Why is Estate Planning Important in Florida?
Loune-Djenia Askew is a member of Rosen Injury Law’s referral network and we wanted to take the time to highlight her firm and practice areas. Loune-Djenia practices in the areas of business law, real estate law, estate planning such as wills and trusts, immigration and civil litigation. Her firm, Askew & Associates, is located in Lauderdale Lakes, Florida. Read the blog below to get a better understanding of why estate planning is so important.
Why is it so important for people to have an asset protection plan in place?
The first thing that we want to talk about is avoiding probate. I’m not sure if anyone has been following up with the recent death of the Black Panther star. Well, his probate was just finalized and a quarter of his asset went to probate court fees as well as attorney’s fees. Those are the types of issues that I want to help clients avoid. Not only are we trying to avoid the cost of probate, we’re also trying to help clients avoid creditors as well.
What is probate and why it’s important for people to try to avoid probate?
Probate is when the family members who are left behind after an individual passes away have to now go to court to take ownership and legal title to the property that the individual, which we call the decedent, left behind. The reason you want to avoid probate is the tremendous court fees and attorney’s fees that you incur when you have to go through this process. Not only is it difficult on the grieving family who does not really want to go to court when they’re having to grieve a family member, it’s also very cost intensive and reduces the assets and the value of that estate that the decedent left behind.
If a person has a last will, and they’re going to be devising property, money, their assets to beneficiaries, what are some ways that you’re able to help a client avoid having those assets go into the estate and be subject to creditors collecting money from those assets?
One of the things that the community does not really understand is a will does not avoid probate. All that a will does is serve as a written document that tells the court exactly how you want to divide your property. Ultimately, you are not avoiding probate by just writing a will. What can help you avoid probate is by creating a trust, which is setting up a mechanism where title is already transferred over, legal title to your property is already transferred over before you pass away, that way you’re not passing away and leaving the title attached to you alone, which is the ultimate reason why you have to go to probate.
What happens if someone has a bunch of credit card debt or maybe mortgage debt and they pass away and they don’t have a plan in place? What happens to their assets?
Their assets will be significantly reduced based on the creditors. Creditors have the right even after you pass away. If you leave your assets unprotected, where now they’re having to be probated through court, the court will notify the creditors that this is what this individual has left behind and they will, basically, resolve those debts and reduce your overall estate, which ultimately reduces how much your beneficiaries are able to inherit from you.
Other than trusts, do life insurance policies make good mechanisms to avoid money going into the estate?
Definitely life insurance policies are one of the best ways to transfer asset and avoid probate. One of the things that we want to make sure though, is when you have the life insurance policy in place, you want to name a beneficiary and you want to make sure you are naming a beneficiary that is still alive. You’ll be surprised, some people name beneficiaries and the beneficiaries, for some reason or another, end up passing away before them. If that is the situation, you now have left the life insurance policy to be probated. The proper planning is to have the life insurance policy and to make sure you’re keeping your beneficiaries up to date as well.
What are some of the different types of trust that you advise clients to get?
We definitely have the option of revocable trust. That way, if someone wants to establish a trust while they are still alive and also be a beneficiary of that trust, which means they have access to those assets while they’re still alive but once they pass away, they have the named beneficiaries that will inherit upon their passing. That is a great way to set up a trust.
Only caveat is unless you have a spendthrift provision in that trust, it’s not going to help avoid creditors as best as an irrevocable trust. An irrevocable trust is a trust that you can create during your life, however, there are mechanisms in place to avoid revoking that trust, which is basically canceling the trust. Versus the revocable trust, you can cancel it while you’re still alive, but it’s not going to avoid creditors such as the irrevocable trust.
There’s also pet trust. I know there’s a lot of pet lovers out there. You can set up a trust so that your pet is taken care of upon your passing.
What is a revocable trust?
A revocable trust, also known as an inter-vivos trust, is a trust that someone creates while they are still living. They can also name themselves as a beneficiary so that they are able to access those assets while they’re alive, but they also have named beneficiaries that will inherit those assets upon their passing.
Will a revocable trust help their beneficiaries avoid the funds going into probate?
Yes. The revocable trust will avoid probate. However, the caveat with the revocable trust, unless you have an additional mechanism in place such as a spendthrift provision, will not avoid creditors. That is the main difference between that and something else called an irrevocable trust.
What is the difference between an irrevocable trust and a revocable trust?
An irrevocable trust, the main difference between that and the revocable trust is the irrevocable trust cannot be canceled by what we call the settler, which is who is putting the assets into the trust. What that does is help protect beneficiaries from creditors because you’re showing the creditors that you no longer have control of those assets. Versus the revocable trust, which you are able to cancel while you’re still alive, shows the creditors you have control over those assets, so what they think is they can now access those assets.