Are you new to Florida estate planning? Our easy-to-understand Florida estate planning guide will help you cover the essentials, so your family’s wealth and future are protected. We’ve also covered more advanced key topics, such as Medicaid planning and asset protection.
We welcome you to also check out our Florida estate planning checklist or call our Florida estate planning attorney team for a free consultation.
What is Estate Planning?
Estate planning is the term given to processes where you legally document your wishes and intentions for your estate.
It covers a wide range of areas, from how you want your assets to be shared after death, to who would look after your children if you passed away while they’re minors. By having an estate plan, you can ensure that your intentions are followed and that your family’s wealth is protected.
What Is an Estate?
Your estate is everything that you own or have an interest in, including:
- Real estate and land
- Bank accounts and their funds
- Investments and stocks
- Personal belongings and items
Are There Estate Taxes in Florida?
There are no inheritance taxes or estate taxes in the state of Florida. However, if you have an extremely high-value estate (over $12,920,000 in 2023) then you will be required to pay Federal U.S. estate taxes.
What Estate Planning Steps Do I Need to Complete?
Estate planning in Florida is accessible to everyone, regardless of net worth. However, with a higher net worth the scope of options typically becomes wider.
Here are some estate planning steps that everyone should complete:
- A last will and testament
- Living will
- Guardianship choices
- Appointing a durable power of attorney
- Health care directives
Read on to discover why.
What is a Will?
A will is a legally binding document that records your wishes for your estate distribution, minor children guardianship and any other instructions.
Wills are considered the most essential part of estate planning. It is highly advised that everyone creates a will, regardless of net worth, age and marital status.
However, the following individuals need them more than anyone else:
- Parents with minor children
- Parents with disabled children
- Parents with children from different partners.
- Married or divorced individuals
- Complicated or high-value estates
- Owners of pets
- Owners of multiple assets or real estate
Read Related: Frequently Asked Questions About Wills
What Happens If I Die without a Will in Florida?
If you die without a valid will in Florida, your estate will be distributed via Florida intestate laws. Your wishes and intentions will not be followed; distribution will be determined via the probate court instead.
This is not ideal, as your estate could be shared to people you wouldn’t select.
What Happens To My Children After I Pass Away?
In the nightmare scenario that you pass away while your children are still minors, then their guardianship will be determined by what it says in your will. You should clearly state the individuals you wish to become potential guardians of your children in the will document.
If you don’t write these instructions in your will, their guardianship will be determined by a court meaning your children could end up under the guardianship of someone you wouldn’t want.
What Makes a Valid Will in Florida?
The probate process ensures that a will is a ‘valid’ legal document and that no manipulation or foul play has been involved.
In Florida, a will must:
- Be signed and created by an individual aged 18 years old or more, or an emancipated minor.
- By someone of ‘Sound Mind’.
- Signed in the presence of at least two competent witnesses.
- Drafted and signed free of influence or persuasion of someone else.
Do I Need a Lawyer to Make a Will?
You are not legally required to use a lawyer when making a will in Florida. However, it’s advised that you do to avoid making mistakes that could invalidate your will or open it up to misinterpretations or claims that a common from DIY will services.
This is especially true if you have a complicated or high-value estate that could benefit from expert estate planning thinking.
What is Probate?
Probate is a court-supervised process that involves verifying the authenticity of a Will, identifying and collecting the decedent’s assets, paying creditors and distributing the estate according to the instructions of the Will.
Probate is required for every estate. If there is no will, the probate court will use Florida’s Intestate Succession Laws to distribute the estate.
Why Do People Try to Avoid Probate?
Probate is a formal and lengthy process, usually taking between 3-12 months. Some probate processes can become expensive, stressful and drawn out.
Some people, therefore, use estate planning to allow assets and funds to bypass probate entirely. This can be done by using certain types of trusts, where the assets are received immediately after the death of the owner.
Bigger, more complicated estates are also at risk of extensive probates where creditors, will contests and claims are possible.
What Assets Are Exempt from Probate?
- Furnishing in the home residence (Of up to $20,000 in value).
- Two motor vehicles named in the decedent’s name, that were regularly used and not weighing more than 15,000 lbs.
- Tuition programs, qualified under IRS Code, Section 529
- Some types of educator death benefits
- Revocable trusts assets
- Transfer on death bank accounts or transfer on death property.
- Joint Title with Rights of Survivorship
- Tenancy by Entireties
What Are Trusts?
Trusts are legal entities that hold property or assets for the benefit of a person or persons. Made legal using a trust document, the trustor (trust creator) places assets into the trust and writes instructions for its management and distribution.
Trusts are managed by a trustee, who must always act in the best interest of the beneficiaries.
Do I Need a Trust?
Trusts are advanced estate planning options, so they’re not necessary for everyone. However, they open up a wider range of control over your estate.
They can help:
- Avoid taxes and probate.
- Gain extra control over asset distribution, with the ability to add conditions for long after your death.
- Be used to help with Medicaid eligibility.
- Fund pet care.
- Support special needs children, while retaining Government benefit eligibility.
For example, if you only have a will then your estate will be distributed immediately after probate. That could see your children and loved ones receiving large funds at once. But if you have a trust, you can add milestones so they receive assets and funds at key points in their life (such as 21st birthdays or wedding days).
What Types of Trusts Are There?
There are many types of trust in Florida all serving different purposes, including:
- Revocable living trusts (trusts that can be edited during your lifetime).
- Irrevocable trusts (trusts that cannot be edited during your lifetime).
- Qualified Income Trusts (trusts used to gain Medicaid eligibility when your income is too high).
- Testamentary Trusts (trusts created via will after the grantor dies).
- Irrevocable Life Insurance Trusts (trusts used to ensure life insurance proceeds are managed and distributed post-death).
- Charitable Lead Trusts (Used to donate to charity via a trust, potentially reducing beneficiary tax liability).
- Charitable Remainder Trusts (Used to hold appreciated assets on a low basis, such as real estate or stocks).
- Dynasty Trusts (Long-term trusts that enable wealth to be shared amongst generations, without transfer taxes.
- Special Needs Trusts (Used to allow special needs people to gain access to funding, without losing their public assistance program benefits).
- Pet Trusts (Provides designated funds for pets after their owner passes away).
- Qualified Domestic Trust (Allows non-US citizen spouses to benefit from martial deduction).
- Grantor Retained Annuity Trust (Used to secure assets in a trust that generates annual income).
- Generation Skipping Trust (Used to allow grandchildren to inherit assets, rather than immediate children).
- Qualified Personal Residence Trust (Allows the grantor to remove their personal home from the estate, to reduce the impact of gift taxes).
Read Related: Full Guide to the Different Types of Trusts in Florida
Power of Attorney
A Power of Attorney (POA) is an individual authorized to act on behalf of another person on important decisions such as medical issues, finances, taxes, investment, guardianship and property.
You should appoint a POA if you want someone to act on your behalf in the event that you are incapacitated. T
There are several types of Power of Attorney in Florida:
- Medical Power of Attorney
- General Power of Attorney
- Limited Power of Attorney
- Durable Power of Attorney
General Power of Attorney
A General Power of Attorney is commonly used in Florida estate planning. It gives the authorized individual the right to represent your legal life, from banking and real estate to investment and tax filing.
Limited Power of Attorney
Limited Power of Attorney in Florida allows you the selected individual to act on your behalf for a specified purpose and duration only.
For example, if you ever want to travel away from Florida but still need to take care of your finances, or sale of a property then you could appoint a Limited Power of Attorney.
Durable Power of Attorney
Durable Power of Attorney in Florida is similar to a General Power of Attorney, except they remain authorized if you become incapacitated. This can be useful if you’re concerned about how your finances, investments or businesses will be managed if you have an accident.
Medical Power of Attorney
Medical Power of Attorney in Florida is like a durable power of attorney for health-related decisions. This document describes the principal’s consent to the selected Power of Attorney to make decisions in the event of medical conditions.
The individual authorized as the Medical Power of Attorney is legally bound to oversee any medical decisions made for the principal, such as life support.
Advance directives (also known as ‘health care directives’ or ‘medical directives’) are legally binding instructions for how you’d like to be treated if you are incapacitated.
For example, if you go into a coma how would you like to be treated? Are there medications you’d prefer or like to avoid? Do you have a life-support preference?
These directives can be recorded to direct your care in a tragic event. They can also relieve a lot of the pressure placed on family members who otherwise would have a dilemma. They can be edited at any point.
Read related: How to Plan Advance Health Care Directives in Florida
Health Care Proxy
You can also appoint a ‘Health Care Proxy’, which is someone authorized to make medical decisions on your behalf if you are unable to.
Florida is a debtor-friendly state, allowing nearly anyone to use asset protection to their advantage.
Put simply, a debtor structures their assets to limit the way a creditor can collect on those assets. It can be deployed at any stage of debt! However, it’s considered very complicated so is completed with the help of a Florida asset protection attorney.
Note that there are also ‘Super Creditors’ who can bypass asset protection exemptions under federal law. These include the IRS, Department of Justice and SEC.
Common Asset Protection Structures in Florida
Common examples of asset protection include holding assets in the following legal structures:
- Individual Name
- Multiple Parties Names: Marriage, Domestic Partnerships, General Partnerships, Joint Ventures
- including corporations, LLCs and Limited Partnerships
Common Assets Protected in Florida
- Personal property
- Up to $1,000 of vehicle value
- Disability Income
- Interest in multi-member LLCs
- Life insurance
- Medical savings accounts
- Prepaid college plans
- Retirement accounts such as 401k
- Social security
- Tenants by the entire property
- The income of someone who qualifies as head of household
- Unemployment benefits
Read our full Florida asset protection guide here.
Contact an Estate Planning Attorney Today in Riverview and St. Petersburg
We hope this Florida estate planning guide has helped you understand the key areas needed to meet your estate planning goals.
We welcome you to contact our Florida estate planning attorneys today for a free consultation if you have any questions or wish to get started.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With award-winning experienced estate planning attorneys, they can help you create a water-tight estate plan that protects your rights and wishes.