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Estate Planning for Different Assets


Anyone interested in creating an estate plan does not have to look hard to find a wide variety of do-it-yourself forms and templates that claim to cover all the necessary aspects of this endeavor. The problem with this approach is that placing all assets into a one-size-fits-all box fails to account for how the different structures and legal rules affect how they may be managed and inherited. In other words, different assets need to be handled in various manners to ensure the creator’s wishes are executed and appropriate asset protection provisions are included to reduce potential tax liability and claims against an estate. This level of detail and nuance will never be available through fill-in-the-blank forms, and an experienced estate planning attorney is the best source to receive advice on how to maximize and thoroughly protect one’s property through an estate plan. An overview of some considerations that affect how different types of assets should be assessed when forming an estate plan will follow below.

Types of Assets to Consider

An essential part of putting together an estate plan is taking inventory of the property a person owns that he/she wants to pass on to other family members, which may involve thinking about accounts and other interests that are not normally at front of one’s mind. Basically, creating an estate plan means assessing which property has value and ensuring it is preserved to the largest possible extent and passed on to the desired recipients. Examples of assets that can hold great value, but tend to fly under the radar, and in some cases are left out entirely, include:

  • Annuities and life insurance policies;
  • Mutual funds, stock options, bank accounts, and cash;
  • Profit sharing plans and privately traded stocks; and
  • Appointments to manage another person’s trust or will (usually a parent).

Family Home

The family home, or homestead as it is legally known, is one of the more obvious and common types of property a person would seek to pass on through an estate plan. The legal issues with homesteads are extremely complex.  A married person, who owns the residence in their name only, and not jointly with the other spouse, and absent a waiver by the other spouse, can devise the property only to their spouse, and any different devise would be invalid.  If there is no devise to the spouse, or if there is an attempted, but invalid devise other than to the spouse, the house will pass according to State intestacy laws.  This may result in multiple owners as well as a division whereby the spouse gets to use the property for the rest of his or her life, after which it then passes on to other heirs.  In addition, the protection of the residence from claims of creditors can remain after death, so that the house will pass on to the heirs without having to use it to pay any of the decedent’s creditors, but there are complex rules, and if not followed properly it could result in having to sell the house to pay creditors.  It is critical to have professional legal advice with respect to this most valuable asset.

Retirement Funds

These assets are typically held in accounts with a designated beneficiary set to receive the funds on the death of the account holder. As is, and without additional planning, income tax consequences will be imposed upon any recipient every time he/she takes a distribution.  For beneficiaries other than the spouse, regardless of age, annual distributions begin immediately.  Spouses also face tax liability for distributions, but may be able to defer distribution depending on their age.  The proper handling of retirement accounts should be left to a qualified professional advisor.

Other Financial Accounts

Beyond retirement accounts, some individuals also own stocks, bonds, bank accounts, and more, which receive the fewest restrictions on who may inherit, and also typically enjoy tax advantages in terms of value and liability for capital gains. However, that depends upon whether an estate would be subject to the federal estate tax, so additional analysis may be needed.

Real Estate

Finally, given that a lot of people in Florida are transplants from other States, many own real estate elsewhere. Each State has different laws related to income, estate, and gift taxes that must be analyzed to determine potential liability and options to reduce it.

Speak to an Estate Planning Attorney

Proper estate planning requires assembling many different pieces of a complicated puzzle to reach a cohesive result. William Rambaum understands the numerous nuances that can drastically alter the outcome of trust or will. If you have questions or need an experienced attorney to advise you on creating an effective estate plan, contact the Oldsmar office to schedule an appointment.




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