Estate Planning

Protecting your family starts with a phone call.

Call 954-580-3690 or email [email protected] today.

My daughter’s ex-husband took my savings account!

Mary Client, a 72 year old widow with 3 adult children, comes into my Plantation office to discuss doing a simple Will. Mary says she wants to leave her assets equally to her 3 kids upon her death. Mary’s only assets consist of a checking and savings account. I explain to Mary that she should have a durable power of attorney as part of her estate plan so that her children can help pay her bills and help with other financial matters in the event she became incapacitated. Mary says that she added her daughter June to her checking and savings accounts, so she doesn’t need a durable power of attorney. I explain to Mary that upon her death, her checking and savings account will automatically belong to June 100%, even if Mary’s Will says she leaves all her assets equally to her 3 children. The accounts will not pass through probate since they are jointly owned and therefore the Will does not control them. This is a surprise to Mary and it is not the outcome she intended. But what’s even worse, Mary then tells me that June is being sued after defaulting on a loan and she is also in the middle of a divorce. Since June is legally the owner of the bank accounts and can withdraw 100% of the balance as a joint owner, the full value of both accounts is at risk of being taken by June’s creditors and being divided as a marital asset in her divorce. Mary was shocked by this news and did not anticipate these outcomes when she added June to her accounts. I advised Mary that she should remove June as an owner of her accounts. Unfortunately, June would have to sign off on this since she is a legal owner of the accounts and June lives in Minnesota, and it would be very costly for her to travel to Florida to sign the paperwork.

What did Mary do wrong? Mary should have consulted with a lawyer prior to adding June to the accounts. Often times people do things out of convenience not realizing that there may be significant legal consequences. Had Mary met with me before doing this, I would have advised her that she could execute a durable power of attorney that would give June all the power that she needed to help Mary pay bills, and many other things, and it would not automatically transfer the accounts 100% to June upon Mary’s death. The durable power of attorney would not subject Mary’s accounts to June’s creditors nor would it cause the accounts to be treated as marital assets subject to division in a dissolution proceeding. June might be able to prove in court that the money really belongs to mom and that she was only added to the accounts for convenience purposes and that she is not “really” an owner. But who wants to be litigating that issue in court? How much money in legal fees will that cost June and/or Mary? The moral of the story is, Mary should have a trusted attorney that she can call before she makes any sort of decision like this in the future.

I had a Last Will and Testament, but my estate still ended up in probate court!

Welcome to my blog! This is my first post and I am excited to educate readers in Plantation and other areas of Broward County about estate planning and probate & trust administration. One topic that is near and dear to my heart is what a Last Will and Testament is and does, and what it is not and does not. A Last Will and Testament(referred to herein simply as a “Will”) does not keep your estate out of probate. That’s right . . . . . . . your estate does not end up in probate because you didn’t have a Will.

Now, that doesn’t mean you shouldn’t have a will, because there are many reasons to have a one. But often times, people make a Will assuming that it is going to accomplish certain objectives, and unfortunately because they are misinformed, there are unintended consequences.

Florida Probate is a process of transferring title to your assets at death. If your assets don’t automatically pass to someone (discussed more below), then they must go through the Florida probate process in order to properly transfer title to the recipient. Then what does a Will do? A Will controls the probate process. If you have assets that pass through probate then the Will controls who receives those assets and who is appointed to be in charge of the process (called a personal representative in Florida, aka executor). A Will does not have any impact over assets that don’t pass through the probate process.So what doesn’t pass through probate? Potentially lots of things! Do you have an IRA or 401(k) with a designated beneficiary? Do you have a life insurance policy with a designated beneficiary? Do you have a bank account that you added your adult child on in case you need help paying bills as you get older?

These are all examples of assets that don’t pass through the probate process and that are not controlled by the provisions in your Will. For instance, let’s say that your only asset is your IRA with a balance of $700,000, and the IRA names your daughter and son as beneficiaries. Your Will leaves $50,000 to each grandchild and then the balance to your girlfriend because your kids never visit you. Guess what . . . . . . . . your kids get your entire IRA and your grandkids and girlfriend get nothing because the IRA passes outside of the probate process and the Will only controls assets that must pass through probate.Consulting with a lawyer is tremendously important because estate planning is tricky and unintended consequences happen all of the time.