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Will You or Won't You?

A Guide to Preparing Your Will & Trust

Your Last Will and Testament is your directive that controls the distribution of your property at your death. Your Will speaks only at your death, and does not transfer any property during your lifetime. You may make changes during your lifetime.


A Trust is a written agreement between you and your trustee regarding the management of your property both during your lifetime and at death. When properly funded, a trust will avoid probate at death.


Both Wills and Trusts permit you to provide for your beneficiaries in a variety of different way, including creating separate trusts for the benefit of specific beneficiaries, to select the fiduciary that will carry out the administration of your plan, and to name guardians for your minor children.


The following questions and answers will assist you in deciding whether a Will or a Trust might best fits your needs. It will also prepare you for the initial estate planning appointment, where we will walk you through the planning process and answer any additional questions that you may have.

Do I need to make a Will?


This is the first decision that you need to make. If a person dies without a will, that person is said to have died intestate. The laws of the state in which you are domiciled at the time of your death will govern how property will be distributed if you do not have a will at the time of your death. This intestate distribution may not be what you would desire.


In Florida, property passes to the surviving spouse only if the children are from the same marriage. If there are children from a previous marriage, the spouse receives one half of the estate, and the children receive the other half.


Another important reason to have a will is to nominate a guardian to care for your

minor children. Without a will, the court will determine who should take care of your children. When your children reach age 18, they will be entitled to the full distribution of their inheritance without any control or supervision of those assets.


For these reasons, most clients conclude that a will is the first step in developing their estate plan.


What are the steps in making a Will?


Making a Will is not difficult. It need not be expensive. Prior to your initial estate planning appointment, our office will send you an estate planning questionnaire, which will guide you through the planning process. The following are the decision making steps to be thinking about prior to your initial appointment:


Step 1.

Decide how you would like your assets to be distributed at your death. Determine the needs of your beneficiaries, including whether they may need special consideration, such as holding their share in trust until they are older. Prepare a net worth statement, listing your assets and how they are titled to assist us in determining the type of will that will best fit your needs.


Step 2.

Meet with us to individualize your plan regarding the best way to distribute your property, and to select your personal representative, trustee and guardians.


Step 3.

Sign your documents in our offices. Florida has specific legal requirements regarding the execution of Wills that need to be carefully followed. Discuss with where your original will will be placed for safekeeping.


Will my Will be probated?


If you choose to use a will, rather than a trust, you will have a probate estate at death. Wills do not avoid probate, but rather direct the probate process.


What is probate?


Probate is the legal procedure that distributes a person’s property at death. In probate, a personal representative (what other states may call an executor) is appointed by the court to act as the Estate’s legal representative. The personal representative works in concert with the probate attorney to ensure that the legal requirements for estate administration are followed, that debts of the decedent are paid, and that distribution to the beneficiaries are made in a timely and orderly process. In Florida, most estates are required to have a Florida attorney assist in the probate process.


What property is subject to probate?


Only property that is owned in the deceased person’s name alone is subject to probate. Property owned jointly with another party will pass by operation of law to the surviving joint tenant. Any property with a beneficiary designation, or by a Payable on Death (POD) or Transfer on Death (TOD) designation, will pass to the designated beneficiary.


How long does it take to probate an estate?


How long an estate is open is dependent on a variety of factors including the size the estate, creditor issues, the need to dispose of assets, income or estate tax issues or other legal issues.


By statute, the estate must remain open for at least four months. In practice, however, most estates are open for about a year. Larger estates can be open for several years.


Can’t I just holder everything as joint tenants?

Most married couples hold the majority of their assets as joint tenants with rights of survivorship. At the death of the first spouse, all jointly held assets pass to the surviving joint tenant by operation of law, without going through a probate estate or a trust.


Often, the surviving parent will place their accounts jointly with a child or with all children. This can cause issues. In the event of a common accident, where both parents die at the same time, assets would be subject to probate administration.


Placing a child’s name on your account during your lifetime can affect the child’s ability to “step up” the basis of the account at death. Creditors of your children may be able to legally attach the assets. You could lose control over the assets.


For these reasons, you should discuss the implications of joint tenancy with me.


What does a guardian do?


If you have minor children, one of the most important reasons for making a will is the ability to name a guardian for your children. The guardian will be responsible for the legal and physical custody of your children under the age of 18. You should give careful consideration to the nomination of your guardian prior to making your estate planning appointment. You may want to name an alternate person, in the event that the original guardian is unable or unwilling to serve.


All About Trusts

What is a trust, and why do I need one?


A trust is a contract between a Grantor (the person creating the Trust), a Trustee (the person responsible for administering the trust) and a beneficiary of the trust. There are literally hundreds of different types of trusts. For purposes of most estate plans, however, we will address testamentary trusts and revocable trusts.


A testament trust is a trust that is contained in a Last Will and Testament. The trust is not created or funded until death. For example, you may state in your will that if your child is under a certain age (for instance, age 30) at death, the share of that child is to be held for their benefit until they reach the stated age. The trustee would hold these funds, paying for the child’s education and welfare, until the child turned 30.


A revocable trust is an agreement between the Grantor and the Trustee that is effective during your lifetime. Typically, during your lifetime, you are the Grantor, the Trustee and the Beneficiary. The trust is effective during your lifetime, and you have the ability to change it at any time. During your lifetime, you manage your property as you desire, just like you would do outside of the trust.


An important aspect of a revocable trust is the benefit that it provides should you become unable to manage your finances. At that time, your designated successor trustee would step into your shoes, to continue to manage your finances for your exclusive benefit. This may eliminate the need for the appointment of a court ordered guardian to manage your financial affairs.


At death, the successor trustee assumes control over the trust. The trust then acts similar to your Will, to pay your creditors, file your final tax returns, and make a distribution of your assets to your designated beneficiaries, in accordance with the terms of the trust. If all of your assets are titled in the name of your trust, then you do not own any assets that would be subject to probate administration.


Probate avoidance is the number one reason to consider a revocable trust. This can save your heirs thousands of dollars in legal and accounting expenses at death.


Additionally, a trust can often be administered in a much shorter time period that a probate administration.


Finally, a trust offers significant privacy:

  • The trust is never filed in the public record, so no one can read it to know who received you assets at death. (Wills are public records).

  • No inventory of trust assets are ever filed, so no one knows how much your estate is worth at your death.

  • Your trustee manages all of your trust assets without court supervision.


The trusts are often called “revocable, living trusts”, meaning that you can amend or revoke the trusts during your lifetime. Because the trust continues in administration after your death, the trust is said to be a “living trust” that extends beyond your lifetime.


Funding your trust (transferring assets into the name of the trust) is a vital requirement of the trust process. Be sure you discuss how to fund your trust with us to make sure that the trust is effectively used.


Who should I name as a Trustee?


During your lifetime, you will likely be the trustee of your own trust. At your death, your  named successor trustee continues the administration of the trust, and follows the directions contained in the trust. This can be an individual, such as an adult child, or a professional trustee, such as a corporate trustee. The selection of a trustee is very important to making sure that the trust is property administered. You should discuss with me the selection of your trustee, including the benefits of using a corporate trustee.


Planning for Larger Estates


Recent changes to the Federal Estate Tax system raised the exemption from Federal Estate Tax to $11.2 million for an individual or $22.4 million for a married couple. The tax rate above this exemption is 40%. If your estate exceeds this amount, it is important that you discuss how to structure your estate plan to minimize your federal estate tax, and to maximize planning opportunities.


One way we do so it to use credit maximizing trusts. Credit maximizing trusts are revocable trusts that divided the estate of the first spouse to do into two separate trusts.


The first trust, called the “family trust” is funded with the federal estate tax exemption amount ($11.2M). The second trust, called the “marital trust” is funded with the excess.


During the surviving spouse’s lifetime, s/he receives income from the family trust, but has limited access to the principal of the trust. The surviving spouse has broader access to the marital trust, receiving both income and principal as necessary to support the surviving spouse’s lifetime. At death, the balance of the marital trust is taxed to the second spouse’s estate. The balance of the family trust passes tax free to the beneficiaries.This structure assures that a married couple takes full advantage of the combined $22.4 million credit.


Changes to the Federal Estate Tax laws also permit a surviving spouse to claim any unused federal estate tax credit on the death of the first spouse, referred to as “portability”. The use of portability is complex, and can be lost in the event of remarriage.


I suggest that you discuss with me the best planning methods to make sure that you maximize your federal estate tax credits.


Couples with estates larger than $22.4 million, or individuals with an estate in excess of $11.2 million require special estate planning, including the use of more complex trusts.


My estate is less than the Federal Estate Tax Exemption. Do I still need a trust?


Yes. A revocable trust will still avoid probate, and prevent public disclosure of your assets at death. If will avoid significant legal and accounting fees related to probate administration, which could be as much as 3% of your estate. The period to administer a trust is typically shorter than a full probate administration.


How do I change my Will or Trust?


You are always able to change either your will or trust, as long as you are competent. As life situations change (deaths, births, marriages, divorces), or if you simply change your mind about how you want your property to be distributed, you should contact me to assist you in making these changes. Often, changes can be made through an amendment to the will called a codicil, or by amending your trust. Other changes may require you to execute a new will, or amend and restate your trust. Never try to make a change to your will or trust without consulting an experienced attorney, as improperly made changes can void your documents.

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