In three decades of serving South Florida clients, it’s clear to us that people have a lot of questions about both wills and trusts. Both of these are legal instruments that can play a role in crafting and implementing a robust estate plan. Not everyone needs both of these, however. Understanding the differences between wills and trusts is vital for establishing an estate plan that works for you and your loved ones.
This blog clarifies the differences between wills and trusts and explains how a knowledgeable will and trust lawyer can help you create an estate plan that considers your unique situation. Continue reading to learn more, then contact the LAW OFFICE OF GARY M. LANDAU, P.A., at (954) 979-6566 to schedule a free initial consultation.
What Is a Will?
A will is a legal document that tells the courts how you want estate assets to be distributed upon your death, including money, personal property, real estate, and other items. To be valid, a will must adhere to Florida law, which is why it is important to consult an experienced will attorney to ensure the will you create meets all legal requirements.
Accuracy in drafting the contents and in executing a Florida will is crucial, because once a person passes away and the will is filed, no changes can be made. The Law Office of Gary M. Landau has seen many instances where probate courts have invalidated inadequately drafted wills. When this happens, assets are distributed based on legal formulas (e.g., first the spouse, then the children…) rather than according to the decedent’s desires.
Married couples need to make two separate wills, one for each spouse.
Understanding What Is Included in a Will
A will lists the names of all beneficiaries who will inherit your assets along with the percentages of the assets each person will receive. Assets that fall outside of a will, such as a life insurance payout or bank accounts listing a direct beneficiary, are not included.
A will is also used by people who have a minor child to designate the choice of a legal guardian should you tragically pass away while your child is underage.
The document also designates a personal representative, which is someone who will work with a probate attorney to handle details of the estate and the distribution of assets during the probate process.
How a Will Helps the Probate Process
Probate is a legal process that is overseen by the Florida Probate Court. Probate allows a person’s assets to ultimately be distributed to their beneficiaries according to their will, which is deposited in the court records after a death.
Probate involves various steps, including:
- Identifying all assets to be distributed
- Notifying creditors whom the deceased person still owes money to, including the hospital and funeral home, and settling those debts
- Liquidating assets such as real estate
- Distributing assets to beneficiaries according to the person’s will
The personal representative named in the will oversees all of these steps, along with the probate attorney. The PR must be a reliable adult (but not a convicted felon) living in the state of Florida, or it can be an individual who does not live in Florida if they have a familial relationship, such as children, siblings, nieces or nephews, and other relatives.
Because changes in life circumstances are inevitable, it is important to conduct periodic reviews of a will and make any needed adjustments. As long as the person making the will, known as a testator, has mental capacity he or she can make alterations based on evolving desires, relationships, family situations, and other circumstances.
What Is a Florida Trust?
A trust is a separate document from a will. A trust is a legal tool that allows individuals to protect, grow, and/or transfer assets. Once assets are placed into a trust the trust becomes the legal owner of these assets.
Trusts involve people or organizations that serve three separate roles:
- The Grantor: the individual who establishes the trust
- The Trustee: the person responsible for the management and administration of the trust
- The Beneficiary: the individual entitled to the benefits of the trust’s assets
In some cases, all three of these roles can be filled by the same person.
Trusts are created for many different purposes. It is important that the Grantor is clear about the reasons they want to create a trust before doing so.
Benefits and Options of Trusts
When you transfer assets into a trust, you establish a legal entity that becomes the official owner of the property. As the trust creator (grantor), you can maintain complete control over your property throughout your lifetime by appointing yourself as the trustee.
However, in the event of your incapacitation or passing, a pre-selected successor trustee will step in to manage the trust or distribute assets to your chosen beneficiaries.
Florida law recognizes various types of trusts, including:
- Living trusts: The most prevalent type in Florida, living trusts allow individuals to maintain control of their assets during their lifetime, but then have a successor trustee step into the role upon their passing
- Special needs trusts (SNTs): For individuals with medical conditions affecting their ability to manage assets, these trusts put someone else in charge of their finances
- Dynasty trusts: Utilized by the ultra-wealthy to oversee family finances and transfer money to succeeding generations
Revocable vs. Non-Revocable Trust in Florida
Trusts fall into two main categories: revocable and irrevocable.
As the name suggests, a revocable trust allows the grantor to modify or revoke it at any time during their lifetime.
Revocable trusts are used by some older people because they think they will not need to probate their assets if they have this trust. However, probate will still be needed for any asset held by the individual that is not in the trust when the person passes. Because many people do not fully fund their trust with everything they own (or assets they acquire after the trust is created), revocable trusts don’t always allow someone to avoid probate.
Irrevocable trusts cannot be easily dissolved. In some instances, you can amend or dissolve an irrevocable trust, but it usually involves a more intricate legal process that often requires a court petition.
Unlike with revocable trusts, the grantor and trustee are separate individuals. The trustee manages all the assets in the trust, with the grantor and beneficiaries generally having no direct access to the trust assets.
An experienced estate planning attorney can clarify the distinctions between revocable and irrevocable trusts as they pertain to your unique circumstances.
How Do Wills and Trusts Differ?
When creating a will and/or a trust, consider these crucial factors:
- Trusts specifically manage the assets that have been put into the trust.
- Wills, when properly drafted, describe the distribution after death of all of the individual’s assets.
- Trusts may streamline estate administration and avoid probate. However, this is only the case if trusts have been funded with all of a person’s assets. There is a cost to set up a trust and to fund it with assets like real estate, whose deeds must be transferred.
- Trust documents are not filed in court. This means it is crucial that the document creating the trust be put someplace the successor trustee can find it. Without this document, problems can ensue in passing trust assets to the successor(s).
- Wills should still be drafted by people who have a trust (known as a pour-over will) to cover the distribution of assets not included in the trust.
To effectively plan your estate, seek the support of a will and estate lawyer who can guide you in making the right choices. You should additionally seek out the advice of a financial advisor and/or tax professional.
Do I Need A Will and a Trust?
Many individuals often wonder whether having a will and a trust is necessary. While a will is essential for everyone, a trust may not necessarily benefit all individuals.
Trusts may be especially valuable for people with dependents or beneficiaries with special needs. And people with extraordinary wealth use them to pass dynastic wealth to others.
For everyone else, whether to establish a trust or rely solely on a will depends on your individual preferences. Some people desire to put their assets in a trust to potentially make the distribution of their assets easier after they pass away. However, this is only the case if all assets are put into the trust and if the original document creating the trust is available to the successor(s).
Healthy individuals with moderate assets may need only a will. In Florida, assets like a bank account that are jointly owned or have designated beneficiaries do not require probate. For married individuals, most assets are usually held jointly with a spouse.
Do I Need A Florida Estate Planning Attorney to Set Up A Will or A Trust?
It is important that legal documents like a will or a trust are created by an experienced estate planning attorney. This would include a valid, legally binding will and possibly a trust if appropriate for your circumstances.
Don’t rely on the internet to help you with these crucial documents, as do-it-yourself forms may not be accurate to your individual circumstances or be specific to the state of Florida.
During an initial free consultation, a wills and probate attorney can guide you in creating a customized estate plan that complies with relevant laws and protects the future of your loved ones. Even after the estate planning process is completed, you should check in with your estate planning attorney every five or ten years to ensure these documents continue to reflect your wishes.
Cost Implications: Flat Fee or Hourly Rate?
You may encounter different cost structures when hiring a South Florida estate planning attorney. Some experienced attorneys offer flat fees, especially for straightforward estate planning tasks like writing a will or overseeing a standard probate.
Others may charge hourly rates, particularly for processes like setting up complex trusts. Discussing cost estimates during your initial consultation will help ensure you’re comfortable with your attorney’s fee structure.
Turn to the LAW OFFICE OF GARY M. LANDAU, P.A. for Knowledgeable Guidance with the Estate Planning Process
Knowledge, competency, and commitment are paramount when searching for an estate planning attorney to guide you through the legal process. Whether you want to update an existing plan or have questions about estate plans in general, the Law Office of Gary M. Landau offers support and answers concerning the legal documents impacting your family and future.
With more than 25 years of experience and countless satisfied clients, Gary M. Landau and his team of legal professionals are uniquely positioned to help you with your probate and real estate needs in South Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are purchasing a home, have inherited a home, or want a closing agent to handle title insurance and all documents for your closing or refinancing, the LAW OFFICE OF GARY M. LANDAU, P.A. is ready to work with you.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.