now, but if there is no change, if there is no new legislation that’s passed, then we go back to a million dollar coupon, which a lot of people don’t really understand what that means.

$1 million in your federal estate tax. That would include IRAs–a lot of people think IRAs are excluded; they’re not–life insurance–life insurance is included in $1 million–and your homestead property. Those three things are myths that people have. They believe that those would not be included in your federal estate tax calculation, but they are.

When you think about, ‘Okay, I have $500,000 and life insurance, I have a homestead worth $250,000, I have cars, I have an IRA worth $150,000,’ you’re at the million dollar level. What happens after you get to that million dollar level and you die? You died, your homestead, all this other stuff is in your name, you have $1.5 million in assets. When you die and you go to the IRS checkout counter and you give them your million dollar coupon, you’re also going to have to write them a check because that $500,000 above the $1 million is going to be taxed at a rate, and we don’t know what it’s going to be, but it likely will be between 45 and 55 percent. You’re talking about handing over to the IRS a check for an additional $300,000. You just took your life insurance and halved it.

Estate planning. When you do trust base planning, you can do a lot to help yourself in really minimizing that taxable amount. High net worth clients in 2012– and it’s getting late; I don’t know when you’re listening to this video–but if you are able to do estate tax planning in 2012, doing a gift is a very good way of making sure that you secure that amount that you have available to give to someone else. You could do that by doing an irrevocable trust. You can actually just give money to people.

There are some strategies that are being used where a husband and a wife create trusts where they have beneficiaries being each other but these two trusts are very different from each other. They’re done at different times, they have different provisions for distributions but allow income streams to go to each other and thereby take advantage of that gift tax exclusion amount of $5 million. That’s a little higher-end net worth, and people have to be very comfortable with some of the downsides about type of estate planning. If you really want to not pay estate taxes, this is the year to do it, and there are lots of strategies that we can use in order to eliminate estate taxes.

Estate taxes are the only tax that we have that are optional. We can use graph planning. We can use something called ILET or an irrevocable life insurance trust. If we have $1.5 million in assets and we have $500,000 as life insurance proceeds, what you basically do is you take that $500,000 of life insurance and you create a separate entity that then owns that life insurance policy. The trust itself becomes the owner of the policy. It takes it out of your estate and puts it in this trust estate.

Now you only have $1 million in assets, so when you die, that life insurance trust becomes its own separate entity and is not taxed so you’ve just saved yourself $250,000 or $300,000 depending on if you’re at 45 or 55. You’ve saved yourself quite a substantial amount of taxes by doing that simple thing, just taking the title of that life insurance and putting it in an irrevocable life insurance trust.”

“The living will is basically a document, and it needs to be a document. It has to be in writing. Basically, it’s meant to say, ‘If I cannot make decisions for myself and I’m at the end of my life or I’m in a persistent vegetative state, I want my designated healthcare surrogate, whoever that medical decision maker is, to have the authority to do this, to do this, to do that.’ That’s what a living will is; a very important document.

Actually, we provide a living will form on our website. It’s downloadable. We want everybody to have it. It’s free. Take it. Share it with your friends and family. Make sure people know what your wishes are. Make sure that when you look at it, that it reflects what your wishes are. It’s got everything in it. There may be things that you want to take out. Having a living will is so important that we at the Miller Elder Law Firm feel like everybody should have it, so feel free to take it.”

“An advance directive is a document where you are telling doctors or your loved ones ahead of time how you want your body treated at the end of your life. For example, a living will is a document that says either, ‘I want my body to be treated to the fullest extent. I want a feeding tube. I want a breathing machine for me, and I want a machine to pump my heart when I’m terminally ill or in stage of the end of life,’ or ‘I don’t want those things.”

You can tell your doctor ahead of time if you want that treatment or not, and then it is a valid, binding document and your doctor will have to honor it. If it’s fully executed and your loved ones show it to the doctor, they’re going to treat your body how you want it treated or not treated.”

“Respite care is for someone who is a caregiver and they’ve been providing care for someone for a long, long time. It may be that the individual is at the end of their life, or they could have an injury or a disease that lasts for many years. We might ask for respite care for the caregiver because they need a break. If you’re a caregiver, your life expectancy actually decreases because of the stress and the turmoil that you’re going through in caring for someone.

Respite care is very important for caregivers to have. If you’re taking care of someone with Alzheimer’s, and you can get someone to give you a break for a couple of hours, great, take it. If you can get someone to give you a break for a couple of days, even better. But, definitely take care yourself as the caregiver so that you can take care of the person who needs your care.”

“We say, as long as you trust the person 110 percent, you should have a power of attorney because someone may need to pay your bills if you’re in the hospital; someone may need to sell your house when you get older so that they can provide for caregivers to come in; all those kind of things. If you don’t have someone you trust, we recommend not signing the power of attorney.”

“There are all kinds of trusts. A trust is just a document. It’s a set of instructions basically that says, ‘I’m going to take my money and I’m going to hold it.’ The trustee is the person who holds the money and follows whatever directions are in the trust.

There are revocable trusts where you can put money in the trust now and then change your mind and take it out. A lot of times that happens. People want to have their money in trust and have it managed by someone when they become incapacitated and then direct where the money will go when they die.

There are irrevocable trusts where once you put the money in, you can’t get it back out. That’s a completed gift for IRS purposes and sometimes people will do that for a state tax planning reasons.

There are also special needs trusts where we can setup a special trust for someone who is disabled either using their own money or using a family member’s money and still allow that individual to be qualified to receive government benefits, but also receive the benefits of the money that is in trust to enhance the quality of their life.

There are all kinds of trusts depending on your situation and what your goals and needs are.”

“There are also special needs trusts where we can set up a special trust for someone who is disabled, either using their own money or using a family member’s money, and still allow that individual to be qualified to receive government benefits but also receive the benefits of the money that is in trust to enhance the quality of their life.”

“There are revocable trusts where you can put money in the trust now and then change your mind and take it out. A lot of times that happens. People want to have their money in trust and have it managed by someone when they become incapacitated and then direct where the money will go when they die.”

“There are irrevocable trusts where, once you put the money in, you can’t get it back out. That’s a completed gift for IRS purposes, and sometimes people will do that for estate tax planning reasons.”

How Does Contesting A Will Work?

Is it possible to contest a will?

Sometimes, beneficiaries of a will might feel their loved one’s assets were mishandled. What options do people have in this situation? Gainesville elder law attorney Shannon Miller explains the concept of contesting a will.

Can A Will Be Contested, and By Whom?

Am I able to contest a will?

Gainesville elder law attorney Shannon Miller discusses the process of contesting a will — legally objecting to the validity of a will — and who is in a position to do it.

“Will contests can also be brought by charitable organizations who were left something in a will. They’re a beneficiary. Even if you’re a charity or you were specifically devised something in a will, you can contest a will either by the administration of it or by the way it was drafted, meaning to test whether or not it’s a valid will.”

Can Trusts Be Contested?

How can I contest a trust?

Contesting a trust is an option, for those who feel their loved one’s assets are not being handled property, or for those who believe the deceased was not in a correct mindset to make any estate decisions when the will or trust was drafted. Gainesville elder law attorney Shannon Miller explains in this video how contesting a trust works.

Contesting a Trust of Someone Who Is Still Alive

If your loved one is still alive, can you contest their trust or will? What are your options, if you feel your relative has not made the right decisions? Gainesville elder law attorney Shannon Miller explains the process of contesting a trust in this situation.

How Does a Lucid Interval Help Estate Planning?

When planning your estate, you might want to take measures to prevent a will contest. One advice Gainesville elder law attorney Shannon Miller gives is to wait until a “lucid interval” to sit down to plan. This means making sure you are in a lucid, alert state of mind — and fully able to understand and stand behind the decisions you are about to take.

“A lucid interval, which means that they’re having a time period where they can understand me and they can make those decision. It’s really an assessment as to whether or not they understand the value of their assets and what they are giving away.”

Then, take that information and go see another law attorney to make sure that your rights are being protected. Really important that you do that very quickly. At our practice, as well as lot of other elder law attorneys that practice in this area, normally the first initial consultation is free. You have kind of a free overview of, “Do you have a case?” When you get that notice to creditors or notice of administration, very important that you very quickly find somebody to help you understand what your rights are, making sure you don’t waive any of your ability to file some kind of objection.”

Those would be potential creditors in the case, and as the personal representative, I would have a duty to send out a physical notice to creditors, to them, saying, ‘Hey, you got 30 days to file a claim in the estate.’ Once I do that and once I publish in the newspaper, then the claims period ends. After that point, if I’ve done my job or I’ve diligently sent out all those notices, done my stuff in the newspaper, then those claims of creditors can be waived.

After that time, if you’ve done your job right, you diligently searched, you sent out your creditor letters, you published in the newspaper, then the door is closed and creditors cannot come back later on and say, ‘Hey, I was owed $100,000. I didn’t make a claim in the estate.’ If you did your job right, that claim from that creditor can be extinguished.”

“Once I publish in the newspaper, then the claims period ends. After that point, if I have done my job where I’ve diligently sent out all those notices, done my stuff in the newspaper, then those claims of creditors can be waived. After that time, if you have done your job right—you diligently searched, you sent out your creditor letter, you published in the newspaper—then the door is closed, and creditors cannot come back later on and say, ‘Hey, I was owed $100,000. I didn’t make a claim in the estate.’ If you did your job right, that claim from that creditor can be extinguished.”

More importantly, that you have a durable power of attorney and a designation of health care surrogate, because if you become incapacitated, and someone needs to make decisions for you–and you would prefer that that person who’s your significant other make those decisions on your behalf–under the rules in Florida right now, you have to have a durable power of attorney or a designation of health care surrogate. You’d have to have a will in order to provide those types of benefits or control to that person.”

“The really critical time period to have an estate plan is, first of all, if you have children. It’s very important for you and your spouse, or even if you’re divorced, to have some agreement as far as who would be the guardian or take care of your children after you die. Also, it’s really important that when you have kids, that you create some kind of way for them to access your funds after your death.

We’ve talked about guardianships, and what happens if you die without a will, and you have children, is that your assets that go to your kids will go instead into a guardianship. Then, you have to file something with the court. The judge ends up being the person who is the gatekeeper for those monies.
If your sister is the one taking care of them, and your sister wants to spend money to send that child to camp, they have to go knock on the courthouse door and ask the judge for money. Then the judge will decide, ‘Well, yes, I think that’s a good idea or no, I don’t think that’s a good idea.’ It costs a lot of money because you have to have an attorney represent you in that way. We think having an estate plan that would include some kind of testamentary trust, either inside of a will or just a regular stand-alone trust, provides a way for us to avoid the process of guardianship, and it allows you to decide who you want to be the gatekeeper, rather than the court.

If you say, ‘Okay, my sister’s going to be the one who takes care of my children. My brother, however, is going to be the trustee of my testamentary trust who decides when the money can be used for summer camp and helps take care of those children.’”

“A ‘notice to creditors’ is actually an official form that’s approved by the Florida Bar that if I was a personal representative in an estate or the executor–now we call them personal representatives–if I was the personal representative in an estate, I want to make sure that I notice all the potential creditors. I have to make a diligent search to see what creditors are out there. If I know that I get the mail, and I’m looking through my Dad’s stuff, and I see that there’s a bill to a hospital or that they had Medicare, we want to make sure we notice Medicare, then make sure that they don’t have a claim. Those would be potential creditors in the case and as the personal representative I would have a duty to send out a physical notice to creditors saying, “Hey, you got 30 days to file a claim in the estate.” Now, once I do that and once I publish in the newspaper, then the claims period ends. After that point, if I’ve done my job where I’ve diligently sent out all those notices, done my stuff in the newspaper, then those claims of creditors can be waived.”

“It used to be that we would say, ‘You need to update your estate plan every seven years.’ Now, it really depends on the changes that are going on either through the legislature, on the federal level; it also depends on the size of your estate. What we have in our offices is actually like an estate planning insurance program. We call it our maintenance program. Basically that requires, as part of the maintenance program, we are required to update your estate plan every two years. We have you on the calendar every two years to come in and update that estate plan as long as you’re in that insurance/maintenance program.

Basically, if you then at any time decide you need to update your plan, if you want to update your trust or you if need to fund additional assets into your trust-based plan, we will do that free of charge. Every year, we also send out what’s called our ‘asset list,’ and basically it’s all your assets that we have and that we know about that are titled into your trust. Then we make sure that there haven’t been any changes to that, so every year you’re going to look at it and go, ‘Oh, I bought a new car,’ or ‘We bought property at the beach,’ or whatever; ‘We sold this or that.’ We make sure we have everything properly funded. If you die, everything’s going to pass the way it should pass through your trust-based plan.”

“What we have in our offices is actually like an estate planning insurance program. We call it our maintenance program. Basically that requires…as part of the maintenance program, we are required to update your estate plan every two years. We have you on the calendar every two years to come in and update that estate plan as long as you’re in that insurance/maintenance program. Basically, if you then, at any time, decide you need to update your plan, if you want to update your trust or if you need to fund additional assets into your trust-based plan, we will do that free of charge.”

“A lot of times we’ll get a call from a client who says, ‘I know the will was filed, and we haven’t been paid for three months.’ You can call us and we’re going to tell you that that’s probably not that long in a probate case. Typically a probate is going to last between a year to two years depending on how difficult or complicated the estate is. We’re going to tell you if you have a good case, and we’re going to tell you if you have a bad case, but we can help you if you are one of those beneficiaries who perhaps didn’t get a distribution timely or who doesn’t believe that the assets were appropriately managed.”

“The ‘terminal condition’ is basically if you are at the end of your life, and the doctor has diagnosed you with a particular condition, usually cancer, and says, ‘You have X number of months to live,’ and it’s very definite that your life is at the end. In that situation, you have to make a decision. Do you want to be resuscitated during that time? Do you want artificial hydration and nutrition to be options for your decision-maker to withdraw? That’s basically Part I of a living will.”

“A living will is basically a document, and it needs to be a document. It has to be in writing, and it addresses three separate conditions that we find in medicine.

The first condition is a terminal condition, and a terminal condition is basically if you are at the end of your life, and the doctor has diagnosed you with a particular condition, usually cancer, and says you have ‘X’ number of months to live, and it’s very definite that your life is at the end. In that situation, you have to make a decision. Do you want to be resuscitated during that time? Do you want artificial hydration and nutrition to be options for your decision-maker to withdraw? That’s basically Part I of a living will.

Part II of a living will is an end-stage condition. If you are at the end of your life, but the doctor doesn’t know what’s going to kill you. Maybe you have heart failure. Maybe your liver’s not working right. Your kidneys are not working right. You’re sick, and you’re at the end of your life, and they know you’re at the end of your life, but they can’t tell you what it is that’s going to kill you. That is called an end-stage condition and again, the question during that time is: Do you want to be resuscitated? Do you want your life artificially prolonged, like on a ventilator? Do you want to have the option for your healthcare surrogate to be able to withdraw artificial hydration and nutrition?

The third condition is a persistent vegetative state, and that is the Terri Schiavo situation, and basically, what we see in that case is that there is no brain activity. When the physicians tell you there’s no brain activity for your mother, the question is: Do you have a living will so that you can withdraw artificial hydration if you don’t wish for that person to continue in that state, and sometimes people leave that person in that condition for a while to see if there’s recovery, but without a living will, you don’t have discretion to withdraw artificial hydration and nutrition in Florida. We encourage everybody to have a living will.”

How Does An End Stage Condition Affect My Estate Planning or Will?

What is an end stage condition, and how can it alter your plans?

An end stage condition, as defined by law, is an illness or injury that has no foreseeable expectation for recovery. In this situation, advises Gainesville elder law attorney Shannon Miller, estate planning and drafting a will become much more of a priority. But who can you turn to for help in this process?

“The third condition is a persistent vegetative state, and that is the Terri Schiavo situation. Basically, what we see in that case is that there is no brain activity. When the physicians tell you there’s no brain activity for your mother, the question is: Do you have a living will so that you can withdraw artificial hydration if you don’t wish for that person to continue in that state? Sometimes, people leave that person in that condition for a while to see if there’s recovery, but without a living will, you don’t have discretion to withdraw artificial hydration and nutrition in Florida.”

“Right now, what’s unique is that we have a $5.1 million exemption for estate tax purposes. That also includes generation-skipping tax as well as gift tax. What that basically means is we have this coupon from the IRS that allows us to transfer moneys, either by virtue of dying — if you have $5 million and you die, you get to use your coupon as you check out, to leave money to others without paying any estate taxes. The same is true if you’re going to give money to a grandchild, or if you’re alive and you decide to give your money away.”

“In your federal estate tax million dollar amount, that would include IRAs. A lot of people think IRA’s are excluded. They’re not. Life insurance is included in that million dollars and your homestead property. Those three things are myths that people have. They believe that those would not be included in your federal estate tax calculation, but they are.”

“The estate taxes are the only tax that we have that are optional. You do not have to pay estate taxes, no matter how much money you have in the United States. There are ways and strategies, we can use GRAP planning, we can use all kinds of things, ILITS.

If we what we did in that scenario that I just spoke of, where we have $1.5 million in assets, and we have $500,000 as life insurance proceeds, one of the strategies that’s very easy to do and easy to set up is something called an ILIT, or an irrevocable life insurance trust. What you basically do is you take that $500,000 worth of life insurance and you create a separate entity that then owns that life insurance policy, so the trust itself becomes the owner of the policy. It takes it out of your estate and puts it in this trust’s estate. Now you only have a million dollars in assets, so when you die, that life insurance trust becomes its own separate entity and is not taxed.

You’ve just saved yourself $250,000 or $300,000, depending on if you’re at 45 or at 55. You’ve saved yourself quite a substantial amount of taxes by doing that simple thing, just taking the title of that life insurance and putting it into an irrevocable life insurance trust.”

“One of the strategies that’s very easy to do and easy to set up is something called an ILIT or an irrevocable life insurance trust. What you basically do is you take that $500,000 worth of life insurance, and you create a separate entity that then owns that life insurance policy. The trust itself becomes the owner of the policy. It takes it out of your estate and puts it in its trust estate. Now you only have a million dollars in assets, so when you die, that life insurance trust becomes its own separate entity and is not taxed. You’ve saved yourself quite a substantial amount of taxes by doing that simple thing, just taking the title of that life insurance and putting it into an irrevocable life insurance trust.”