When people consult an estate planning attorney, they often ask, “In what ways are Wills and trusts different, and do I need both?”
Wills and trusts are both vital parts of good estate planning. While their functions may overlap, you will find several important distinctions between the two. Denise Jomarron, a trust and estate planning attorney in Miami, Florida, explains the differences between Wills and trusts in Florida.
Understanding the Options of a Will
A testator or testatrix (the Will creator) can use a Will to name beneficiaries, issue instructions for distributing assets, and indicate specific final wishes such as burial or cremation arrangements.
A Will must also name a personal representative responsible for handling probate and estate administration after the testator or testatrix’s passing. Probate is the court-supervised process of settling a deceased person’s estate, which involves:
- Identifying the decedent’s assets
- Publishing Notice to Creditors
- Paying the decedent’s debts (claims filed by creditors)
- Distributing the assets to beneficiaries
The personal representative should be a capable, trustworthy adult who will take care of these tasks with the guidance of a probate attorney. The testator or testatrix may change a Will at any point during their lifetime so long as they have legal capacity to do so. People often do so due to changes in their desires, relationships, family situations, and other circumstances.
What Happens If I Don’t Make a Will?
If a person dies without creating a legally valid Will, their assets will usually pass to family members according to Florida’s intestacy laws. At times, these laws do not correspond with what the deceased person would have wished. For example, a person may choose to bequeath part of their assets to charity or leave a larger share of their property to certain family members who need it most.
Understanding the Options of a Trust
When a person transfers assets to a trust they create, the trust becomes the legal entity that owns the property. Transferring property to a trust can have several legal benefits, such as avoiding probate and providing a higher degree of privacy.
The trust creator, or grantor, can maintain full control of their property during their lifetime by naming themselves as the trustee. When the grantor dies or becomes incapacitated, a pre-appointed successor trustee will take over trust management and distribute assets to designated beneficiaries.
Florida residents have various options for creating a trust, including:
- Revocable Living Trust. The grantor can change the terms of a revocable trust at any time during their lifetime so long as they have legal capacity to do so, as with a Will. A revocable trust allows seamless asset management transfer in the case of the grantor’s disability or death.
- Irrevocable Trust. An irrevocable trust is almost impossible to modify after its creation. Irrevocable trusts can exclude assets from the grantor’s taxable estate so that the grantor does not have to pay taxes for any income that trust assets generate.
- Spendthrift Trust. A spendthrift trust restricts the access a beneficiary has to the trust’s principal funds. This type of trust can prevent uncontrolled spending and protect assets from creditors.
A knowledgeable estate planning attorney can help you create the right type of trust to accommodate your future goals and safeguard your property.
What Makes a Will Better Than a Trust, or a Trust Better Than a Will?
In comparing Wills and trusts, the question should not be “Which one is better?” but rather “How do Wills and trusts differ?” Here are a few key points to keep in mind when creating a Will, a trust, or both:
- A trust only manages the property that the grantor specifically chooses to include in it. All other property is outside the trust’s control. A properly drafted Will includes all of the testator or testatrix’s property.
- Trusts can speed estate administration, cut taxes, and help avoid probate. However, improperly administered trusts can complicate estate administration.
- A Will can serve to appoint a guardian for any children under the age of 18.
- Compared to Wills, trusts are far more difficult to dispute in court.
- A Will is always prepared alongside a trust in order to list the trust as a beneficiary of the testator or testatrix’s estate. This is done to ensure that any assets that were left out of the trust are distributed to the Trustee of the trust during the probate process or estate administration.
- Although Wills are more straightforward and usually less expensive than setting up a trust, a Trust may sometimes be the best option, and is less expensive in the long run, as it has the advantage of avoiding the probate process if properly funded.
A Will and estate lawyer can advise you on using a Will, a trust, or both, to fulfill your estate planning goals. In some cases, you may also wish to consult with a financial advisor or tax professional.
Do I Need Both a Will and a Trust?
Does everyone need both a Will and a trust? While Will and estate lawyers emphasize that everyone should have a Will, creating a trust may not be strictly necessary under certain circumstances. Healthy, relatively young people with moderate assets often choose to create a Will but delay establishing a trust until they amass more property. Furthermore, according to Florida law, jointly owned assets or assets designating beneficiaries do not require probate.
Married people who intend to leave most of their property to their spouse may avoid probate even without setting up a trust.
Denise Jomarron Legal Group: Estate Planning Attorney in Miami, Florida
Are you looking for an estate planning attorney? At Denise Jomarron Legal Group, we help individuals and families design customized plans to ensure protection for their loved ones should they become incapacitated or pass away. Call to schedule your free 20-minute consultation at (305) 402-4494 in Miami, Florida.
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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. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
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Miami, FL 33137-3255