The Key Differences Between Wills and Trusts

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Many people, when they think about estate planning, focus on a will. But wills aren’t the only option, and there’s a lot more to an estate plan than just a will.

Luckily, if you use other tools, such as trusts, you can help keep our loved ones out of court. How do you know whether a will or trust is best for your personal circumstances? The best way is to meet with an attorney for a planning session, to review your goals and needs. From there, you can make the right choice for the people you love.

In the meantime, here are some key differences between wills and trusts:

When they take effect

A will only goes into effect when you die, but a revocable living trust takes effect as soon as it’s signed and your assets are transferred into the name of the trust. A will directs who will receive your property at your death, and a trust specifies how your property will be distributed before your death, at your death, or at a specified time after death. This is what keeps your family out of court if you become incapacitated or die.

Because a will only goes into effect when you die, it doesn’t protect you if you become incapacitated and are no longer able to make decisions about your financial and healthcare needs. If you do become incapacitated, your family will have to petition the court to appoint a conservator or guardian to handle your affairs, which can be expensive, time consuming, and stressful.

However, with a trust, you can appoint someone to manage your medical and financial decisions for you. This helps to keep your family out of court, which is a huge deal during emergencies when decisions have to be made quickly.

What property they cover

A will covers any property solely owned in your name. A will does not cover property co-owned by you with others listed as joint tenants, nor does your will cover assets that pass directly to a beneficiary by contract, such as life insurance.

A trust can cover property that has been transferred, or “funded,” to the trust or where the trust is the named beneficiary of an account or policy. So if an asset hasn’t been properly funded to the trust, it won’t be covered, so it’s critical to work with an attorney who can help you properly fund your trust.

Unfortunately, many lawyers set up trusts, but don’t make sure that assets are properly re-titled or beneficiary designated, and the trust doesn’t work when your family needs it.

Administration

In order for assets in a will to be transferred to a beneficiary, the will must pass through the court process called probate. The court oversees the will’s administration in probate, ensuring your property is distributed according to your wishes, with automatic supervision to handle any disputes.

Because probate is a public proceeding, your will becomes part of the public record upon your death, allowing everyone to see the contents of your estate, who your beneficiaries are, and what they’ll receive.

But trusts don’t have as much court involvement, which saves time and money. And because your trust doesn’t get recorded with the court, its contents stay private.

Cost

Wills and trusts do differ in cost—not only when they’re created, but also when they’re used. Generally, will-based plans are a lot cheaper than trust-based plans. For example, depending on the options you choose, you might spend an average of $1,500 for a will-based plan. With a trust-based plan, depending on the options you choose, you could spend about $4,000 to set it up. But wills have to go through probate, where attorney’s fees and court costs can add up, especially if the will is contested. That can cost a lot more than setting up a trust in the first place. In addition to the financial costs, think of how much time it is spent in administering a will through the probate process.

The probate process in Florida is not a fast process. Your loved ones could have to wait for months before getting permission to access certain accounts, receive their inheritance or get Court permission to sell property. With a properly funded trust, you can save a lot of time.

When you meet with attorney Myrna Serrano Setty, she’ll carefully analyze your assets and help you design an estate plan that offers maximum protection for your family’s particular situation and budget.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she helps her clients make informed and empowered decisions about life and death, for themselves and their loved ones. Contact her firm at (813) 514-2946 to get started.

Estate Planning Mistakes Seniors (Including You or Your Parents) Can’t Afford to Make

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It’s no secret that many of us put off estate planning. But once you or your parents reach senior status, you really can’t afford to put it off any longer. Unfortunately, without proper planning, seniors can lose everything, even if they have family to look after them. Having a will isn’t enough.

More and more, the media is highlighting stories of seniors being taken advantage of, and even being targeted by unscrupulous professional guardians. The New Yorker  recently published an article about many seniors in Nevada that were targeted by professional guardians, had their rights and property stripped away, and were isolated from their own families.

While planning for your incapacity and death can be scary, it’s even scarier to think of all the horrible things that can happen to your family if don’t have the right planning in place.

Here are a some of the most common mistakes that seniors make:

Mistake #1: Not creating advance medical directives

In your senior years, health care matters become much more relevant and urgent. At this age, you can no longer afford to put off important decisions related to your medical needs. How do you want your medical care handled if you become incapacitated and can’t communicate your wishes? And at the end of life, how do you want your medical care handled? You can address both of these situations with a Designation of Health Care Surrogate and a Living Will.

With the Designation of Health Care Surrogate, you appoint a health care decisionmaker that can step in for you when you can’t make your own health care decisions. With the Living Will, you provide guidelines for what medical care you want or don’t want at the end of your life. You can even include other instructions, such as who can visit you.

Mistake #2: Relying only on a will

Many people mistakenly believe that a will is the only estate planning tool they need. While wills are definitely one key aspect of estate planning, they come with some serious limitations:

● Wills require your family to go through probate, which is open to the public, can be time consuming and expensive.
● Wills don’t offer you any protection if you become incapacitated and unable to make legal and financial decisions.
● Wills don’t cover jointly owned assets or those with beneficiary designations, such as life insurance policies.
● Wills don’t shield assets from your creditors or those of your heirs.
● Wills don’t provide protections or guidance for when and how your heirs take control of their inheritance.

Mistake #3: Not keeping your plan current

Far too often people prepare a will or trust when they’re young, put it into a drawer, and forget about it. But your estate plan is worthless if you don’t regularly update it when your assets, family situation, and/or the laws change.

We recommend you review your plan at least every three years to make sure it’s up to date and immediately amend it following events like divorce, deaths, births, and inheritances. And if you have a trust in place, you need to make sure that you’re using it properly. Many people who have trusts aren’t using them effectively, leaving their property vulnerable to probate or mismanagement.

Mistake #4: Not pre-planning funeral arrangements

Although most people don’t want to think about their own funerals, pre-planning these services is a key facet of estate planning, especially for seniors. By taking care of your funeral arrangements ahead of time, you not only eliminate the burden and expense for your family, you’re able to make your memorial ceremony more meaningful, as well.

In addition to basic wishes, such as whether you prefer to be buried or cremated, you can choose what kind of memorial service you want—simple, elaborate, or maybe none at all. Are there songs you want played? Prayers or poems recited? Do you have a specific burial plot or a spot where you want your ashes scattered?

Pre-planning these things can help relieve significant stress and sadness for your family, while also ensuring your memory is honored exactly how you want. It’s important that you take care of your estate planning immediately and avoid these common mistakes. Our firm can walk you step-by-step through the process, ensuring that you have everything in place to protect yourself, your assets, and your family.

This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she helps her clients make informed and empowered decisions about life and death, for themselves and the people they love. Contact Myrna today at (813) 514-2946.

Before Your Kids Leave For College, Make Sure They Sign These Documents

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With high school graduation coming up, many parents will soon watch their children become adults (at least in the eyes of the law) and leave home to pursue their education and career goals.

Turning 18, graduating high school, and moving out is a huge accomplishment. It also comes with some serious responsibilities that probably aren’t at the forefront of their (or your) mind right now. Once your children become legal adults, many areas that were once under your control are now solely up to them.

Here’s the big one: Before they turned 18, you had access to their financial accounts and had the power to make all of their healthcare decisions. But after they turn 18, you’re no longer able to do either.

Before your kids head out into the world, you should discuss and have them sign the following estate planning documents, so if they become incapacitated for any reason, you can easily access their medical records and financial accounts without having to go to court. Signing these documents will ensure that if they ever do need your help and guidance, you’ll have the legal authority to easily provide it.

Designation of Health Care Surrogate

The Designation of Health Care Surrogate allows your child to name an agent (like you), who has the power to make healthcare decisions for them if they’re incapacitated and can’t make such decisions for themselves. For example, this authority allows you to make medical decisions if your child is knocked unconscious in a car accident or falls into a coma due to an illness.

That said, while medical power of attorney would give you authority to view your child’s medical records and make treatment decisions, that authority only goes into effect if the child becomes incapacitated. This means that unless your child is incapacitated, you do not have the authority to view their medical records, which are considered private under HIPAA.

HIPPA Authorization

Passed in 1996, the “Health Insurance Portability and Accountability Act,” or HIPPA, requires health care providers and insurance companies to protect the privacy of a patient’s health records. Once your child turns 18, nobody – not even parents are legally authorized to access his or her medical records without prior written permission.

But this is easily remedied by having your child sign a HIPPA authorization that grants you the authority to access his or her medical records. This can be critical if you ever need to make informed decisions about your child’s medical care.

Living Will

A living will provides specific guidelines for how medical care should be handled at the end of life. Your child may have certain wishes for their end-of-life care, so it’s important you discuss and document these decisions.

Durable Power of Attorney

If your child becomes incapacitated, you’ll also need a durable power of attorney to access his or her financial accounts. If you do not have a signed, financial durable power of attorney, you’ll have to go to court to get access. That costs times and a lot more money than you would have spent if you put plans in place ahead of time.

The durable power of attorney will give you the authority to manage their financial and legal matters, such as paying bills, applying for Social Security benefits, and/or managing banking and other financial accounts.

If your child is getting ready to leave the nest to attend college or pursue some other life goal, you can trust us our firm to help your child articulate and legally protect their healthcare and end-of-life wishes. With us in your corner, you’ll have peace of mind that your child will be well taken care of in the event of an unforeseen accident or illness.

This article is a service of your family’s personal estate planning lawyer, Myrna Serrano Setty. Our firm don’t just draft documents, we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life and Legacy Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office at (813) 514-2946 to get started.

Talking to Your Kids About Money

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Whether or not you think you’re wealthy, you need to talk to your kids about money. It doesn’t matter how hold your kids are.

The Wall Street Journal article “The Best Way for Wealthy Parents to Talk to Kids About Family Money” offers guidelines for how and when “the money talk” should take place. Based on interviews with multiple financial experts, the article suggests these discussions should happen in three stages during the child’s lifetime.

This is how each of these three stages apply to your family wealth as a whole, regardless of how much—or how little—money you have at the moment:

Tweens and teens

The tween years (ages 10-12) are a good time to start talking with your kids about your family wealth. At this age, the discussion should be aimed at letting your kids know that family wealth is not just the amount of money that your family has, but involves all of the family resources.

Time, energy, attention, and money (TEAM) are the resources that make up your family wealth. With this in mind, use one day over a coming weekend to create a Family Wealth Inventory with your tween or teen kids. Inventory all of the family’s TEAM resources, along with other intangibles, such as values, insights, as well as stories and experiences you want considered as part of the Family Wealth bank.

This is an ideal time to tell them the family story, talking about how you and their other relatives worked your way to the family wealth you have now, how decisions have been made from one generation to the next regarding family wealth, and how you hope decisions will be made in the future.

Around ages 10 to 12, you can also start talking to your kids about the fact that one day you won’t be here, your intentions surrounding what you plan to pass on to them (beyond just money) and how you plan to pass it on, as well as what they choose to do with the inheritance they’re receiving.

Again, the inheritance they’re receiving is not just the money you’re leaving—it also involves your family genetics, values, ancestry, connections, knowledge, and much more.

In their 20s

If you haven’t yet begun talking to your kids about your family wealth, you should start now. And if you’ve already begun the conversations, make sure to continue talking to them during this important stage of their life. Once they’ve moved out of the home, they need to begin thinking about their own family wealth, including setting up their own legal documents, so if something happens to them, you won’t get stuck in court or conflict. They also need to know whether you plan to offer them financial assistance during their lifetime, along with what the parameters of this assistance are and why you’ve set things up this way.

This is also a great time to start discussing your own retirement plans and whether or not you’ll need any financial support from them later on in their life.

If you haven’t already shared your estate plan with your kids—including where to find it, why you’ve made the decisions you’ve made. This is also a great time to introduce them to your family’s estate planning lawyer.

In their 30s and 40s

By their 30s, your kids should be ready to be fully involved in your family wealth. This would be the perfect time to have a family meeting facilitated by us, if you haven’t done so already.

You can kick-start the talk by reading from a letter you’ve written that outlines the hopes you have for your family wealth, both now and in the future. Since you’ll likely in retirement or close to retirement, it’s important that you discuss the actual value of the family’s wealth and detail your wishes about passing it on. At this age, you never know how much time you have left to prepare your kids to effectively manage the money you’ve spent your entire life accumulating.

By now, you definitely want your kids to know if they should plan to provide financial support for you. At the same time, you may want to start looking at how you can pass on what you do have during your lifetime, instead of waiting until death, so you can invest in creating more family wealth with your kids together.

As your family’s personal estate planning lawyer,  we can help facilitate these discussions provide estate planning strategies to help your kids become creators of more family wealth, instead of people who you might be afraid will squander what you’ve created. Indeed, we can help you set up structures that incentivize them to invest and grow their inheritance, rather than waste it. Contact us today to learn more.

Our firm doesn’t just draft documents. We ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life and Legacy Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today! (813) 514-2946