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How to avoid probate with a life estate

There is one way that heirs can inherit real estate while avoiding the cost and hassle of probate: through the use of an estate planning tool known as a life estate.

A life estate is a deed that allows the real estate owner to remain in his or her home during their lifetime. Upon the owner’s death, the property passes directly to the heir or heirs named in the life estate, who only need to provide the court with a copy of the owner’s death certificate to take ownership.

With a life estate, the parent becomes the “life tenant” of the home, and the children are designated as “remaindermen.” Probate is avoided because ownership of the property transfers by deed to the remaindermen upon creation of the life estate, while the life tenant is still alive.

The life tenant still has responsibility for maintaining the property and making mortgage and property tax payments while still in the home, even though the parent and children are co-owners of the property. The children do not obtain sole ownership of the home until the life tenant dies; however, the ownership interests are still considered assets that could be attached by creditors for unpaid debts or awarded to an ex-spouse in a divorce.

If the life tenant decides to sell the home, he or she must obtain the permission of all remaindermen to do so or the children can return their interest in the home to the life tenant by consent. However, any remainderman can sell their interest in the property without the consent of the other owners.

Our experienced and trusted estate planning attorneys have been serving Treasure Coast families for decades, and Michael Fowler is one of only four Treasure Coast attorneys who is Board Certified by the Florida Bar in Elder Law. Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Estate planning for single parents

It is estimated that one-third of American children live in a single-parent household, and single parents are advised to create an estate plan that provides protection for their children. Here are some tips:

Create a will that names a property guardian for your child(ren). If you die when your children are still minors, a court will recognize the person you have designated as property guardian to manage their inheritance if there is no other plan (like a trust) in place.

Establish a trust. You will can create a trust for each child, or a “pot trust” for all your children. You will need to name a trustee to handle your children’s inheritance until your children reach whatever age you specify in the trust to receive that inheritance. Since children under the age of 18 cannot directly inherit large sums of money or property, a trust protects assets for them until they are of legal age.

Name a guardian – one of the most important reasons for parents to have an estate plan is to legally name a guardian for your children; you can always change your choice if necessary, but if you don’t make at least one choice, the state will do it for you.

Name a custodian. Under the Uniform Transfers to Minors Act, you can choose a guardian to manage property you leave to a child until that child reaches the age of 21. If you don’t want them to inherit until they are older, then use a trust.

Use life insurance to fund a trust or custodianship, and invest in disability insurance to cover your living expenses in case you become disabled.

Gifts – talk to an estate planning attorney about the tax advantages of gifting portions of your estate to your children while you are still alive, which can help reduce estate taxes.

With the proper guidance, you can protect your finances and spare your loved ones the frustration of having to make costly and difficult decisions.  Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Do I need a will?

When your life changes, your will needs to change as well. You can do this by either modifying your will with a codicil, or by creating a new will. To eliminate any possibilities for confusion, you should consider drawing a new will when you experience a big life change such as:

Divorce – In most states, a divorce decree will nullify any gift made to a former spouse; however, to ensure your assets go where you want them to go, you should draw up a new will following a divorce.

Marriage – No matter if it’s your first marriage or your fourth, you and your new spouse should both create a new will. If there are now stepchildren you want added as beneficiaries, you will need to provide for them by name in your will, unless they have been adopted, in which case they will be considered your legal children.

Birth – Your will should include the establishment of a guardian for any minor children.

Death – If you have named someone as a beneficiary in your will and they before you do, a new will should be created so the assets can be redistributed.

Reviewing your will when life changes – such as a birth, a death, or divorce – will help ensure your will is valid and does what you intend for it to do. Here are some other things you can do to ensure your Florida will is valid:

Make sure it can be found. A common mistake many people make is to lock away their will in a bank safety deposit box, not realizing that it will require a court order to open that box and your loved ones will be without the necessary documents to open probate.

Be careful about who you choose as executor. Naturally you want to name someone who is responsible, but be sure they actually want the job before you name them. In addition, name a second person to serve in case your first choice is unavailable.

Avoid contradictions in estate planning documents. You want to be sure your will doesn’t contradict the choices you have already made for those listed on beneficiary forms for your life insurance policy, retirement accounts, etc.

Name a back-up guardian. One of the most important functions of a will is naming a guardian for minor children. But what if you only named one person, and that person couldn’t take on the responsibility? Naming a second choice for guardian will bypass this potential problem.

Be specific. If you want to disinherit someone, you must state that specifically in your will. In addition, if you have gotten divorced and remarried but have children from your first marriage, you will want to make provisions for both your current spouse and your children from the first marriage. Not doing so could leave your children unintentionally disinherited.

Seek professional guidance. While there are many online options for creating a will, these are not tailored to your specific needs. Seek professional guidance from a qualified estate planning attorney so you can avoid common mistakes that could invalidate your will.

Our experienced and trusted estate planning attorneys have been serving Treasure Coast families for decades, and Michael Fowler is one of only nine attorneys in the state of Florida who is double board-certified in wills trusts and estates and in elder law. Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.