Estate Planning in Florida ─ Not a Job for Amateurs or Any Run-of-the Mill Attorney
70% of adult Americans don't have a will, not to mention a durable power of attorney, a living will, and a health care proxy. For those who do have a will, it's often 20 years out of date ─ a relic from the days when your children were small. Not addressing this issue is an act of selfishness: it will almost certainly leave an expensive mess for your loved ones.
Florida Supreme Court Case Demonstrates the Dangers of Do-It-Yourself
The television ads make it look so easy. Why hire an attorney to set up a will when you can just buy the document and do it yourself? Why pay someone hundreds of dollars to write a will when you can get a snazzy, legal-looking document starting at $69 online?
The answer - if you really care about having your last wishes fulfilled - is to recognize that it's hard - really hard - for an non-attorney to create an effective will or trust. Only an experienced estate planning attorney should draft your client's documents to ensure that they will stand up to scrutiny and challenges.
As documented in the ABA Journal, an April case that made it to the Florida Supreme Court demonstrates the pitfalls of using an "E-Z" legal document instead of hiring an attorney. Read more here.
Companies like LegalZoom offer all kinds of documents, from creating a will to incorporating an LLC. Nowhere do their ads mention the clauses and provisions that clients should know about and the states in which they might need them.
So Easy A Caveman Can Do It
It was a do-it-yourself "E-Z Legal Form" that Ann Aldrich used in the Florida case. Her estate came into dispute because it lacked a residuary clause that spelled out how assets Aldrich acquired after the will was made out were to be distributed.
Aldrich created her will in 2004, leaving all to her sister, Mary Eaton. The will said that if Eaton died before Aldrich did, all assets should pass to Aldrich's brother, James Aldrich. Eaton died in 2007, and she left Ann Aldrich a substantial amount of land and cash, according to Forbes. These assets became the crux of the case before the Florida Supreme Court.
Two of Ann Aldrich's nieces contested the will during probate, arguing that they were entitled to part of the estate that was not specifically included in the document. Their legal argument said that because the will didn't have a residuary clause, the unnamed assets should pass through Florida's laws of intestacy.
Ann Aldrich had included an addendum to her will in 2008 in which everything was given to her brother, but the Florida court ruled that it was legally ineffective because it was signed by just one witness; Florida law requires two witnesses to a testamentary instrument.
After more than four years of legal wrangling, the court ruled for the nieces - even though they weren't included in the will. The court found the nieces' arguments and claim legally valid under the laws of intestacy because the E-Z form didn't include a residuary clause that would dispose of property not listed in the document.
Although the court seemed sympathetic to James Aldrich's plight, it ultimately found that he had no legal leg to stand upon. In the opinion by Justice Peggy Quince, she wrote that any other interpretation would require the court to rewrite the will to include provisions that Ann Aldrich did not specify.
Justice Barbara Pariente, in concurring, said the case reminded her of the old adage, "penny wise and pound foolish," for had Ann Aldrich used an attorney to draw up her will, her brother likely would have wound up with the full estate as Ann intended.
What is Estate Planning? Four Key Areas
1. Protect and Provide For You and Your Spouse
2. Protect Your Values and Your Valuables
3. Protect the People You Love and the Causes You Support
4. Protect Against the People You Don’t Love and the Causes You Don’t Support
The Definition of Good Estate Planning
● While I am alive and well, I am able to control and benefit from my assets.
● If I become disabled, I am able to protect and care for myself, or receive care according to my instructions.
● At death, I leave my values and my valuables to whom I want, the way I want, and when I want, protecting my heirs from predators.
● At each stage of my plan, I save as much on taxes, court costs, and legal fees as possible.
● While we are alive and well, my spouse and I are able to control and benefit from our assets.
● If one or both of us becomes disabled, we are able to protect and care for ourselves, or receive care according to our instructions.
● At death, we leave our values and our valuables to whom we want, the way we want, and when we want, protecting our heirs from predators.
● At each stage of our plan, we save as much on taxes, court costs, and legal fees as possible.
Understanding Ownership and Title Issues
Five Types of Ownership:
1. Sole Ownership: The asset is owned by a single person
2. Co-Ownership or Tenants in Common: The asset is owned/shared by two or more individuals. Upon the death of any of them, his/her share is passed along to whomever he/she designates.
3. Joint Tenants with Right of Survivorship: The asset is owned/shared by two or more individuals. Upon the death of any of them, his/her share is owned by the survivor(s).
4. Ownership with Beneficiary Designation: The asset is owned subject to an agreement or contract specifying that upon the death of the owner, the custodian of the asset transfers it to the beneficiary(ies) designated in the agreement or contract.
5. Ownership by Trust: The asset is owned by a legal entity called a trust, in which the one who establishes the trust (the “trustmaker”) specifies that it be held and managed by a “trustee” under certain terms and conditions for the benefit of a person or group of people (the “beneficiary(ies)”. The trust instructions may specify how, when, and under what terms the property may be transferred out of the trust.
What Happens at the Incapacity of the Owner(s)?
1. Sole Ownership: The incapacity of the owner will require that an agent with a valid durable power of attorney or a court-appointed conservator manage the property.
2. Co-Ownership or Tenants in Common: The incapacity of any one of the co-owners will require that an agent with a valid durable power of attorney or a court-appointed conservator manage that person’s share of the property.
3. Joint Tenants with Right of Survivorship: The incapacity of any one of the co-owners will require that an agent with a valid durable power of attorney or a court-appointed conservator manage that person’s share of the property.
4. Ownership with Beneficiary Designation: The custodian may continue to manage the property, but a distribution by the custodian to the incapacitated beneficiary may require that an agent with a valid durable power of attorney or a court-appointed conservator manage the distribution on behalf of the beneficiary.
5. Ownership by Trust: The trust document will provide for successor trustees and contingent beneficiaries, so the incapacity of the trustmaker won’t matter much.
What Happens at the Death of the Owner(s)?
1. Sole Ownership: The property is transferred to a new owner according to the will of the decedent or the laws of intestacy. See rules of distribution “pecking order” below. “Death Probate (Estate Administration)” will probably be required.
2. Co-Ownership or Tenants in Common: The share of the decedent co-owner will be treated according to the rules of Sole Ownership stated in the previous sentence. “Death Probate (Estate Administration)” will probably be required. The new owner of the decedent’s share will become a partner with the surviving co-owners.
3. Joint Tenants with Right of Survivorship: The share of the decedent joint tenant will automatically pass in equal ownership to the surviving joint tenant(s). If there is only one surviving joint tenant, he/she becomes the Sole Owner, and the rules stated above will apply upon his/her death.
4. Ownership with Beneficiary Designation: The property is transferred by the custodian to the beneficiary(ies) designated in the agreement or contract. “Death Probate (Estate Administration)” will usually not be required.
5. Ownership by Trust: The trust document will provide for successor trustees and contingent beneficiaries, so the death of the trustmaker won’t matter much.
The Distribution at Death “Pecking Order”
When the owner of an asset dies, there is a priority of rules for determining who the new owner of that asset becomes.
2. Beneficiary Designation
4. Laws of Intestacy