Estate planning often includes durable power of attorney
BY RAY PALMER Special to Gulf Breeze News news@gulfbreezenews.com

Palmer

An estate plan should include meeting lifetime objectives, death transfer objectives and incorporate tax planning strategies. The estate plan should anticipate and provide for lifetime needs including income from retirement, replacement of income in the event of disability, and management of the estate in the event of incapacity. The Durable Power of Attorney (DPOA) is often used in the event of incapacity. The durable aspect means that the DPOA shall survive the incapacity of the principal. The DPOA is terminated upon death, revocation or appointment of a guardian. The guardianship process is process most families should avoid and can be avoided in most cases with the DPOA. Thought should be given as to who is best to act as agent, who should act as alternative agent, or whether joint or dual agents should be appointed. Caution should be exercised in selecting the agent. The agent designated in a power of attorney may be able to access bank accounts, sell property and take other actions provided for in the document. Certain powers must be specifically provided for in the power of attorney or the power of attorney will not be effective. Florida provides for springing power of attorney whereby a power of attorney only becomes effective upon the incapacity of the principal. Asset protection devices include homestead exemption, life insurance, tenancy by the entireties, qualified retirement plans and irrevocable trusts.

Death transfer objectives should include maximization of assets transferred. Planning often avoids the cost of prob ate. Properly titling assets may result in the streamlined and less expensive summary administration procedures provided for in Florida as opposed to a full administration. Revocable living trusts are often used to avoid or minimize probate. Trusts can take on many different characteristics and thus the many names that trusts are known by: revocable, irrevocable, inter vivos, testamentary, charitable remainder, etc. Your estate planning attorney can discuss whether a trust is an advisable tool in your estate plan.

Federal Estate Tax is a tax on transfer of net worth. Tax planning for wealth transfers should address both gift tax and death tax issues.

Two basic tax planning methods utilized include gifting and maximizing the unified credit allocated to each individual.

Through December 2008 each individual may transfer $2,000,000 in assets upon their passing exempt from Federal Estate Tax. Proper tax planning contemplates using both the unlimited marital deduction and the unified credit for maximum benefit. Disclaimers are another device that should be considered in reaching one's estate plan objective. Even if your estate is not taxable, preparing a durable power of attorney, last will and testament and a living will provides for an orderly and effective transfer of your estate.