Category Archives: life planning

Avoid Probate -An Easy Reminder to Check Assets

beneficiaries, life planning, probate

As we get ready for tax time, you have a perfect opportunity to do a check on your assets to see which ones can avoid probate. 

Ideally, you would look at fine tuning your estate planning if anything has changed since you did your last will and testament.  These changes can include your divorce, new or dormant accounts (whether bank, brokerage or retirement) that you haven’t looked at in a while, or simply do not remember how you set them up. This would allow you to correct any errors to ensure an asset will avoid probate.

What is Probate and what is Included/Excluded?

Probate involves the administration of the estate (assets and debts) of a person who has passed away, the deceased. It is a legal process to ensure that the assets of the deceased are distributed to their heirs, and legal debts paid.

When a person dies without a will, or intestate, probate will be conducted according to the instate statute.  In Florida, the intestate laws can be found here (in Part 1 of Chapter 732) of the Florida Statutes.

If the person passed away with a will, probate will be administered according to the person’s will.

Generally speaking, assets that have a designated beneficiary will avoid probate.  This is the case, for example, with retirement plans, life insurance policies, bank accounts, certificates of deposit, investment accounts. 

Real property may also bypass probate, depending on how the property is titled; however, real property issues related to probate are not discussed in this post.

The important thing to remember is that for an asset to bypass probate, it has to have a designated beneficiary.  That is, a beneficiary has to be named with the institution holding the asset as the person who will receive the asset when the owner passes away.

For example, you have a bank account at XYZ Bank; they hold your money in that account.  By designating a beneficiary for payment upon your passing away, the account does not have to go through probate in order for your beneficiary to get the money.  It is similar for investment accounts.

Using Year-End 1099 Forms as a Checklist to Avoid Probate

Anyone who paid you money during the year in excess of $600 is required to provide you a 1099 form regarding the income they paid you.

For bank accounts that paid you interest during the year, the bank may or may not send you a 1099 even if the interest was less than $600.  Even if you do not receive a 1099, you are still responsible for reporting any amount received as interest.  But this would be a good opportunity to check the beneficiary on all your accounts held at any bank.

For brokerage or investment accounts, institutions will send you a 1099 related to dividends received/reinvested during the year.  Here too, you have an opportunity to check for a beneficiary designation.

Retirement plans are different in that they do not send you a 1099; they send a different form later in the year.  You still get to designate your beneficiary in most cases.

2 Important facts about Assets that Avoid Probate

There are two facts you need to remember about these assets.

First, because the asset will pass outside your will, the gift will be immediate, as it does not need to be probated.  This means that you should make sure you have designated the beneficiary you want.

Second, you may want to consider designating a primary beneficiary and a contingent beneficiary.  The primary beneficiary will receive the asset if they are alive at the time of your passing.  If, however, the primary beneficiary is no longer alive when you pass away, then the contingent beneficiary will get the asset.  In this way, you don’t leave the asset without a beneficiary, which would cause it to go through probate as part of your general estate.

Conclusion

Florida law provides you an opportunity to avoid probate for many assets.  Making sure you have designated a beneficiary for them lets you take advantage of that opportunity.

This post is general information and not legal advice. If you have questions about your specific situation, you should consult an attorney to get legal advice for you.

Life Planning –Getting to Where You Want to Be in the New Year

Holidays, life planning

Life planning can be an idea that either scares you or excites you, depending on what you think about when you hear the phrase.    The good news is that life planning is all about setting a goal -or set of goals -for the near future, and the steps you need to take to realize those goals. It is not about planning every minute of your waking day.

Although the New Year is a perfect point for starting a life plan, you can start at any point during the year.  All you need is at least one goal that you really want to achieve, something that is important to you now.

Contents:

Life Planning and Unfinished Business

A natural place to start life planning is to take stock of whatever you have started but not finished. If, for whatever reason, you decide that any unfinished business is not important to you any longer, than you can close them out in your mind and begin with a goal that you now want to accomplish.

In terms of unfinished business, the only thing to watch out for is the habit of not finishing what you start.  A pattern of not finishing what you start will naturally lead to nothing being accomplished. It’s hard to accomplish a goal without taking steps to accomplishing it.

How to Start a Life Plan

Ideally, your life plan will include goals that are relevant to you in all areas of your life.  I find that to be an intimidating thought.  Some will tell you to create a vision.  Others will tell you to prioritize your goals.  Still others advice that you conduct a self-assessment.

I have found creating a vision to be useful.  It is nothing more than taking some time to think about what I want my life to look like in a year’s time—to envision a day in my life in the future.  Then, I work backward to establish a goal to get to what I have envisioned, and the steps I need to take during the year to get there.  I have found that when envisioning my life in a year’s time, there is usually one area that stands out; that is the area I build my plan around.  I don’t build detailed plans about every area of life; I also don’t write down more than 3 or 4 general steps.

I think the most important approach for starting a life plan is the one that will work for you.  Some people write very specific steps and reviewing weekly or monthly.  Other have a general idea or direction and follow it.

Stay Flexible

Like any planning, one has to remain flexible in the steps one has to take.  I’ve found that evaluating what I do in terms of my general steps is a more sane way for me to following a plan; and I prefer to follow the steps I set out as best I can.  When the year is up, it doesn’t matter if I followed each step I set out to the letter or if I varied it some.  I still get a version of what I envisioned.

Writing Your Life Plan for the New Year

Once you have a life plan, it’s time to write it down.  There are life plan books you can buy; and, of course, there are apps for that as well.

Whether to use pen and paper or a digital app is really a personal preference.  However, research suggests that using pen and paper makes it more likely that you will remember what you write down.  Personally, I’ve found this to be true as I write my life plan on a journal.

Why Plan?

If you’ve  read this far, you may be wondering about why make a plan.  You only need a plan if you want to accomplish something, want to keep focus on it, and minimize distractions.

Otherwise, my guess is that no plan is needed.  Below is a quote I love from Alice in Wonderland, which encapsulates the ideas of plans/goals pretty well:

“Alice: Would you tell me, please, which way I ought to go from here?

The Cheshire Cat: That depends a good deal on where you want to get to.

Alice: I don’t much care where.

The Cheshire Cat: Then it doesn’t much matter which way you go.

Alice: …So long as I get somewhere.

The Cheshire Cat: Oh, you’re sure to do that, if only you walk long enough.”

Conclusion

The approach of a New Year gives us an opportunity to set and accomplish goals important to us. Tying up unfinished business can be part of a life plan. On the other hand, life planning can be a useful tool to help you accomplish what you want, whenever you want.  Setting out steps to accomplish your goal(s) keeps you focused and minimizes distraction. 

Much of what I write during the year has to do with divorce and other legal documents.  As family lawyers, we know that our services to a client are not rendered in a vacuum.

You may come to us for a divorce or life documents because these are areas you need to take care of and fit within the idea you have of your life going forward.  This is a different perspective than seeing divorce as something that happens to you; or a last will you do ahead of time as opposed to forcibly facing our mortality.  I find this different perspective to be more empowering.

I share here the idea of life planning as a tool because I have found it useful throughout the years, and don’t get much of an opportunity to discuss it otherwise with my clients.