Who Is Going to Pay My Bills?

Can you pay my bills? Can you pay my telephone bills? Do you pay my automobile bills? If you did then maybe we could chill.

Okay, so maybe we are not concerned about a boyfriend taking advantage of us like Beyoncé. However, the question of who will pay your bills when you pass away is a valid question and one that is determined based on the solvency of your estate when you pass away.

If you die and your medical and credit card bills start piling up it is important to understand who will be responsible for paying off all of these debts and in what amounts. The answer will depend on whether the estate of the decedent is solvent or insolvent.

What is a Solvent Estate?

A solvent estate is one that has enough assets to pay off the decedent's bills. This essentially means, the value of all the decedent's individual assets exceeds the amount of bills owed. If the estate is determined to be solvent, then the Personal Representative of the decedent's estate will be responsible for paying all of the bills from the assets owned by the estate. So basically, if there is money to pay the bills, the bills will be paid.

Example:

If all of the decedent's individual assets equal $50,000 and the credit card and medical bills equal $25,000, then the decedent's estate is solvent and can be used by the Personal Representative to pay the bills in full and the remaining $25,000 will be paid to the beneficiaries named in the Last Will and Testament or Living Trust (if there are estate planning documents prepared). If no estate planning documents are in place, the decedent's heirs at law will receive based off Florida Statute.

“Debt collectors are very creative and persuasive. Even if you are not responsible for the debt, they may use terms such as ‘moral responsibility’ and use guilt to make family members feel they have to pay debts.”

What is an Insolvent Estate?

An insolvent estate is one that does not have enough assets to pay off the decedent's bills. So when you add up all the assets, the value of the decedent's individual assets is equal to or less than the amount of bills owed.  If the estate is insolvent, then the Personal Representative will need to prioritize payment of the bills as provided by Florida law.

Example:

If the decedent's individual assets equal $50,000 but the credit card and medical bills equal $100,000, then the deceased person's estate is insolvent by $50,000. The Personal Representative will need to look to Florida law to determine which creditors will get paid in full, which creditors will receive only a partial payment, and which creditors will get absolutely nothing.

There are different classes of creditors and depending on where that creditor ranks will depend on if they get paid in full, partial payment or no payment.

Example

For instance, medical bills incurred within 60 days of the decedent's date of death will get paid before a credit card company gets paid.  If there are not enoughassets to pay the credit card company, they will only receive a proportionate share and the remainder will have to be written off by the credit card company.

In an insolvent estate, the decedent's beneficiaries will end up getting nothing. The good news is, that they will not be responsible for paying the balance of the decedent's unpaid debts (unless a beneficiary was a co-signor or co-guarantor on the debt).  The creditors that were not paid in full will simply have to write off the bad debt.

Debt collectors are very creative and persuasive. Even if you are not responsible for the debt, they may use terms such as ‘moral responsibility’ and use guilt to make family members feel they have to pay debts.

BEWARE: Creditors always come before beneficiaries. That is why it is extremely important to protect your assets and start estate planning today!

If you live in Miami-Dade, Broward, or Palm Beach County contact an experienced estate-planning and probate attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

            You Can't Predict The Future But You Can Plan For It.

Heroes Get Remembered, But Legends Never Die

Legend: MICHAEL JACKSON   

Estate Planning Mistake: FAILURE TO FINISH WHAT YOU START

The singer's fame and place in pop culture is so big that even though he was a human being like the rest of us, it seemed he would somehow live forever. That's partly why nearly everyone was shocked at his 2009 passing and still are today. 

Although the music legend, Michael Jackson, did so many things right in the music industry, one thing he failed to do right was his estate planning. One major lesson that can be learned from Michael Jackson's estate is: FAILING TO FINISH WHAT YOU START

Michael Jackson created a trust, but never fully funded it, which defeated a primary purpose of having a trust. This caused a lot of fighting within his family. His estate was made public when filed with the probate court and all secrets were let out for the world to see.

“If you never place the items you wish to keep protected into the safe, and someone robs your house, your assets are not protected. ”

Why would someone want a revocable trust?

What is a revocable trust?

A legal document that allows you to state your final wishes. In Florida, you can state who will receive and who will not receive from your estate. You are able to retain control of your assets during your lifetime and place stipulations on those who are to receive from your estate after your passing.  

What are the benefits of a revocable trust in Florida?

(1)Keep assets out of the probate court. Eliminates court fee and attorney's fees

(2)No delays and hassles associated with the probate process

(3)Private document. No one will ever have access to your financial information or who benefited from your estate.

How do you 'fund' a trust in Florida?

A trust is only as valuable as the assets that 'fund' it. If the trust is not funded, the trust is nothing more then a sheet of paper. Funding a trust simply means transferring property into the trust as well as retitling bank accounts, real estate and investments. 

For example, you purchase a safe that is fireproof, waterproof, and is drilled into the ground so a burglar cannot remove it easily from the home. If you never place the items you wish to keep protected into the safe, and someone robs your house, your assets are not protected. They were never placed in the safe. Same is true if you don't fund the trust with your assets. They will have to go through probate if not properly placed in your trust.

If you go through the effort of drafting a trust, make sure you complete the process and fully fund it. Last thing you want to do is pass away with a trust, and not get the full benefits of a trust.

If you live in Miami-Dade, Broward, or Palm Beach County contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs. You can’t predict the future, but you can plan for it.

Beneficiary Designations: More Important Than You May Think

In Florida, one of the simplest ways to ensure someone receives your assets, is to name a specific person as a designated beneficiary on your accounts. By law, beneficiaries (individuals or institutions) you designate for an account will receive assets in that account upon your death (avoiding probate).

What type of accounts allow a beneficiary designation?  

·      Retirement Accounts

·      Life Insurance policies

·      Annuities

In South Florida, it is important to name both a primary beneficiary and contingent beneficiary. The contingent beneficiary will receive the assets if the primary beneficiary predeceases you.

What type of account does not include a beneficiary designation?

Brokerage accounts do not include beneficiary designations, but you can complete a Transfer on Death (TOD) agreement to designate how your assets should be distributed.

“It is important to review your beneficiary designation regularly, especially when there is a life changing event (marriage, divorce, birth of a child, or death of a spouse)”

You must complete a separate TOD agreement for each single or joint account you have. A TOD agreement assigns beneficiaries, which helps you avoid the costs, delays and publicity of probate. Without the designation assigned to the account, the account would be subject to probate.

It is important to review your beneficiary designation regularly, especially when there is a life changing event (marriage, divorce, birth of a child, or death of a spouse). If you do not update your account beneficiaries, your assets could be inherited by someone you no longer wish to receive (ie. ex-spouse)

Keep in mind beneficiary designations trump what ever is stated in a will or trust. However, the will or trust can help direct how the funds will be distributed to the intended beneficiary. For instance, you might have a child who you do not trust with money, the will or trust will give instructions on how the money will be distributed to the child over a period of time so they don't spend all the money at once.

If you live in Miami-Dade, Broward, or Palm Beach county contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs. You can’t predict the future, but you can plan for it.

Let's Talk About Wills Baby

Let's Talk About Wills Baby. Let's Talk About Your Money. Let's Talk About All The Good Things and The Bad Things That Could Be. Let's Talk About Wills.

Ok, now stop singing and let's get serious.

What are the benefits of a will?

·      Easy to establish

·      Less expensive to establish

·      Governs the distribution of your assets upon your death

·      States who will be the guardian of your minor children or special needs children

·      States your wishes to be buried or cremated

·      Ability to be updated/amended at any time

“It does not govern assets held jointly or those that you designate a beneficiary”

What are things to consider with a will? 

·      Must go through probate

·      Does not address incapacity

A will is your strategy for distributing your assets upon your death. It applies only to assets that are held in your individual name. It does not govern assets held jointly or those that you designate a beneficiary. A will does not prevent probate. When you die,  the Judge reviews the will to determine if it is valid. Once the will is validated, the Judge will grant powers to the executor to collect and manage your assets and distribute your property to beneficiaries after creditors and taxes are paid. Make sure you pick someone you trust to carry out your final wishes.

One thing to keep in mind, a will is the only documents that can designate guardians whether it’s for a minor child or a special needs child.

A will does not address incapacity issues. In addition to having a will, everyone should have his or her advanced directives. That includes your Durable Power of Attorney, Healthcare Surrogate and Living Will. Those 3 documents specifically address incapacity.

If you live in Miami-Dade, Broward, or Palm Beach county contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs. You can’t predict the future, but you can plan for it!

Estate Planning for Retirement: Pay on Death Accounts

Your estate consists of both probate and non-probate assets. When you prepare a will you include probate assets to be distributed to named beneficiaries. If you have non-probate assets, regardless of whom you name as a beneficiary in the will, they will go directly to the pay on death “POD” beneficiary directly in the document.

Probate Assets:

Personal items, jewelry, art, antiques

Individual assets (property titled solely in your name)

Non-Probate Assets (Pay on Death):

• Life Insurance
• Retirement Accounts (401(k)s and IRAs),
• Annuities
• Bank Accounts (some)
• Jointly owned assets “tenancy by the entirety” “ with rights of survivorship”

A pay on death (POD) account names your beneficiary. As the name suggests, when you (the primary account holder) passes away the assets that are left in the account become the property of the named beneficiary.

“If you have non-probate assets, regardless of whom you name as a beneficiary in the will, they will go directly to the pay on death “POD” beneficiary directly in the document.”

There are some positives that come along with these accounts. These assets are outside of the probate process and there is a direct transfer to the named beneficiary.  You also retain control over the funds throughout your life and have the right to change beneficiaries or even close the account if you want to. Flexibility is certainly a good thing when it comes to your hard earned assets.

However, pay on death accounts are not a comprehensive estate planning solution. These assets are still a part of your estate for estate tax purposes so they do nothing to provide tax efficiency. There are no incapacity provisions, and you may not be able to give varying percentages of the resources left in the account to multiple respective beneficiaries.

If you live in Miami-Dade, Broward, or Palm Beach counties it is time to start preparing your estate-planning portfolio. Make sure both you and your family are taken care of in the future. You can’t predict the future, but you can plan for it.

Contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

Protect Yourself Before You Wreck Yourself

To protect yourself from life threatening illnesses, you get vaccinated.  Failure to vaccinate is acting recklessly. You have a greater chance of catching an illness that you could spread to other unsuspecting individuals.

To protect your wealth and family you need an estate plan. With no estate planning, you are acting recklessly. You will allow the State to determine how to distribute your assets, determine who will take care of your minor children, and allow creditors direct access to your funds before money is distributed to your children.

Vaccinations save thousands of  lives.

Estate planning saves thousands of dollars and makes sure your family is taken care of for generations to come.

“With no estate planning, you are acting recklessly.”

Estate planning is not a ‘once and done’ activity. The world is constantly changing and there is a chance that the estate plan you previously drafted no longer works as intended. You will need a ‘booster shot’ every time life changes.

If you live in Miami-Dade, Broward, or Palm Beach counties it is time to start preparing your estate-planning portfolio. Make sure your family is taken care of when you are gone. You can’t predict the future, but you can plan for it.

Contact an experienced estate-planning attorney at The Hershey Law Firm, in Fort Lauderdale, Florida, at (954) 303-9468 to discuss your estate planning needs.

Being A Trustee Is Not Just A Good Deed, You Receive “Reasonable” Compensation

You are named the trustee of a family member’s trust in South Florida. Your first reaction is, why me? Your second reaction is,: how much work is involved?

Many people choose to be their own trustee and continue to manage their affairs for as long as they are able. A successor trustee is named to step in and manage the trust when the trustee is no longer able to continue (usually due to incapacity or death).

The trustee has a very important role, to safeguard assets for others; for the grantor (if living) and for the beneficiaries, who will receive them after the grantor dies. The trustee essentially “manages” the estate.

“In Florida, trustee compensation is determined by the terms of the Trust, then by what is reasonable under the circumstances. ”

A trustee will be compensated for their services.  Trustees are not entitled to compensation simply by virtue of their appointment as trustee, but they must provide a service and/or benefit that are supported by adequate proof.

In Florida, trustee compensation is determined by the terms of the Trust, then by what is reasonable under the circumstances.  If the terms of the Trust do not specify the trustee’s compensation, the amount will depend on the type of trust administration which will be required.

The probate court may allow more or less compensation if:

(1) Duties of the trustee are substantially different from those contemplated in the trust.

(2) Compensation specified in trust would be unreasonably high or low.

(3) If trustee has rendered services in connection with the administration of the Trust, the trustee shall also be allowed reasonable compensation for other services rendered in addition to reasonable compensation as trustee.

It is an important to decision to decide who will be named a trustee for your trust. Speak with an experienced estate-planning attorney in South Florida to help advise you.  Contact The Hershey Law Firm, (954) 303-9468, located in Fort Lauderdale, Florida for your estate planning needs.