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1. Last Will and Testament:
What is a Last Will and Testament?
A Last Will and Testament is a legally enforceable writing that settles these main questions:
A Last Will and Testament can be specifically tailored to your specific needs and desires. For instance, if you want to leave a gift to young beneficiaries, but don’t want them to receive the assets until they have matured, then, a “testamentary trust” can be included in your will that directs your personal representative to distribute assets in a time-controlled or upon the meeting of certain conditions.
2. Revocable Trust.
What is a Revocable Trust?
A Revocable Trust (also called a Living Trust) is an estate planning vehicle that will allow your assets to be distributed to your beneficiaries without the need for any probate (legal/court process). A Trust is a legal contract that you (as Grantor) make with yourself (as Trustee) during your lifetime. Once a Trust is established, it is like a basket that you fill up with your assets during your lifetime —your real properties, your accounts, your vehicles, your companies, etc. During your lifetime, you are the “Trustee” or manager of the assets, and you are also the only beneficiary of those assets. When you pass away, the Trust retains ownership the assets your transferred into the Trust during your lifetime, and there is no need for probating any of the assets in your Trust. Your Trust “basket” gets passed to your Successor Trustee, who then holds or distributes your Trust assets to your named beneficiaries according to the directions you have left in your Trust.
Funding the Trust: In order for your trust to hold any assets, you must “fund” your trust. Funding a trust means retitling assets, such as real property, vehicles, bank accounts, investment accounts, business interests, etc. in the name of your trust. YOUR TRUST WILL ONLY AVOID PROBATE TO THE EXTENT THAT PROPERTY IS PROPERLY TITLED INTO THE TRUST. A common misconception is that once you make a Trust, all of your assets automatically move into the Trust. This is not true. Making a Trust is like making a basket. Once you have made the Trust basket, you must transfer your assets into the Trust basket during your lifetime. This means you must take action to transfer your assets into the Trust. If you pass away with property titled in your individual name rather than in the name of the Trust, it would be necessary to probate this property, which will not serve the intended purpose of avoiding probate and simplifying the transfer of your assets after death.
Making changes to the Trust: Like your Last Will and Testament, your Revocable Trust may be amended or revoked by you during your lifetime. It is not necessary that you amend the Trust merely to deposit or withdraw property from the Trust. It is suggested that you periodically review the terms of your Trust to make sure it continues to reflect your intentions. If you amend, modify or revoke the terms of provisions of the Will or Trust Agreement, it must be done in a manner prescribed by law in order to be effective.
Tax treatment of a Revocable Trust: You are not required to file a separate tax return for your Trust, so long as the Trust assets and incomes are owned and controlled by you. All income and deductions from the Trust should be reported on your Individual Form 1040 in accordance with its instructions. When you pass away, your Trust becomes “irrevocable,” and will be assigned a separate EIN for any required tax filings.
How is a Trust different than a Will?
Like a Trust, a Will is also an estate planning vehicle that sets forth how you wish your assets to be distributed upon your death. The distribution of assets by Will requires the probate process, which is typically a 6-12 month judicial process (requiring an attorney), depending upon the value of the assets that are to be distributed and the type of probate required (full administration vs. summary administration). The costs of probate administration include the court costs (approx. $350-$550, depending on the type of probate), the attorney fees (minimum $1,500 up to a maximum set by FL statute, based upon a percentage of the value of estate assets). On the other hand, any assets held by the Trust will not need to be probated.
Although a Trust and a Will are both effective estate-planning vehicles for distribution of assets upon death, having a Trust keeps your estate privately-managed by your family, according to your terms, avoiding the time and costs of probate administration.
What is the cost difference between a Trust package and a Will package?
A standard Trust package, which includes a Revocable Trust, Pour-Over Will, Medical Powers of Attorney, Durable Powers of Attorney, Living Will, and Instructions for Disposition of Remains, and a Deed to Trust (to transfer your real property into the Trust), will typically cost $1200-$1600. A basic Will package includes Last Will and Testament, Medical Powers of Attorney, Durable Powers of Attorney, Living Will, and Instructions for Disposition of Remains and will typically cost $325-$525. Although a Trust package costs more to set up during your lifetime, the savings in time and money after your death is much greater than the time and money that would be spent through the probate process after death.
3. For out-of-state decedents:
If someone passed away owning real estate or other property in Florida, but being domiciled in another state, then Florida “ancillary” probate may be necessary to transfer the FL property to heirs or beneficiaries. For out-of-state clients, we offer the full scope of ancillary probate administration services in Florida, as well as Trust administration and distribution of trust assets.
4. What is probate?
Probate is a term used to describe the legal process that takes place after you die in order to transfer ownership of your property to your beneficiaries (if you had a will) or to your next of kin (if you did not have a will). There are two types of probate: Full Administration and Summary Administration. If you die leaving non-exempt property valued at over $75,000, the Full Administration is necessary. Full Administration is a longer process that includes a “Notice to Creditors” publication in the newspaper and a 90-day “Creditor Claim Period” that allows your creditors to file claims against your estate. To qualify for a summary administration, which is typically a shorter probate process and does not include a “Creditor claim period,” the value of the estate's nonexempt assets must be less than $75,000 or the decedent must have passed away more than two years ago.
5. Is probate always necessary?
Probate is not necessary if the decedent had no property. If you think you will own any assets when you die, then probate will be necessary unless you take preventative action during your lifetime. With proper estate planning, (which is our specialty!), probate can often be avoided altogether, and your property can pass in a twinkling of an eye, without any court process. Without proper planning, probate cannot be avoided after death.
6. What are the main ways to avoid probate?
Naming Payable on Death beneficiaries on your financial and retirement accounts.
Creating a Trust and transferring your property into the Trust during your lifetime.
Deeding your real property via Enhanced Life Estate Deeds, whereby you retain complete control over your real property during your lifetime and name a beneficiary to receive your property upon death.
Naming Transfer on Death beneficiaries for your businesses by including such language in your Operating Agreements and Membership Certificates.
By taking such action before you die, ownership of your “titled assets” will transfer by operation of law upon your death, without the need for Court Orders through the probate process.
7. What are the benefits of having a Will vs. not having a Will?
If you die having a Will, then you have died “testate.” That means you have died “with a will.” This is good news for the loved ones you leave behind, since they will be saved the costly and time-consuming process of intestate, “without a will” probate. If probate is necessary for your estate, then having a Will makes the process a whole lot simpler and better for everyone involved. There’s no guesswork and nothing to decide in a testate probate. You have already decided it all, and the only thing left to do is carry out your intentions. Having a Will is a win-win for you and your loved ones!
8. What happens if I die without a will, a.k.a “intestate?”
If you die without having a Will, then you have died “intestate.” That means you have died “without a will.” This is “no bueno” for the loved ones you leave behind. If you died intestate and owned any property or owed debts at the time of your death, then your loved ones will have to go through a time-consuming, costly, and burdensome legal process called “probate” to get control over your property and satisfy your obligations. It also means that your property will ultimately be distributed to those “next of kin” who, by Florida statute, would have the right to receive your property, since you did not state your intentions in a Will. If you die intestate, or without a Will, you lose the right to choose who will be the personal representative of your estate and how your property will be distributed after your death. If you die intestate with minor children, and there is no surviving legal guardian of your children, then you leave it up the State of Florida to appoint a guardian for you children. Ultimately, if you die intestate, that is without a will, these are some of the unfortunate consequences: a whole lot of work for attorneys, which means much higher fees for your estate; much less privacy for your estate; the state of Florida will decide how your property will be distributed, whether you would have approved or not; the state of Florida will decide who will be the personal representative of your estate, whether you would have approved or not; the state of Florida will decide who will be the guardian of your orphaned children, whether you would have approved or not; and the probate process will take much longer, involve much more court involvement, and typically cost a lot more.
