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ESTATE PLANNING

Offering insights on estate planning, tax matters, and legal documents like Power of Attorney and Living Will by John J. Lancaster from Clark, Campbell, Lancaster & Munson, P.A.

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ESTATE PLANNING

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  1. ESTATE PLANNING BY: John J. Lancaster LL.M. Clark, Campbell, Lancaster & Munson, P.A. 500 South Florida Avenue, Suite 800 Lakeland, FL 33801 Telephone (863) 647-5337

  2. JOHN J. LANCASTER, LL.M. John Lancaster is a shareholder with Clark, Campbell, Lancaster & Munson, P.A., where he practices law in the areas of tax controversy, income, estate and gift tax planning, and entity formation. Prior to joining Clark, Campbell, Lancaster & Munson, John worked as a senior attorney for District Counsel, Internal Revenue Service (IRS) and as a Special Assistant United States Attorney.  While working for the IRS, John represented the IRS before the U.S. Tax Court and Bankruptcy Court. He also provided legal advice to IRS revenue agents and officers in their examination and collection of income, estate and gift taxes.  John graduated cum laude from Thomas M. Cooley Law School and received his bachelor’s degree and master of laws degree in taxation from the University of Florida. He is admitted to practice law in Tennessee and Florida. He is also Board Certified by the Florida Bar in Tax, and has contributed to four chapters in the Florida Small Business Practice, Sixth Edition, book for the Florida Bar.

  3. During Life Documents Durable Power of Attorney Health Care Surrogate HIPAA Release Living Will Do Not Resuscitate Order

  4. Durable Power of Attorney • Purpose: To provide a person (commonly referred to as the “attorney-in-fact” or “agent”) authority over financial decisions and over property • Effective: Upon execution (Immediately). Must have contractual capacity to execute. • Powers: Broad powers over bank and financial accounts, creation of trusts, lawsuits, real property, business transactions, tax matters, gifts, etc. • Can you limit the Powers: Yes • Who to name as attorney-in-fact: Someone trustworthy • How terminated: In writing, destruction, notice of termination, revocation • Benefits: Helps eliminate the need for a guardianship over the property and disputes among family members on who makes the final financial decisions.

  5. Health Care Surrogate • Purpose: To provide a person authority to make health care decisions on behalf of an individual • Effective: Upon execution or the individual is unable to make decisions. Must have contractual capacity to execute. • Powers: Broad powers to make health care decisions • What if I’m competent: Then the competent person will continue to make the health care decisions, unless the individual states otherwise • Who to name as the Surrogate: Someone trustworthy and has the ability to handle making such decisions (especially in a stressful situation) • Benefit: Helps eliminate the need for a guardianship over the person and disputes among family members on who makes the final decision.

  6. Example 23 year old child is in a severe ATV accident, but lives and lacks capacity. Who makes financial and medical decisions for him? A guardianship may need to be established. A guardianship could be avoided if the 23 year old child had executed a Durable Power of Attorney and Health Care Surrogate.

  7. HIPAA Release • Purpose: To provide a person authority to obtain medical information on behalf of an individual • Effective: Upon execution or limited upon capacity or competency • Powers: Broad powers to obtain medically necessary information on behalf of an individual • What if I’m competent: Then competent person will continue to get medical information • Who to name: Typically the Health Care Surrogate • Benefit: Same as Health Care Surrogate. Helps keep your medical information private

  8. Living Will • Purpose: An individual’s directive regarding their end-of-life medical care in case they become unable to communicate their wishes • Effective: Upon individual’s inability to communicate their wishes. Typically, if an individual has one of the following as determined by 2 treating physicians: 1. A terminal condition; 2. An end-stage condition; or 3. A persistent vegetative state, then life-prolonging procedures can be withheld or withdrawn when such procedures will serve only to prolong artificially the process of dying. • Directives: Request no feeding tubes or feeding tubes. Can add additional instructions. • Benefits: Sets forth the individual’s desires on end-of-life medical care. Eliminates the stress on others to make this decision and the potential for disputes among family members

  9. DO NOT RESUSCITATE ORDER • Purpose: An individual’s wish not to be resuscitated in the event of respiratory or cardiac arrest. • Effective: When individual cannot make decisions • Form: Executed in the presence of a physician on a Yellow Form. Available on Florida Department of Health website.

  10. After Death Assets Passing Outside of Probate Last Will and Testament Revocable Trusts (During Life and After Death)

  11. Assets Passing Outside of Probate • Life Insurance: You name the primary beneficiaries and then the contingent beneficiaries. • Annuities: You name the primary beneficiaries and then the contingent beneficiaries. • Retirement Accounts: You name the primary beneficiaries and then the contingent beneficiaries. • Transfer on Death (“TOD”) or Payable on Death (“POD”): You name the beneficiaries • Tenancy by the Entirety: Ownership of property and accounts by husband and wife • Joint ownership with rights of survivorship: Upon death of either joint owner, the survivor receives complete ownership

  12. ASSETS PASSING OUTSIDE OF PROBATE (CONT.) • With respect to assets passing outside of probate, review carefully your beneficiary forms to make sure that if a beneficiary predeceases you and you do not change or update the form, that your intended successor beneficiary will receive the assets. For example, husband’s life insurance policy names his wife as the primary beneficiary and your 3 children as contingent beneficiaries to receive equally the insurance proceed (1/3 each). Wife predeceases husband, and one of husband’s children, who has surviving children (husband’s grandchildren), predeceases husband. It was husband’s intent that if this occurred, husband wished that his deceased child’s 1/3 interest in the proceeds be distributed to deceased child’s children (your grandchildren) in equal shares. Unless the insurance contract provides for this, then the proceeds may go to 2 other living children or be subject to the deceased child’s last will and testament (his estate).

  13. LAST WILL AND TESTAMENT • Purpose: A legal document by which an individual identifies individuals (and/or charities) that are to receive a deceased person’s property and possessions upon death. These individual’s and charities are named beneficiaries. • Operates as a road map for the distribution of the assets • Identifies the person(s) you wish to be in charge of distributing your assets upon death, commonly referred to as the Personal Representative or Executor of the Will • You can make specific gifts to individuals and charities (for example, a watch to a child or stock to a charity) • You can set forth your burial intentions • If you have minor children, you can name guardians for your children.

  14. LAST WILL AND TESTAMENT (CONT.) • You can establish trusts in the Will (commonly referred to as “Testamentary Trusts”): • A minor’s trust: For example, distribute income and principal over time for the child’s benefit for their health, maintenance, support, and education. (Distribute the principal of the trust as follows: 1/3 at age 25; ½ at age 30; and remainder at age 35). You have flexibility in when and how the trust proceeds are distributed following your death. Without a trust, a guardian may need to be appointed to receive the assets for the minor, and at age 18, the minor will receive the assets outright. • A special needs trust: If you have a beneficiary who is or may become dependent on governmental benefits, such beneficiary may not qualify or lose the benefits because of the beneficiary’s available assets. Instead of leaving the assets outright to the beneficiary, you may distribute the assets into a special needs trust (“SNT”) that is set up for the benefit of the beneficiary, but the SNT does not disqualify the beneficiary from governmental benefits. • An estate tax savings trust: The current estate tax exemption is $11.4 million. If your estate exceeds $11.4 million, you can establish certain trust to help avoid or reduce the estate tax.

  15. LAST WILL AND TESTAMENT (CONT.) • Probate: Assets passing under a Will will typically subject to probate. Probate is the legal/court process through which your assets are distributed to the beneficiaries after creditors have been satisfied. • Filing of the Will: During your life, the Will does not need to be deposited with the court. Upon death, your Will is deposited with the local court

  16. REVOCABLE TRUST • (sometimes referred to as “living trust” or “inter vivos trust”) • Purpose: You use a revocable trust to help avoid the costs and hassles of probate, provide some privacy and ease of transition of assets. The trust helps provide continued management and preservation of your assets. • You name the Trustee(s) to manage the trust assets. You can also name successor Trustee(s) should a trustee be unwilling or unable to serve as trustee. Typically, you name yourself as Trustee, and then successor trustee(s) in the event of your incapacity, incompetency or death. • In the event of your incapacity or incompetency, the Trustee can manage the trust assets for your benefit. • Upon death, the assets held or received by the trust, after payment of expenses, are distributed to the individuals (and/or charities) (“beneficiaries”) much like the Will. You can establish trusts inside the Revocable Trust. These “subtrusts” created under the Revocable Trust are the same as discussed under Testamentary Trusts for Wills (creation of a minor’s trust, special needs trust, and estate tax savings trusts).

  17. REVOCABLE TRUST (CONT.) • Filing of the Trust: During your life, you do not need to record the trust with the court. Upon death, the trustee will file a Notice of Trust document to help put creditors on notice, but will not file the whole trust with the court. • Funding of the Trust: You re-title assets into the name of the trust or name the trust as the beneficiary of assets that pass outside of probate (life insurance, annuities, retirement accounts, etc.)

  18. Some Planned Giving Options Bequest in Last Will or Trust: You can leave a specific amount, a percentage of your estate, a specific piece of property, or the entirety of your estate to a charity of your choosing. Beneficiary Designation: You can name an investment account, life insurance policy, bank account, or retirement plan to a charity of your choosing by naming them as the beneficiary on a beneficiary designation form. Charitable Remainder Trusts:  A charitable remainder trust is a tax-exempt irrevocable trust  designed to reduce the taxable income of individuals by first dispersing income to the beneficiaries of the trust for a specified period of time and then donating the remainder of the trust to the designated charity. This is a “split interest” giving vehicle that allows a trustor to make contributions, be eligible for a partial tax deduction, and donate remaining assets. Charitable Lead Trusts:A charitable lead trust is an irrevocable trust designed to provide financial support to one or more charities for a period of time, with the remaining assets eventually going to family members or other beneficiaries. Charitable lead trusts are often considered to be the inverse of a charitable remainder trust.

  19. Final Considerations A person should not forum shop for estate planning documents such as will and trusts in states where they are just visiting. Those people should have documents drafted by a licensed and qualified attorney in the state where they reside or where real property is located. If you live outside of Florida, you can access the attached directory of elder law attorneys that may be of assistance. You can search by zip code or city to find someone near you to see if they can assist you accomplish your estate planning goals. https://www.naela.org/findlawyer

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