Estate Planning Booklet

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You do not have to be rich to have an estate. Estate is the term used to describe all the assets held at your death. Regardless of how big or how small they think their estate is, Everyone should have a Will and at least a basic estate plan. Without an estate plan in place, your assets may not be disposed of in the way you would choose upon your death.


Probate is the court process that administers wills, and appoints guardians. It is supervised by a judge of the Probate Court, who will oversee the process to insure that your ultimate wishes are carried out. Like any other court proceeding there are expenses involved. There are filing fees, attorney's fees and other costs involved to administer an estate in the probate court. These costs will be paid by the estate. An estate must go through probate whether the person has a will or not, however there are other methods of passing property at your death to your beneficiaries which do not require court administered probate proceedings.

How can you dispose of property at your death?

There are a number of methods used to dispose of property at death, all of which have their advantages and disadvantages. Among the most common methods are:

1) Joint Property. Property can be titled in the joint names of two or more people, with rights of survivorship. Upon death, the asset passes to the survivor, without court order. There are risks involved in the use of joint property as an estate plan. It is most satisfactory between a husband and wife in a nontaxable estate, where the spouses intend the survivor to be the beneficiary. Generally, it is not advisable to use joint property as the core of your estate plan to pass property to others after you are gone. One disadvantage is the creation of the joint account could be considered an asset of the donee, subject to debts, judgments or other claims. Other disadvantages include the possibility the donee could redeem the asset during the donor's lifetime against their wishes or the chance that people may not die in the anticipated order, which could totally disrupt the anticipated passage of the property.

2) In Trust for Accounts. Banks often offer accounts which are titled "A in trust for B" or designate A pay on [email protected] beneficiary. These are also known as ITF or POD accounts and are also sometimes referred to as "TottenPlan Without Trusts." Upon A's death the account passes to B, but during A's lifetime, B has no claim against the account. Creditors of B cannot attach the account and B cannot withdraw from the account during A's lifetime. This avoids some of the disadvantages of joint accounts; however, these types of accounts still have the potential of people dying in the wrong order resulting in a disruption of the estate plan. Totten Trusts or ITF accounts are better used for relatively small amounts and not as a plan to dispose of the bulk of one's estate.

3) Life Insurance and Annuities. Life insurance and annuities are usually payable to a named beneficiary. This avoids probate and is commonly acceptable. In addition, some polices may allow alternate beneficiary designations to be made. The designation of a beneficiary for these types of assets offers much more flexibility in the ability to provide for contingencies than a joint or "in trust for" account, but are still not as flexible as what can be done in a will or trust. In some instances it may be preferable to make the life insurance policy payable to your estate or to a Living Trust@ as part of your overall estate plan, for example if liquid funds are needed to pay taxes or other liabilities.

4) Last Will and Testament. A will has no effect until death. There is no transfer during your lifetime and generally wills are fully amendable and revocable during your life. Wills can go into great detail in disposing of your assets and the cost of preparing a will is relatively modest. A disadvantage is that upon death, assets which pass under the will are subject to a probate administration, which is overseen by the probate court. There are costs for filing fees, bonds, attorney fees, and personal representative fees. However, all these costs are incurred after your death and the highly structured supervision of the court offers you a high assurance that the assets will be properly administered and distributed in accordance with your last wishes.

5) Living Trust. A living trust comes into existence during your lifetime. Assets are held in the name of the trustee of the trust, which can be the same as the person creating the trust. Like a will it is normally amendable, revocable, and can go into great detail in disposing of assets. Upon death, the named successor trustee takes over and is responsible for the administration and distribution, generally without court supervision. As a result the costs and fees are usually less than those involved in a probate estate administration. The disadvantage is the lack of formal supervision of the successor trustee, however there is a growing tendency for the legislature to enact laws which regulate trustees. The costs, incurred during your lifetime, of creating a trust is usually higher than preparing a will. Contrary to popular belief, a revocable trust is generally not more advantageous than a will, as far as income taxes or asset protection is concerned, but various forms of trusts can be used to minimize estate or death taxes. Trusts are beneficial for those wishing to minimize or avoid the costs of probate, for larger estates to minimize or avoid estate death taxes, and for retired, elderly, ill, or terminal persons because of the ability of the successor trustee to manage assets in the event of incapacity.


The basic estate plan for anyone should include at least a will, living will and durable power of attorney. These documents and their effect are described in detail in this booklet. In some cases a trust may also be beneficial to help you meet your objectives. Trusts are also described in this booklet.

We hope this information will assist you and answer your questions in a frank and understandable manner. It is estimated that over 80% of Americans do not have wills. By requesting this information you have taken the first step toward peace of mind and providing for those you care for after you are gone. As you read through this booklet jot down any questions you may have. We would be happy to answer your questions and assist you in formulating an estate plan to meet your needs and objectives.


A Will is the most basic and most important element in any estate plan. It is a key instrument for the transfer of property at death as it expresses your written instructions that describe how your estate will be disposed of or distributed between family and friends when you die. Not only does it ensure that your assets go to the recipients of your choice, it also specifies how and when your beneficiaries are to receive them.

A Will takes care of all the little things that are important to you and reminds loved ones that you cared enough about them to remember them after you are gone. Most importantly, it ensures those who depend on you the most - your spouse, children, or anyone else who may rely on you financially or otherwise, receive your assets in the manner you determine to be appropriate. Without a Will, your estate will be distributed in accordance with state law, which will determine who gets what without regard to your wishes or your survivors' needs. State law may require distribution of your property in an undesirable manner and result in added expense to your estate.

A Will is the starting point of any estate plan. If properly prepared and executed, the Will's instructions become valid and enforceable at your death to direct the distribution of your assets.


With a Will and Estate Plan

1. Your assets are distributed according to

your instructions.

2. You name a Personal Representative,

Trustee, etc., you know and trust to carry

out your instructions and manage your


3. Taxes and administrative expenses can be

kept to a minimum.

4. You can name the person you wish to be a

guardian for your minor children.

5. Your Will can provide for the orderly

continuation or sale of a family business.

Without any Estate Plan

1. State law determines who gets your assets,

possibly leading to an undesirable result.

2. The Court will appoint an administrator that

you may not desire or whose ideas and

values may not be compatible with your own.

3. After-death expenses may be greater due to

unnecessary taxes and the expenses of

locating missing or unknown heirs.

4. The Court, at its discretion, will appoint the

guardian of your minor children.

5. Family business may not continue as you

desire, causing financial loss or a forced





The first step in creating an estate plan is to decide who will inherit what assets and when they should receive them. Common questions to ask are: How should you provide for your surviving spouse and children? Do you wish to provide for grandchildren or others? Do any beneficiaries have special needs? Do you wish to make any gifts to charities?


You should first determine if there is anyone you wish to leave a specific item or amount of money to. These are called specific bequests, such as all my Coca Cola stock to my friend, John [email protected] or A$1,000 to my sister, Jane [email protected] In Florida items of tangible personal property can be left by a separate written Memorandum for the Disposition of Tangible Personal Property@. This is a separate written document, which is referenced in the will and does not otherwise require the legal formalities of a will to be effective. In this memorandum you can leave specific items of your tangible personal property to people to whom those items may have the most meaning, ie: your fishing poles to the friend you always went fishing with or your wedding china to your daughter who always admired it, and so on. This is only good for tangible personal property, things you can see and touch, not bequests of cash, real estate, or intangibles, such as stocks or bonds. Those types of assets must be left by specific bequests or as part of the residue in your will. The advantage of the memorandum is that you do not have to think of everyone you want remembered with an item of your personal property when you draw your will. You will be able to add those people at a later time and make changes any time you wish without having the costs of visiting the lawyer's office every time you want to leave someone an item of tangible personal property to remember you by.


After you have determined any specific bequest you wish to make, you must determine who gets what is left. This remainder is called the residue of your estate and your residuary bequest will encompass everything which was not specifically left to anyone else in the will. Usually the bulk of the estate is left to the residuary beneficiaries, but it should be noted that care should be taken in making any specific bequests, as they will generally be made first and if your specific bequests exceed the value of your estate on death your residuary beneficiaries could end up with nothing. You can leave the residue of your estate to as many individuals or entities as you desire by splitting it into shares or percentages, for example, 50% to your spouse and 50% to your children or 1/3 to your son, 1/3 to your daughter, and 1/3 to charity.


If you have minor children, you should take the opportunity in your will to make special provisions for their care until they become adults. You may name a guardian in your will. Your choosing of a guardian will give you a say in who raises your children, should you die prior to their reaching adulthood. You may leave your estate to your minor children, but you may not want them to have access to the money until they are grown. In your will you may create a support trust for your minor children. The assets from your estate would be put in a trust until they reach a certain age, at which time it would be turned over to them. Often parents do not want children to have unrestricted access to an inheritance until they reach a certain age. Depending on the circumstances and the amount of money involved, you may chose an age of 18, 21, 25 or even 30 or older before turning the trust assets over to them. In the meantime, you can name a trustee in your will, who will oversee the trust and have discretion to make distributions for your children's living, education and other expenses, according to your instructions.


You may express your funeral and burial plans in your will, however, this is not required. Many people will express a desire, such as being cremated or directing burial in a family plot in the will. If you have not made those decisions yet, you can leave that open and let your family know your wishes at a future date. If you have made pre-arrangements with a funeral home, cemetery or religious organization, you may wish to make reference to such plans in your will.


The next step in preparing a Will is naming your Personal Representative. A Personal Representative or Executor is the person who, after your death, will administer your estate, retain the attorney for your estate and file required papers with the probate court, manage your assets, file the tax returns and ultimately distribute the assets to your named beneficiaries. You should take care in selecting a Personal Representative. It is a job that imposes a great deal of responsibility.

In deciding upon your Personal Representative, you should make sure that the one selected is willing, able and competent to serve, is trustworthy, does not have any conflicts of interest, has not been convicted of a felony and is over the age of 18. Many individuals can serve as the Personal Representative, such as your spouse or other beneficiary of the Will, a non-beneficiary friend or family member, the family attorney or accountant, or a corporate fiduciary such as a bank or trust company. There are limitations on the ability to appoint a non-relative, who is not a resident of Florida.

The five basic responsibilities of the Personal Representative are:

1. Filing the proper documents with the

probate court and working with the

attorney in the administration of your


2. Locating, securing and valuing assets.

3. Identifying, notifying, and paying


4. Settling taxes and filing returns.

5. Distributing the assets in accordance

with your Will.

If possible you should pick someone who is a resident of Florida and lives locally, as one of the duties of the Personal Representative is to physically gather the assets. Personal Representatives are entitled to reasonable compensation for the services they provide, therefore you may wish to name the primary beneficiary of the Will for your first choice as Personal Representative, so those costs will enure to their benefit. This can be your spouse or adult children.

You should name at least one alternate Personal Representative, in case your first choice is unable or unwilling to serve as it does involve a large responsibility and time commitment. It also may be desirable to name a professional or corporate fiduciary, such as a bank or trust company as another alternate if there is no one else available or willing to serve as your personal representative, keeping in mind those professionals will be entitled to a reasonable fee for the additional responsibility and services they would be providing. By naming a professional or corporate fiduciary as a final alternate you can have a high degree of assurance that there will be someone of your choice available and willing to serve as your Personal Representative if your other choices are not able to take on the job.


Currently, as of 2006, estate taxes for U.S. citizens and resident aliens apply only to estates valued in excess of $2,000,00,000. Under current legislation this amount will continue to increase and the top rates will be reduced though 2009. In 2010 the estate tax will be eliminated for one year. Because the current estate tax legislation reforms are scheduled to expire in 2011 the estate tax will be reinstated in that year for estates over $1,000,000.00 and the top estate tax rate will revert back to 55%. As such there is currently a large degree of uncertainty as to what the long term status of the estate tax laws will be. It will be up to Congress to resolve this with more permanent and certain legislation regarding the estate taxes.

Currently estates receive a unified credit against the tax which would otherwise be owed on this exclusion amount. For non-resident aliens and non-U.S. citizens, this amount may be significantly reduced and special planning considerations should be taken. To figure the value of your estate, include all your assets and, if married, include 2 of property held jointly with your spouse, at their fair market value, (what they are worth today). You should, of course, include cash, certificates of deposit, stocks, bonds, your personal residence, automobiles, boats, jewelry, and furnishings. Many people forget to include joint assets, In Trust For (ITF) assets, retirement benefits, insurance proceeds and annuities, which are also includable in their taxable estate, as well as anything else of any value owned by you or in which you have an interest at your death. Generally, if this amount is less than $2,000,000 for U.S. citizens and you have not made reportable gifts during your lifetime, you would not currently owe any estate taxes if you died in 2006.

Even though there are currently no federal estate taxes due on estates less than $2,000,000.00 you should become familiar with the estate taxes laws if your estate is approaching $1,000,000.00. Estate taxes currently can go as high as 46% of the taxable estate. While periodic review of your assets and estate plan is always desirable, particularly for anyone approaching the taxable estate limits, it is even more important in the current legislative environment in regards to the U.S. estate tax.

If you think you may have a taxable estate, please read I.R.S. publication 950, Introduction to Estate and Gift Taxes, which is available directly from the I.R.S. or call us for a copy. There are methods to reduce such taxes which are beyond the scope of this booklet. If your estate is over $1,500,000 we suggest an individual conference with one of our attorneys to determine the estate plan best suited for your needs.

Recent Legislation provides for an increase in the exclusion amount and a reduction in the rates for estate and gift taxes, with a one year elimination as follows:

Decedents dying and gifts made during:

Applicable exclusion amount:

Top Estate Tax Rate


























estate tax repealed






Gifts you make during your lifetime may be counted against the unified credit amount available to your estate after you pass on, thereby reducing the exclusion amount you can pass tax free in your estate. Currently you may gift up to $12,000, per person, ($24,000 for a married couple), per year as a gift, free of any gift tax consequences or reporting requirements and without reducing the amount of your unified credit. This is called the Annual Gift Tax Exclusion and with a proper plan, is a valuable way to reduce the size of large estates over several years with no tax consequences, provided of course you can afford to make the gifts. Under the current law the lifetime gift exclusion for amounts over the annual exclusion is $1,000,000.00, which means lifetime gifts over this amount may be subject to gift tax.



The Living Will is a document that expresses your wishes concerning the type of medical care you wish to have or to have withheld. Many people use the Living Will as a vehicle to express their desire not to be kept alive by machines or other unnatural medical procedures when there is no "reasonable medical probability of recovery." With the costs of medical treatment today such heroics can deplete an estate in a matter of days, making it financially and emotionally devastating to the family. The Living Will can express your desire to avoid such actions. Since you are making that decision beforehand, you spare your family the necessity and pain of making that decision for you.

In your Living Will you can name a Health Care Surrogate who will make medical decisions for you should you be unable to do so. The Health Care Surrogate should be someone close to you, who knows your desires concerning medical treatment and care. You should discuss your views on treatments with them so that they understand what you would want done should they be faced with making medical decisions for you. Most people name their spouse, parent, or adult children as their Health Care Surrogate.

You should take care to appoint someone who will carry out your wishes without regard to their own emotions. For example, if you do not desire life-prolonging procedures as discussed above and you know emotionally your spouse could not direct the doctor to withhold such treatment, you should consider someone else who will carry out your wishes. It should be remembered you are the one making the decision and the Health Care Surrogate is only carrying out your wishes when you cannot.


A designated health care surrogate can be named to make other elective health care decisions for you when you are unable and can also be authorized to discuss your medical care and treatment with your medical care providers.


The Durable Power of Attorney is a document that allows another person to do anything for you in your name that you could do for yourself. The Durable Power of Attorney becomes effective when delivered. This document is used during your lifetime to allow someone else to make decisions for you should you be unable to. The Power is terminated upon your death and your named Personal Representative will take over responsibility for wrapping up your affairs. The Durable Power of Attorney generally includes the power to buy and sell assets, sign checks, open and close bank accounts, borrow and collect money owed to you, sue on your behalf, buy, sell, mortgage, and lease real property, have access to safe deposit boxes and remove contents, manage business interests, buy and sell securities and make other investment decisions.

As you can see this is a broad power and there is great potential for abuse if given to an unethical person. You should only give a Durable Power of Attorney to someone in whom you have great trust. With that said, it can have great advantages should you become incapacitated. Without a Durable Power of Attorney, if you are incapacitated and unable to handle your affairs due to an accident or sickness, your family would need to have the court appoint a guardian to handle your affairs.

Just like dying without a will, the person appointed by the court as guardian may not be the person you would chose for this position. However, in this case you are still alive. This proceeding will also require hiring an attorney and incurring continuing costs, as the guardian will be required to submit periodic accountings to the court for review and conform to other administrative and court requirements. With a Durable Power of Attorney you can name the person to handle your affairs should you be unable to do so.


A living trust can hold title to assets in the name of the designated trustee, for the uses and terms you determine in the trust document. The trustee is generally responsible and has a duty to manage and distribute the assets in accordance with the provisions of the trust document. The typical living trust is amendable and revocable. Oftentimes the grantor, who creates the trust is the initial trustee. The trust may provide for a successor trustee and for disposition of the assets after the grantor's demise, much like a will.

Assets which are transferred and titled in the name of the trustee are not estate assets and are not subject to probate administration. As a result, the fees and costs involved in the passage of assets after death are usually less than would be involved in an estate administration. However, the costs of creating a trust are generally higher than the creation of a will.

Trusts are generally income tax neutral and there is no significant income tax saving advantages in a standard revocable trust. Assets held in trust are also includable in the gross estate when figuring estate taxes. Trusts can be used to minimize estate taxes on death, for estates in excess of the estate tax exclusion amount, (see page six for a schedule and discussion of currently pending changes involving the estate tax). A typical scenario may involve the splitting of joint assets, between spouses to trusts established in each spouse's name, so each gets the full benefit of their individual estate tax exclusion. The trust would become irrevocable upon death but could pay income to the surviving spouse for life as well as principal for certain needs such as medical expenses or to maintain their standard of living. When the surviving spouse dies, the couple would be able to pass up double the amount of the single exclusion, (currently 3,000,000 for 2004), free of estate taxes to their children. Trusts can also be used to hold life insurance outside of your taxable estate for the purposes of paying anticipated estate taxes or to leave property to charity, while retaining the income or benefit of the property during your lifetime. If you have a taxable estate and are interested in such estate planning vehicles to minimize death taxes we would be happy to discuss your options in a personal consultation.

For older persons, one advantage of a trust is that it can provide for a successor trustee to manage assets and pay expenses if the grantor becomes incapacitated. The flexibility afforded a trustee can be greater and involve less problems than the durable power of attorney.

Since the trustee's actions are not court supervised, the potential for abuse of trust powers or improper conduct is greater than in a will, where the personal representative's actions are supervised by the court. It is imperative that any trustee selected be of the highest character. You should take great care in selecting your trustee and use the same precautions and criteria used to choose the personal representative of your will.

A trust can avoid probate administration, if all assets are transferred to the trust. This means changing the title to bank accounts, stocks, real estate, and etcetera. Some assets, such as automobiles and one's homestead, may be held outside the trust without undue complication, depending on the circumstances.

A trust is not for everyone. Sometimes the nature of assets does not lend themselves to trust ownership, such as an on-going partnership business. Younger people whose life expectancy is substantial may not be as concerned with minimizing probate costs or management of assets in case of incapacity. Those with very modest estates may well prefer a will instead of a trust, since the costs of preparation of a will is generally less than for a trust. Even if one selects to proceed with a trust, a will is still essential to assure that a complete testamentary plan is in place. It seldom happens that all assets are titled in the name of the trust and a will is needed to cover those assets. A APour-Over Will@ can be used to leave anything not placed in the trust during your lifetime to the trustee of your trust to be distributed in accordance with the terms of your trust.


Estate planning is not a one-time process. Your estate plan should be periodically reviewed to determine that it meets your current needs and wishes. Changes to your Will can be done by an amendment called a Codicil or by drawing a new Will all together. Such changes cannot be done informally by writing or crossing out words on your old will. They must be drawn with the same formalities of the original Will.


* FAMILY CHANGES. Marriage, divorce, death, adoption and birth of children and grandchildren, health issues and aging are all life events that give rise to the possible need for changes in your estate plan.

* CHANGE IN FINANCIAL, MEDICAL OR FAMILY STATUS. The plan you made when your net worth and income were lower may not be what you want today. You may need a new plan for tax reasons or even if your estate is still not taxable, you may wish to divide it up differently as your net worth increases. Changes in the financial, medical, or family status of your beneficiaries, guardians, or your named personal representatives or trustees may give rise to change your will or estate plan.

* MOVING TO A NEW STATE. Different states have different laws, and Will or estate plan drawn in your old state may have different legal ramifications in your new state. When you establish residency in a new state you should always have your old will reviewed by an attorney licensed in that state and a new will drafted if necessary.

* CHANGE IN THE TAX LAWS. Any time there is a change in the estate tax laws, you should review your estate plan to determine their effect on your circumstances.


If you do not have an estate plan in place or you need to update your current estate plan, we hope you take this opportunity to allow us to assist you in this regard. The law firm of FISHER AND WILSEY, P.A. has been assisting clients in the areas of Wills, Trusts, Estates, Taxation, Real Estate, Commercial transactions, and Litigation for over forty years. We would be happy to meet you for a consultation to review your personal situation. The right to make a will and plan your estate is a right you should exercise, both for your own peace of mind and for those you care for.