The Right Path for You Series will discuss the most common pathways used for estate planning and will compare the considerations of each.
When you are deciding how to plan your estate there are generally two paths that will work for most clients: a will centric estate or a trust-based estate. But there are many people who have attempted to create other pathways, or do so from lack of action, that can provide varying results.
Part I. Intestate Succession.
Part II. Gifting It All Away
Part III. Hold All Assets in Joint Ownership
Part IV. Hold All Assets in POD/TOD Accounts
Part V. Will Only
Part VI. Revocable Living Trust
While you are contemplating your path take into account the following 16 considerations:
- potential litigation
- ancillary administration
- disability planning
- protection from creditors
- Medicaid planning
- continuity of business affairs
- rights of a spouse
- fiduciary liability
- naming a non-resident fiduciary
- divorce, pretermitted heirs, adopted children, and income tax
- the necessity that a Revocable Living Trust must be funded
- continuing gift program
- estate tax planning
Let's get started.
Part I. Intestate Succession.
If you are reading this, you likely are not one who would want your estate to simply pass under law and in the control of the state. But that is the choice that many people make either by design, lack of a will or a poorly drafted will.
An intestate succession occurs when any part of the estate is not effectively disposed of by will. You may assume that your spouse may simply take all your estate, but under § 732.102, Florida Statutes, that is not the case. Upon your death, the probate court will first consider the surviving spouse's share. If there is no surviving descendant, then the spouse takes all. If there are one or more descendants, all of whom are also descendants of the surviving spouse, and the surviving spouse has no other descendants, then the spouse takes all.
This changes if there are surviving descendants who are not lineal descendants of the spouse, then the spouse only takes one-half of the estate. Also, if there are descendants and all of them are also descendants of the spouse, and the spouse has descendants of his or her own not shared with the decendant, then the spouse takes one half the estate.
The remainder of the estate not passed to the surviving spouse will then pass as follows:
(1) To the descendants of the decedent.
(2) If there is no descendant, to the decedent's father and mother equally, or to the survivor of them.
(3) If there is none of the foregoing, to the decedent's brothers and sisters and the descendants of deceased brothers and sisters.
(4) If there is none of the foregoing, the estate shall be divided, one-half of which shall go to the decedent's paternal, and the other half to the decedent's maternal, kindred in the following order:
(a) To the grandfather and grandmother equally, or to the survivor of them.
(b) If there is no grandfather or grandmother, to uncles and aunts and descendants of deceased uncles and aunts of the decedent.
(c) If there is either no paternal kindred or no maternal kindred, the estate shall go to the other kindred who survive, in the order stated above.
(5) If there is no kindred of either part, the whole of the property shall go to the kindred of the last deceased spouse of the decedent as if the deceased spouse had survived the decedent and then died intestate entitled to the estate.
(6) If none of the foregoing, and if any of the descendants of the decedent's great-grandparents were Holocaust victims as defined in s. 626.9543(3)(a), including such victims in countries cooperating with the discriminatory policies of Nazi Germany, then to the descendants of the great-grandparents. The court shall allow any such descendant to meet a reasonable, not unduly restrictive, standard of proof to substantiate his or her lineage. This subsection only applies to escheated property and shall cease to be effective for proceedings filed after December 31, 2004.
Finally, when a person dies leaving an estate without being survived by any person entitled to a part of it, that part shall escheat to the state. Property that escheats is sold as provided in the Florida Probate Rules and the proceeds paid to the Chief Financial Officer of the state and deposited in the State School Fund.
In the case of allowing your estate to follow intestate succession, Florida Statutes will control the succession and not you. If you were planning on your spouse taking your entire estate than intestate succession is not the way to ensure that is accomplished.
There will still be costs to probate the estate and the confusion presented with intestate succcession could cause probate to become a lengthy process.
We presented this as Part I of the series because the problem of intestate succession is obvious to most clients. However, a poorly drafted will cause many of these same problems. That portion of the estate not fully disposed of by a will will go through intestate succession. Many people attempting to draft their own wills have often left portions of their estate outside of the will forcing those portions through intestate succession.