Life Planning

Asset Titles

How an asset is titled defines who owns it, how it can be divided, and what happens to it upon the death of the owner. For example, assets titled in the joint names of husband and wife are owned by each and pass to the spouse upon death. An asset titled in the names of two or more unmarried persons is owned jointly, although not necessarily 50-50, and may or may not pass to the other upon death depending on how it is worded.

Sometimes, it may be important that the asset pass to a joint owner upon death, or it may be important that it not pass to a joint owner upon death. For example, it may be important that a bank account pass to a spouse or partner but equally important that it not pass to one child and exclude other children. Even if a will distributes assets equally between children, an asset titled in name of one child will go only to that child. It is also important to consider that a joint owner has control over the asset and must be trusted.

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Domestic Contract

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A domestic contract defines how each person contributes and shares in a household. It is similar to a partnership business contract and gives each household member certain rights and responsibilities. It can avoid misunderstandings, be enforced in court, and help to clarify other planning documents.

Deeds

Deeds list the title owners of real property. They are recorded in the county records and available to the public. Ownership of real property has roots from the day this country was founded, and “chain of title” is of paramount importance to the ownership and, very importantly, the ability to buy and sell property. Without a proper chain of title, difficulties
arise in attempting to buy or sell property. This is why it is very important that every deed be prepared properly. If a deed is not prepared properly, it can cause problems whenever a property is sold.

Titles on deeds define who owns the property. They can also define what happens to the property when an owner dies. Deeds in the name of husband and wife automatically pass title to the surviving spouse when one spouse dies. Deeds in the name of two unmarried people automatically pass title to the survivor only if the deed is written to “person one and person two as joint tenants with the right of survivorship.”

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Deeds in the name of one person alone do not pass title upon death. For this property, a probate estate will be necessary. The Florida Constitution contains unique provisions for “homestead” property. Under these provisions, a home must pass to a person’s spouse for life and then to the person’s minor children, if a spouse and minor children exist. If a spouse and adult children exist, the property must pass to the spouse or to the spouse for life and then to the children.

If the person has a will, the Probate Court will authorize transferring property to the person named in the will, so long as the will does not conflict with the constitutional provisions. If the will conflicts with the constitutional provisions, the Constitution overrides the will. If the person has no will, the Probate Court will pass title according to the Constitution and, if the constitutional provisions do not apply, according to the “intestate” statutes.

You can see that passing real property, especially homesteads, in Florida can be complicated and can require a Probate estate. If you want to avoid a Probate estate, it is important to prepare deeds in a way that will pass title outside the estate. Joint and survivorship deeds are one way to pass title outside the estate. There are special types of deeds that can also pass title outside an estate, such as life estate deeds or enhanced life estate (“Lady Bird”) deeds. Real property can also be titled in (owned by) a trust, land trust, or company (LLC, corporation, etc.).

You can see that passing real property, especially homesteads, in Florida can be complicated and can require a Probate estate. If you want to avoid a Probate estate, it is important to prepare deeds in a way that will pass title outside the estate. Joint and survivorship deeds are one way to pass title outside the estate. There are special types of deeds that can also pass title outside an estate, such as life estate deeds or enhanced life estate (“Lady Bird”) deeds. Real property can also be titled in (owned by) a trust, land trust, or company (LLC, corporation, etc.).

Personal Services Contract

A personal services contract sets out specific services, who will provide those services, how much the provider will be paid, and how and when the provider will be paid. Personal services can be anything from paying bills to providing hands-on care. This type of contract is frequently used to preserve assets and qualify for Medicaid when a person needs nursing home care. With a personal services contract, one can pre-pay for services that Medicaid will not provide, still qualify for Medicaid benefits, and maintain a quality of life that would not be available without this planning device. It can be used with family members, friends, and professionals.

Life Plan Law Catherine E. Blackburn Trusts

Power of Attorney

A power of attorney (POA) gives another person (the “attorney in fact” or “agent”) the right to act on behalf of, or instead of, the person who signed the power of attorney (the “principal”). Although a POA is a very common and useful planning document, it is important to understand some basic facts about the POA:

  1. It is effective when signed. This means that, unless the agent does not have the original or a copy of the POA, the agent can take any action that is authorized in the POA, with or without the principal’s separate approval.
  2. The agent owes specific duties to the principal and will be legally liable for violating those duties. In general, the agent must act on behalf of, for the benefit of, and in the best interests of the principal. A POA is not permission for an agent to take advantage of the principal or use the principal’s assets for themselves.
  3. A POA can be revoked, but it is important to make sure that third parties are informed that the POA was revoked.
  4. An agent can be removed by a court, but this may be expensive and not necessarily easy.
Life Plan Law Catherine E. Blackburn Power of Attorney

On October 1, 2011, Florida substantially changed the law governing powers of attorney. The new law defined how and when POA’s are effective, created qualifications for agents/attorneys in fact, listed how and when a POA terminates or is revoked, prescribed how co-agents or successor agents may act, permitted only “qualified agents” to be compensated, specifically described an agent’s duties, created a method for court intervention, allowed third parties to challenge a POA before accepting it, and, importantly, required that certain powers be stated very specifically and separately signed or initialed by the principal.

Although a POA signed before October 1, 2011, or in another state, will usually be effective, it may or may not permit the agent to do what the principal actually wanted. In addition, a bank, brokerage, institution, or third person, may or may not challenge the “old” POA. The author of this Guide recommends that all existing plan documents, and especially powers of attorney, be carefully examined to make sure they still accomplish the goals for which they were drafted. In addition, the author recommends against using pre-printed or computer/internet generated powers of attorney.

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Powers of attorney are one of the most effective and useful life planning documents. A properly-drafted POA allows an agent to take actions on behalf of a principal after the principal can no longer act for himself or herself. This is often very important when the principal becomes temporarily or permanently incapacitated or needs nursing home care and can allow the agent to preserve the principal’s assets, even if the principal must apply for Medicaid benefits. A living trust, if properly prepared and funded, can also be used in this way (see “living trusts”). Everyone should consider preparing a POA and/or living trust and consult with a qualified attorney about the risks and benefits of these devices for their specific circumstances.

Once the principal’s mental abilities decline, it may be too late to prepare or modify a POA. However, there are few hard and fast rules about when a person “has capacity” to prepare or modify a POA (or a contract, will, or other document). A person with dementia, for example, may still have capacity to create or modify a POA. Do not assume it is too late. Rather, consult a qualified attorney about what can be done.

Because mental and physical abilities often diminish with age, seniors are a prime target for unscrupulous people and businesses. If you believe that an agent, a professional, a business, a family member, a caregiver, or someone else has or is taking advantage of a senior, do something about it. There are special laws protecting seniors. You can consult an attorney about what is and is not appropriate or call Florida Adult Protective Services at 1-800-96 ABUSE.

Health Care Surrogate Designation

A surrogate designation is a document that formally appoints one or more persons to make health care decisions for another if the other is temporarily or permanently unable to make his or her own decisions. It usually permits the surrogate to obtain medical records and can be personalized to incorporate provisions of a living will or even combined with a living will.

Health care surrogate designations are important in minimizing confusion and stress that frequently accompany a serious illness or injury. They ensure that the person you choose will make decisions if you are not able. A surrogate designation avoids searching for a family member to make emergency decisions and places decision-making clearly in the hands of a named person. Many authorities strongly recommend that all persons prepare a health care surrogate designation.

Florida law is designed to make surrogate designations easy to prepare and use, and blank forms can be obtained from many medical providers, office supply stores, and on the internet. Some forms even include living will provisions. Even a simple form is better than none. If you wish to personalize your designation, a qualified attorney can easily assist.

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Living Will

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Living wills express personal wishes for end of life care.  They state what life-prolonging measures an individual desires, and what measures the individual chooses to refuse.  Perhaps more than any other document, a living will is deeply personal and requires that one consider the end of life.

If you want medical providers to use all available means to prolong your life, then you do not need a living will.  This would include resuscitation (“CPR”), use of a ventilator, artificial nutrition (“feeding tubes”), and artificial hydration (“IVs”) for as long as you live.   If you do not want one or more of these procedures, or other end-of-life care, it is best to prepare a living will.

The Florida laws governing “advance health care directives” attempt to balance the individual’s right to refuse treatment with society’s goal of preserving life.  To achieve that balance, Florida law requires living wills be executed with certain formalities and provides a mechanism to challenge in court a surrogate’s decision to refuse or withdraw treatment.

Living wills executed before Florida amended its laws in 2001, or prepared in another state, are effective, but medical providers may hesitate to honor them.  Therefore, if expressing your right to refuse treatment is important to you, it is best to prepare a living will that meets Florida’s 2001 criteria.

With or without a living will, your health care surrogate, family, friends, and medical providers can support you best if you tell them about your desires.  It may seem morbid or insensitive to talk about end-of-life preferences, but no one knows when a catastrophic injury or illness may strike.  If we talk about these matters, then we can live every moment of life to its fullest without worrying about what remains unsaid.  The common wisdom to “live each moment as if it were our last” is wisdom indeed.

Living Trust

A living trust is nothing like a living will.  In general, a trust is a place where people (“settlors”) place assets to be managed by trustees.  There are many kinds of trusts and most, but not all, are created by a written document and the transfer of assets to the trust.  Some trusts are permanent and cannot be changed (irrevocable trusts).  Some arise from a will after death (testamentary trusts).  A living trust is revocable, changeable by the settlor during his or her life, and then managed by a named trustee after the settlor’s death.  While the settlor lives, he or she can add assets to the trust, take assets away from the trust, change the beneficiaries of the trust, change the trustee, or change any provision of the trust.  A living trust is a private document and, unless challenged, is not presented to any court.

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A living trust provides a great deal of flexibility and assistance in managing assets.  The settlor can create the trust, provide for his or her lifetime support from the trust, provide support for others (especially disabled children) during the settlor’s lifetime and/or after the settlor’s death, provide for distribution of assets after the settlor’s death, and choose the trustee(s).  If a co-trustee is named or added, that person can step in at any time to assist the settlor in managing most or all financial affairs.  A living trust can also include a “trust protector” who oversees the trust administration to avoid abuse and make changes if the law or circumstances change.

The Florida Trust Code was enacted in 2007 to codify and, in some ways, strengthen the law governing trusts.    Trustees must fulfill specific duties and act for the benefit of the trust beneficiaries (including the settlor).  They must keep records and account to the beneficiaries for what they do.  The actions of a trustee can be challenged in court, but it is up to the beneficiaries to bring the challenge.  A court does not automatically review trust activities as it does a will.

A living trust is one of the most commonly used devices to “avoid probate,” in other words, to provide for the disposition of assets after death, without reference to a will, and without court involvement.

Converting Assets to A Different Type

As discussed earlier, assets can be titled in different ways to achieve different results. Some people choose to manage assets by adding a joint owner to the asset. This allows the joint owner to manage that asset (such as a bank account or home ownership), but it also gives the joint owner full rights to the asset, subjects the asset to the joint owner’s creditors, may complicate or prevent eligibility for Medicaid nursing home benefits, and shuts off all others’ rights to the asset before and after death (no matter what the will says). The duties of joint owners to each other are poorly defined, if at all, and court enforcement, if available, is expensive and difficult. Nonetheless, using a senior’s assets for oneself may constitute the crime of exploitation and can be reported to Adult Protective Services at 1-800- 96 ABUSE.

There are more effective ways to manage assets while also protecting the primary owner’s interests, fulfilling all of the primary owner’s goals, and ensuring flexibility to respond if circumstances change.

Although obvious, it also bears mentioning that almost any asset can be converted to a different type of asset. Anyone who pays even a little attention to the news knows that it is sometimes beneficial to sell stock. It can also be beneficial to buy or sell real estate, insurance, annuities, retirement accounts, certificates of deposit, cars, boats, businesses, jewelry, gold, and anything else that has value. Converting assets can be an important part of life planning.

Transferring Assets

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Transferring assets is closely related to converting assets and is essential when funding a living trust. In fact, a living trust is not effective until assets are transferred to the trust.

It is important for seniors to consider carefully any transfer that could be considered a gift. A gift is usually defined as the transfer of an asset for less than its market value. The IRS, bankruptcy courts, and Medicaid authorities use this definition and closely scrutinize such transfers. Attempting to make oneself eligible for bankruptcy or Medicaid by giving assets away will have very negative consequences. The bankruptcy court or Medicaid authorities may insist that the gift be returned or, if not possible, declare the person ineligible for benefits.

It is tempting to help children or grandchildren by giving them money, cars, or houses, or paying debts for them. Unfortunately, Medicaid authorities will look back 5 years and question every gift within that time period. If you or your spouse may need Medicaid benefits for nursing home care within 5 years, you may wish to consult an Elder Law attorney for ways to help without jeopardizing possible Medicaid benefits. If you made gifts within 5 years and find yourself needing Medicaid benefits, you should consult an Elder Law attorney before applying for benefits. Under these circumstances, Elder law attorneys can often help obtain benefits.

Guardianships

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Guardianships are a formal, court supervised process of appointing a representative (“guardian”) to manage the needs of an incapacitated person (the “ward”). The ward may be physically or mentally incapacitated, or both, and the guardian may be appointed to care for the ward’s financial needs (guardian of the property), personal needs (guardian of the person), or both (plenary guardian).

Except for a voluntary guardianship of the property, guardianships apply only to persons who are completely incapacitated. They require court and attorney involvement, remove the ward’s legal rights, and can be expensive. The court will supervise a guardianship until the ward regains capacity, if ever, and the guardian must file periodic reports.

For many reasons, it is often preferable to use other life planning tools than resort to a formal guardianship. However, there are times when a guardianship is necessary. If you are concerned about a person’s mental or physical capacity, you should consult a Life Planning attorney as soon as possible so as to avoid the need for a guardianship.

Wills and Probate

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A will is a formal document that directs how a person’s assets will be distributed after death. Probate is the court process of administering a person’s assets (the “estate”) according to the will.

A will appoints someone to gather and distribute assets (the “personal representative”), defines who will receive the assets (the “beneficiaries”), and directs how the process will proceed. The process begins after the will has been “admitted to probate” and is supervised by the Probate Court.

Many people ask, “do I need a will?” If a person owns assets in his or her name alone and dies without a will (dies “intestate”), state statutes provide how the person’s assets will be distributed. In general, Florida statutes distribute assets according to blood relations, and not necessarily in the order you would choose. In today’s world, intestate distribution can be complicated if the deceased person (the “decedent”) is or was married, has or had children, or has a business. It can also be complicated if any of the decedent’s spouse(s), children, parents, or siblings have died or if the decedent has or had step-children.

It is important to know that intestate distribution is not automatic. It requires court intervention, can result in challenges and litigation, and can be expensive. If a Florida resident dies with only limited assets, the estate may be eligible for a simplified court proceeding (“summary administration”) or even no administration. However, making use of the summary administration or no administration procedures usually requires the advice or assistance of a lawyer.

Only you can decide whether the cost and difficulty of distributing assets through intestate procedures is better than the cost of preparing a will. It is relatively inexpensive to prepare a simple will, and often advisable, even if you believe you “have nothing” or you put your assets in someone else’s name.

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