Wills, Trusts, & Estate Planning
Wills:
A will is a document which designates who is to receive one’s assets upon death. Without a will, your property will pass under the intestacy laws. The intestacy laws are a “one-size fits all” solution: If you die with a spouse, everything goes to your spouse; if your spouse dies first, everything goes equally to your children; etc…). However, in life one size does not always fit all. Sometimes a testator wants to exclude one of his or her relatives from a will. Maybe the testator is estranged from their family, and they would rather leave their property to charity, or to friends. LBGT couples must certainly have a will to ensure their estate goes to their partner. Non-married co-habiting couples also need a will if they wish their assets to pass to their partner when they die. Anyone who wishes to leave assets to a step child must have a will. In any of these situations, a will is essential because the intestacy statutes only provides for assets to pass to blood relatives. Everyone should have a will, regardless.
Wills can be as simple or as complex as the testator wishes. The testator can just say that their entire estate is to be divided between their three children. Or they can leave very specific bequests to a number of people or organizations.
A will in Florida must be in writing, and signed in front of two witnesses. It is also very helpful if the will is “self-proving”, which is an additional portion of the will where the testator and witnesses sign in front of a notary. If a will is not self proving, the witnesses will need to be tracked down to file an oath in order to open a probate estate.
Trusts:
There are many kinds of trusts, some of which have very specific purposes for estate tax or income tax planning. Most of these types of more exotic trusts are directed at preserving extreme wealth. For most of us, these types of trusts are not relevant, and this firm is not involved with those types of trusts. The federal estate tax exemption is now $11.4 million for an individual and $22.4 million for a married couple (as of 2019). If you are in a position of needing an estate plan for tens of millions of dollars of wealth, then you should find a firm which bases its practice on tax planning for those types of high net worth individuals.
When most people (other than those mentioned in the prior paragraph) refer to a trust, they are referring to a revocable living trust. A revocable living trust is created with a document called a Trust Agreement. A trust agreement provides that the person creating the trust (“settlor”) is transferring assets to a person to be in charge of the assets (“trustee”), for the benefit of others (“beneficiaries”). The trust agreement contains all of the rules which must be followed in administering the trust.
Trust Property: In order for a trust to function it is necessary for the settlor to transfer assets into the trust. The settlor will need to transfer bank accounts, real property, investment accounts, and all other property into the name of the trust. Once that is done, the trustee has power over all of those assets.
Why set up a trust?
Probate avoidance.
If all of your assets are placed in a trust, then they transfer at death to your beneficiaries without having to go through probate, thus saving time and expense. As with a will, you can name in your trust to whom your assets will pass upon death, and also name a successor trustee, to be in charge of things in the same way a personal representative would be in a will.
Combining yours and your spouse’s estate plans jointly. A joint trust between husband and wife provides estate planning for two, with assets flowing directly from husband to wife upon the death of one.
Incompetency provisions: Since a trust is in effect during your lifetime, not just upon your death, trusts can provide for taking care of your assets and finances in the event you become incapacitated, either physically or mentally.
- Durable Power of Attorney
- Health Care Power of Attorney
- Living Will
