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Ultimate estate planning checklist

To create a a proper estate planning checklist, the first thing you must ascertain is your assets, your wishes, and your needs. Depending on the answer to those 3 questions, then an estate planning attorney can make recommendations on how to better achieve your wishes.

Review Your Assets

Before you create any estate plan make a list of the assets and liabilities that you have. Depending on your assets, the estate plan can be simple or complex.

When you create a list of your assets and liabilities, then we must ascertain whether your assets are non-probate assets or if they will pass through probate if you were to pass away.

Non-probate assets include insurance paid to a named beneficiary, IRA’s, jointly owned property with right of survivorship, and bank accounts with a named beneficiary.

If your assets will pass through probate court, then you should review the intestacy law in your States to determine who will inherit your probate assets should you pass away.

Your Wishes

The next thing you need to ascertain is who you would like to inherit your assets and how. If you are married, most States have laws protecting the surviving spouse.

Do you want your spouse to inherit all of your property or do you want to do a split with your children, if any. Would you like to make gifts to charity, friends, or other family members? 

These questions are important because it will determine the best vehicle to use to transfer your assets at death. Specially, if your assets have no liquidity and some of the assets may need to be sold to fulfill your wishes.

The last question you may wish to think about is whether you want your assets to be transferred immediately after death or in a period of time. If you want your assets to be transferred in a period of time, then you must likely will need a trust or another similar vehicle. 

Your Needs

Finally, you must consider your needs right now and in the foreseeable future. If you are going to need your assets for your daily living, then your wishes may not necessarily align with your needs.

Essentially, there might be nothing left by the time you pass away or very few assets.

Estate Planning Document Checklist

There are 5 essential fundamentals documents integral to any estate plan:

  1. Revocable Living Trust;
  2. Last Will and Testament;
  3. Power of Attorney;
  4. Health Care Surrogate; and
  5. Living Will

I will go over each document one by one and why you should consider having each document in your estate planning checklist.

Revocable Living Trust

When creating your list of assets, if you have assets that will not pass by operation of law, meaning assets that are titled under your name individually and without a beneficiary designation, then a revocable living trust is a must document to have.

A revocable living trust allows you to change the title of the asset, from your name individually to the title of the trust.

Every trust must have a trustee. A trustee is an individual who administers the trust. During your life, you will likely be your own trustee and administer the trust yourself.

When changing the title to the asset, it will be changed for example from John Doe to John Doe, as Trustee of the John Doe Revocable Living Trust, and the date it was created.

The result of this title change is that if you were to pass away, then the property will not be titled under your name individually, but in the name of the trust, effectively avoiding probate court.

Upon your incapacity or death, then you may designate a successor trustee to administer the trust on your behalf based on the provisions within your trust.

If you become incapacitated and all your assets are titled in the trust name, then you can also effectively avoid guardianship court and the appointment of a guardian of the property to handle your assets.

Aside from avoiding probate and guardianship court, the revocable living trust allows you to defer the distribution of your assets. This is specially useful if you have minor beneficiaries at death. You can defer making distributions until your minor children become adults, or until a later age.

Before you pass away, the revocable living trust can be changed at any moment. However, at death, the trust becomes irrevocable and no longer can be changed unless with court approval. This is not entirely a bad thing, because we can place protections in place to protect your beneficiaries in the case they have creditors.

During your life, a revocable living trust does not provide you any asset protection, only your beneficiaries can be protected at death.

Last Will and Testament

A last will and testament is the cornerstone of any estate planning checklist. Even if you create a revocable living trust, you should create a last will and testament.

If you create a revocable living trust your last will and testament will direct your personal representative to transfer all of your assets to your revocable living trust to be transferred according to the provisions of the trust. The reason for this is that you may not have the time or did not get around to transferring all of your assets to the revocable living trust.

The last will and testament is also paramount when you have minor children. The last will and testament is where you select the guardians of your children should both legal guardians pass away. If you don’t make that designation, then the court will decide for you.

If you don’t decide to create a revocable living trust and just want to create a last will and testament, then creating the last will and testament will allow you to select the beneficiaries you want to inherit your probate assets.

Should you not create a last will and testament nor a revocable living trust, then your probate assets will pass according to the intestacy laws.

Finally, you want to create a last will and testament to designate a personal representative you trust to administer your assets during the probate administration. The personal representative will be in charge of paying creditors, making distributions, and making sure the assets are maintained during the probate administration.

Power of Attorney

The power of attorney allows you to designate an agent to make financial decisions on your behalf. As you grow older, the power of attorney is an important document in your estate planning checklist.

As we grow older, it is only natural for you to need help with your daily activities. The power of attorney allows you to designate someone to go to the bank for you and pay some of your bills. The power of attorney also allows your agent if you give him or her the authority to complete your taxes, sell property, administer your business, and assist you with governmental benefits.

The power of attorney can be made durable. A durable power of attorney allows the agent to make decisions on your behalf even after a subsequent incapacity. In Florida, if that language is not in place in the document, the agent will not have any authority upon your incapacity.

A power of attorney terminates at an specific date you designate or upon your death.

Health Care Surrogate

Similarly to the power of of attorney, the health care surrogate allows you to designate a person, what we call a Surrogate, to make and receive health information on your behalf.

This is particularly important when you are older and you want you children to be informed and help you with your medical appointments and dealing with your doctors.

As long as you can consent yourself, your decisions will be binding. Your Surrogate will not have the power to override your decisions. 

If you have minor children you can also designate a surrogate to take your children to the doctor and receive information if you cannot take them yourself or if you are traveling out of the country.

Living Will

A Living Will allows you to make end-of-life decisions in the event that you are not capable of doing so. When you create a Living Will you decide if you want life-prolonging treatment to be given to you if there is no “reasonable medical probability” of your recovery.

A well drafted Living Will allows you to initial the procedures and treatment that you would like to be withheld. I can tell you from personal experience, that if you are placed in a position to make a decision of this magnitude for someone you love it would totally be an emotional burden.

The Living Will allows you to make a decision yourself. Although you might think that a loved one knows you very well, you don’t necessarily want to put that person in that position. This is why a Living Will is one of the essential documents in any estate plan.

Other Things to Consider

Federal Estate Tax Planning

If your net worth of assets is over 11.4 million dollars or 22.8 million dollars if you are married, then you should considering estate tax planning. The federal estate tax is 40% of everything over the exemption amount.

There are different strategies to reduce your estate tax liabilities. They typically involve the utilization of irrevocable trusts and gifting strategies. 

Although for the vast majority of us the federal estate tax will not apply, it is always good to stay current with the law and how much exemption is currently allowable to the federal state tax.

Federal Estate Tax Planning for Nonresident Aliens

If you are a foreign individual and you are investing in United States situs assets, then your federal estate tax exemption is only $60,000. In addition, FIRPTA and other tax rules may affect you while you are alive.

It is important to plan early to reduce or eliminate your federal estate tax liability here in the U.S.

Medicaid

If you are currently receiving Medicaid, have received Medicaid, or are planning to receive Medicaid, then you should seriously consider preparing an estate plan.

Medicaid typically has a charge-back provision. This means that Medicaid will attempt to recover from probate assets any funds payed by Medicaid during your lifetime. Medicaid will not be able to reach exempt assets, but if there are nonexempt assets they are reachable by Medicaid.

Special Needs Planning

If you have children with special needs or you want someone to receive your inheritance and that person is disabled and on Medicaid, then you should considering creating an Special Needs Trust.

The special needs trusts allows the disabled person to maintain their Medicaid eligibility and not to lose any governmental assistance.

The purpose of the special needs trust is to be a supplement to the governmental assistance, not to replace it.

Conclusion

If you have any questions regarding these topics do not hesitate to reach out to me. My name is Alain Roman and I am attorney licensed in the State of Florida.

If you are not in Florida, you should consult with an estate planning attorney licensed in your State for further information according to your State’s laws. 

Hope you found this information valuable and make sure to share to your family and friends.

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