Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

THE ROLE OF YOUR HEALTH CARE SURROGATE

The creation of a Health Care Surrogate is a vital part of every Florida estate plan. However, the individual appointed to serve in this capacity typically has no idea what the job may entail. The following is a brief synopsis of their expected responsibilities on your behalf: approving medical treatments, medications, diagnostic tests; requesting and approving the release of medical records; determining where medical treatment will be provided (hospital, rehab facility, nursing home, Hospice, etc.); obtaining a second medical opinion; handling insurance carriers and claims; and most importantly communicating with family members. To be an effective Health Care Surrogate the appointee should become familiar with your specific values (religious and spiritual), medical history, end-of-life desires and legal documents. This information will make for an easier transition when you can no longer make decisions for yourself.

TAX REPORTING OF YOUR QUALIFIED CHARITABLE DISTRIBUTION

The ability to transfer up to $100,000 each year from your IRA to charity tax-free, have it count as your Required Minimum Distribution (RMD) and have it not included in your adjusted gross income is now a permanent part of federal tax law. As a result it is important to understand how a Qualified Charitable Distribution should be reported to the IRS. The gift should be reported on IRS Form 1099-R, which you should receive from the IRA administrator. The gift should also be listed on line 15a of your Form 1040 as a gross distribution from your IRA. On line 15b, write $0 for the taxable amount (if you don’t have any taxable distributions from your IRAs for the year). Add “QCD,” for “qualified charitable distribution,” next to that line to show why the distribution is tax-free. If only part of your distribution was a QCD, put the taxable portion on line 15b and still add “QCD” to explain the difference between line 15a and 15b. It is recommended that you keep an acknowledgement of the gift from the charity in your tax files. If you do not receive one you’ll need to let the charity know to send you the receipt. Keep the 1099-R form and the acknowledgement of the gift from the charity in your tax files.

REASONS TO FUND YOUR REVOCABLE TRUST

You have created a Revocable Trust (aka Revocable Living Trust) as a part of your estate plan and wonder what do you need to do next? The first, and most important thing, that you need to do is ensure that it is properly funded by transferring or assigning ownership of your assets and real property to the Trust. The benefit of properly funding your Trust is that you will not lose any control over or enjoyment of the assets. While you are handling the funding process it is important to recognize why you are doing it: Avoidance of Probate Proceedings. The most common reason individuals create a Revocable Trust is to avoid probate. Probate is the court-supervised transfer of assets from the estate of a deceased person to his or her beneficiaries. However, if all of the decedent’s assets are held in a Revocable Trust at his or her death, they are not subject to probate proceedings in either their state of domicile and any other in which they may own real property. The successor trustee can distribute the assets to each beneficiary without supervision by the court. Management During Incapacity and at Death. Should you become incapacitated the assets maintained in your Revocable Trust can be utilized by your successor trustee, without the necessity of guardianship court intervention, to handle your financial affairs. Similarly, upon your death, the assets can be seamlessly assumed by your successor Trustee, without the need to wait for probate proceedings, and distributed to your beneficiaries. Privacy and Confidentiality. Unlike a Last Will & Testament that will be filed with the probate court, a Revocable Trust is not a matter of public record. Information is reported privately to the beneficiaries and the public will have no access to this information. Every time a new asset is acquired or account opened by you it should be titled in the name of your Trust.

ESTATE PLANNING IS NOT JUST FOR THE OLD AND WEALTHY

Is your child ready for college? While you may have purchased for them new clothing, linens, towels, etc. the question becomes whether they have executed an estate plan? Most families fail to recognize that once their child (young adult) reaches age 18 years they are considered an adult under most state laws and their parents can no longer make all financial and health care decisions for them or have access to their medical records. As a result, estate planning is not only for the old or the wealthy and every individual over age 18 should have, at a minimum, a Power of Attorney and Health Care Directive. A Durable Power of Attorney designates another individual to act for the young adult in legal and financial matters. It is mainly used in the event of an accident or incapacity rendering the young adult unable to effectively manage legal and financial matters. Having such a document in place would avoid the necessity of having a guardian or conservator appointed should an accident or incapacity happen. The Health Care Directive empowers another to make health care decisions in the event of incapacity, articulate their wishes and directions in the event health should deteriorate and designates another to act as “personal representative” for purposes of HIPAA to authorize the release of medical records if necessary to obtain medical treatment. Make sure they have these documents in place prior to dropping them off in college.