Jennifer R. Denorio: Estate Planning for Christians

Jennifer R. Denorio:
Alright, guys, thank you so much for having me. My name is Jennifer R. Denorio, and I'm an estate planning attorney with Lich, which is literally just around the corner. We also have an office in Sebastian, and I work in both of those offices.

Today, we're going to talk about estate planning for Christians. Most of this is just going to be about estate planning, but I'm going to throw in some foundations for Christians and what we should be thinking about while creating an estate plan for ourselves and our families. Ultimately, today we're going to learn three steps to plan and protect your estate:

Know the rules: You have to know a little about the law before you can get started.
Know your predators: Understand who is coming after your stuff.
Know your options: Figure out what your options are.
First, I want to discuss some foundations for estate planning. One thing to remember is that we are just stewards. God is the owner of all, and our responsibility as stewards is to figure out what His plan is for us and incorporate that into our estate plan. Another thing to keep in mind is that love is the basis of all giving. Always keep love at the forefront, and remember that people are more important than dollars. Think about how these distributions, when you are no longer here, will affect the people involved. Unfortunately, we see a lot of fighting when people pass away, so keep that in mind as you create your plan.

Jennifer R. Denorio:
So, let's get into it. First, we need to know the rules. There are rules for when you are alive and rules for when you pass away. Two separate sets of rules. When you are alive, the government says that someone must be able to act on your behalf at all times. If you're alive and well, you act for yourself. But if you are alive and no longer well, meaning you no longer have the capacity to make decisions, the government says that you can choose who is in charge, or they will choose for you. This choice is made through documents known as advance directives, including your power of attorney, healthcare surrogate, and living will.

A power of attorney allows you to name someone to make legal and financial decisions for you if you are unable. A healthcare surrogate allows you to choose someone to make healthcare decisions for you if you're unable. Some places combine these documents into one, but ours is not, which allows flexibility. For example, you might have one child who is good with finances and another who is a nurse, so you can designate different people for different roles.

It's important to know that these documents are effective immediately upon signing. So, you need to pick someone you trust because these documents are very powerful. They only last while you're alive; they are no longer effective once you pass away. The third document is the living will, where you state your wishes on whether or not you want your life artificially prolonged if there’s no reasonable chance of recovery. This is the scary one, but it’s so important. I had a client recently who had to make this decision for her mom, who didn't have a living will, and they had never discussed it. She had to make the decision to let her mom go, and nine years later, that decision still haunts her. This document is really for your family members or whoever you put in charge to make that decision easier.

If you don’t get these documents together before you become incompetent, the government says you must have a guardian appointed through a guardianship proceeding. Guardianship is essentially a full-blown trial to determine if you are incapacitated or not. It involves attorneys, doctors, and it's not quick or cheap. Every time you want to do something, you have to ask the judge. The judge may pick someone you don’t want in charge. So, it's crucial to have these three documents in place to make sure your voice is heard.

Now, let’s talk about what happens when you pass away. We look to your last will and testament, if you have one. It states who will get your stuff and who is in charge of distributing it. However, just because you have a will doesn’t mean you’ll avoid probate. A lot of people think that having a will is enough to avoid probate, but that’s not the case. Your will is actually what gets filed with the probate court to tell them who your beneficiaries are and who’s in charge. Whether or not your estate will go through probate depends on how things are titled. If you pass away with assets in your individual name, with no joint owners or beneficiary designations, those assets must go through probate before being distributed to your beneficiaries.

Probate is a legal process that comes with delays, expenses, and it’s public. On average, probate takes about nine months, and that's if everything goes smoothly. It can be very expensive, starting at 3% of the estate value in Florida. Lastly, it’s public, meaning anyone can go in and see your will, your assets, and everything involved. If you can avoid probate, you should.

If you don’t have a will, we look to the intestate statute, which is like a family tree. It tells us who gets your assets if you pass away without a will. However, I wouldn’t leave your estate in the hands of this statute because there are some odd rules. For example, if you have a spouse and children from a previous relationship, the spouse only gets 50% of your estate, and the children get the other 50%. It's best not to leave it up to the statute.

Jennifer R. Denorio:
Now that we understand the rules, we need to figure out who your predators are. The top predators are the government (through guardianship and probate), taxes, long-term care costs, and your family. Yes, your family can be predators. For instance, in a second marriage, a spouse might change their will after the other spouse passes away, cutting out stepchildren. Or a beneficiary with financial issues or addiction problems might not be the best person to leave a large sum of money to. There are better tools to protect assets for your spouse, family, and children, which we’ll get into.

The best way to protect from these predators is by using a trust, specifically a revocable trust. In a revocable trust, there are three parties: the grantor (the person who creates the trust), the trustee (the person in control of the trust), and the beneficiaries (the people benefiting from the trust). While you are alive and well, you are all three of these people. The biggest benefit of a trust is probate avoidance. If your revocable trust is properly funded, your estate will not go through probate when you pass away.

The trust will lay out who your beneficiaries are and name a successor trustee who will handle distributing everything. This process is quick, inexpensive, and I see a lot less fighting when a trust is involved. Additionally, the trust can provide creditor protection for your beneficiaries. For example, if you leave assets outright to a beneficiary, that money is not protected. But if it’s held in trust, it is protected from creditors, divorce, and other issues.

When you pass away, the trust becomes irrevocable, meaning no one can change the terms. This is another layer of protection.

Audience Member:
Can I take the assets from a trust and put them into another trust that goes to my children?

Jennifer R. Denorio:
No, because it’s not your trust to begin with, but you can take the assets out and create your own trust.

Audience Member:
How do you protect a handicapped child in a trust from losing benefits?

Jennifer R. Denorio:
You do that through a separate share trust. The assets go into a trust account for their benefit, which will not affect their public benefits.

Audience Member:
Are there limits on disbursements from the trust?

Jennifer R. Denorio:
It's up to you. You decide how the disbursements are handled, whether it's monthly income, a set amount, or the trustee’s discretion.

Audience Member:
Can you designate a charitable organization as part of your estate plan?

Jennifer R. Denorio:
Yes, and it's a good tax planning tool as well.

Audience Member:
We have four kids and a revocable trust. Is there a mechanism to ensure everything goes into individual trusts for each child?

Jennifer R. Denorio:
Yes, you can amend your existing trust to make that happen.

Audience Member:
If a husband and wife create a revocable trust and the husband passes away, can the wife change the trust?

Jennifer R. Denorio:
It depends on how you set it up. You can specify that after the husband passes, the wife can or cannot change the trust, depending on your preferences.

Audience Member:
How much in assets should you have before considering a trust?

Jennifer R. Denorio:
It’s not necessarily about the amount but the type of assets and beneficiaries. For instance, if you have property in multiple states, a trust might be beneficial to avoid multiple probate processes.

Jennifer R. Denorio:
One last thing I want you to keep in mind as you create your plan:

Be responsible: Take the time to consider your options and get a plan in place.
Limit your expenses: Learn how to limit expenses like probate, taxes, and guardianship now.
Balance: Decide the balance between providing for your family and giving to charities and the Lord.
Communicate: Explain your plans to your loved ones to avoid confusion.
Be organized: Create an estate plan binder with all your documents, asset information, passwords, and important details.

Jennifer R. Denorio:
Take action and get a plan in place. It doesn't have to be a trust; there are many options available. If you're interested, we offer longer estate planning seminars where we go into more depth. These seminars usually last about an hour and a half, and we cover a lot more detail on all these topics.

Thank you for allowing me to speak today.

Audience:
Thank you.