Estate planning basics

All Florida residents will face different estate planning needs depending on their circumstances.

Some of these issues are quite complex, and should be considered when making estate planning decisions in order to have the best possible outcome from a financial perspective, and to ensure that the individual's wishes are carried out.

The following are some issues that may need to be addressed for proper estate planning depending on the situation.

• Beneficiaries. In relatively simple and small estates, naming a beneficiary on all accounts, and designating beneficiaries of personal property can be sufficient to bypass probate so that the assets can pass freely at the time of death. Oftentimes people forget to update designated beneficiaries. This should be done at regular intervals, and whenever a life-changing event has occurred, such as a death or a marriage.

• Real Property. A home or other real property will pass through probate upon death, unless it is held in trust. Holding real property in trust can avoid the home being attached to judgments in a lawsuit. It can also help if several children must divide an estate. Tax issues are also avoided by setting up a trust to hold real property.
• High net worth. For individuals with high net worth, estate planning can be particularly tricky because the rules are always changing. This is why it is very important for Florida residents with significant assets to consult with a knowledgeable estate planning attorney. The estate tax rules and exemptions fluctuate constantly, so careful planning in this regard will be absolutely necessary. A mistake in this area can cost those with significant net worth to unnecessarily pay millions to the IRS.
• Special needs. A trust would most likely be the most appropriate tool in situations where there is a special need that is desired after one's passing. This could include leaving a legacy to a charity or to someone special, or to provide for a special needs child. A trust can also help to avoid assets going in a specific direction, by bypassing probate and keeping the event private.

These are only some of the basic issues that may arise when discussing estate planning, and it is not meant to be exhaustive. It is important to remember that estate planning is an organic, ongoing necessity. This means that decisions can be changed, at least until the point of death.

Source: Forbes, "A Common Sense Approach to Estate Planning," Nancy Anderson, Jan. 19, 2012