Florida Estate Planning FAQs

Florida Estate Planning FAQs Provided by Our Attorney Justin Stivers

Below, we provide answers to commonly asked questions on the topic of Wills and Trusts. Working with an attorney can help you protect your future and pass on your legacy the way you want and to whom you want. At Stivers Law, many of our clients come to our team with questions on the topics of estate planning, Wills, and Trusts.

Below, we have compiled a list of some of the most common questions that we receive and the answers that we provide. For more detailed information specific to your situation, please reach out to our office using our contact form or by calling us directly at (305) 456-3255. When you have a solid estate plan in place, you and your loved ones are protected for the future – no matter what happens.

Speak to Our Experienced Estate Planning Attorney

An estate planning attorney at our firm is happy to offer you assistance with any aspect of estate planning in Coral Gables, Miami, and surrounding areas in Florida.  Call Stivers Law at (305) 456-3255, watch one of our estate planning webinars, or contact us online to take the next steps.

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• • Why do I need an estate plan?

• • Most of us spend a considerable amount of time and energy in our lives accumulating wealth. With this, there comes a time to preserve wealth both for enjoyment and future generations. A solid, effective estate plan ensures that your hard-earned wealth will remain intact as it passes to your beneficiaries, instead of being siphoned off to government processes and bureaucrats.

• • If I don’t create an estate plan, won’t the government provide one for me?

• • YES. But your family may not like it. The government’s estate plan is called “Intestate Probate” and guarantees government interference in the disposition of your estate. Documents must be filed and approval must be received from a court to pay your bills, pay your spouse an allowance, and account for your property–and it all takes place in the public’s view. If you fail to plan your estate, you lose the opportunity to protect your family from an impersonal, complex, governmental process that can become a nightmare. Then there is the matter of the state and federal government’s death taxes. There is much you can do in planning your estate that will reduce and even eliminate death taxes, but you don’t suppose the government’s estate plan is designed to save your estate from taxes, do you? While some estate planners favor Wills and others prefer a Living Trust as the estate plan of choice, all estate planners agree that dying without an estate plan should be avoided at all costs.

• • What’s the difference between having a Will and a Living Trust?

• • A Will is a legal document that describes how your assets should be distributed in the event of death. The actual distribution, however, is controlled by a legal process called probate, which is Latin for “prove the Will.” Upon your death, the Will becomes a public document available for inspection by all comers. And, once your Will enters the probate process, it’s no longer controlled by your family, but by the court and probate attorneys. Probate can be cumbersome, time-consuming, expensive, and emotionally traumatic during a family’s time of grief and vulnerability. Con artists and others with less-than-pure financial motives have been known to use their knowledge about the contents of a Will to prey on survivors. A Living Trust avoids probate because your property is owned by the Trust, so technically there’s nothing for the probate courts to administer. Whomever you name as your “successor trustee” gains control of your assets and distributes them exactly according to your instructions. There is one other crucial difference: A Will doesn’t take effect until your death, and is therefore no help to you during lifetime planning, an increasingly important consideration since Americans are now living longer. A Living Trust can help you preserve and increase your estate while you’re alive, and offers protection should you become mentally disabled.

• • The possibility of a disabling injury or illness scares me. What would happen if I were mentally disabled and had no estate plan or just a Will?

• • Unfortunately, you would be subject to “living probate,” also known as a conservatorship or guardianship proceeding. If you become mentally disabled before you die, the probate court will appoint someone to take control of your assets and personal affairs. These “court-appointed agents” must file a strict accounting of your finances with the court. The process is often expensive, time-consuming and humiliating.

• • If I set up a Living Trust, can I be my own trustee?

• • YES. In fact, people who create most Living Trusts act as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your Trust. In the event of a mentally disabling condition, your hand-picked successor trustee, not the court’s appointee, assumes control over your affairs.

• • Will a Living Trust avoid income taxes?

• • NO. The purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate state and federal estate taxes. It’s not a vehicle for reducing income taxes. In fact, if you’re the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

• • Can I transfer real estate into a Living Trust?

• • YES. In fact, all real estate should be transferred into your Living Trust. Otherwise, upon your death, depending on how you hold the title, there will be a death probate in every state in which you hold real property. When your real property is owned by your Living Trust, there is no probate anywhere.

• • Is the Living Trust some kind of loophole the government will eventually close down?

• • NO. The Living Trust has been authorized by the law for centuries. The government really has no interest in making you or your family suffer a probate that will only further clog up the legal system. A Living Trust avoids probate so that your estate is settled exactly according to your wishes.

• • Isn’t a Living Trust only for the rich?

• • NO. A Living Trust can help anyone protect his or her family from unnecessary probate fees, attorney’s fees, court costs and state and federal estate taxes. In certain circumstances even individuals with small estates can derive meaningful benefits.

• • Can any attorney create a Living Trust?

• • YES, but you would be better off choosing an attorney whose practice is focused on estate planning. Members of the American Academy of Estate Planning Attorneys receive continuing legal education on the latest changes in laws affecting estate planning, allowing them to stay on top of the latest laws and techniques to help you meet your needs.

• • What is the federal estate tax?

• • The federal estate tax is a tax levied by the federal government upon the estate of a deceased person. The federal government gives certain exclusions and deductions and then taxes everything above a set level.

• • What is a state estate or inheritance tax?

• • A state estate tax is a tax levied by a state government upon the estate of a deceased person. It is levied in much the same way as the federal estate tax. A state inheritance tax is a tax levied by a state government that varies depending upon the relationship of the inheritor to the deceased person. Many states have a separate state estate or inheritance tax which kicks in at a lower level than that of the federal government.

• • What is portability?

• • Portability is where the surviving spouse can use the amount of federal estate tax exclusion that their deceased spouse left unused at their death. Portability has been part of the law since 2011, though it was temporary until 2013.

• • Must an estate tax return be filed if portability will be utilized?

• • Yes. Portability must be elected on a timely-filed federal estate tax return. This is the case even though a federal estate tax return would not otherwise be required, such as if the estate of the deceased spouse is below the threshold for federal estate taxation.

• • What is a Last Will and Testament?

• • A Last Will and Testament is a legal document that is used to express an individual’s wishes regarding his/her estate assets and what should be done with them upon the Testator’s (creator of the Will) death. Gifts made in a Will may be general (such as “half my estate”) or specific (such as “my art collection”) and may be made to an unlimited number of beneficiaries.  A Will also offers the parents of minor children the only official opportunity to nominate a Guardian for the minor children should one ever be needed.

• • When should I execute a Will?

• • Despite what many people believe, you cannot be too young (as long as you are an adult) or too poor to benefit from a Will. Every adult can benefit from creating a Will regardless of age, marital status, or net worth. At a bare minimum, executing a Will ensures that the State of Florida will not determine what happens to your estate assets if something happens to you. It can also help avoid disputes among your family after you are gone.

• • What happens if I die without a Will in place?

• • When a decedent dies without a valid Will (or trust) in place the estate is referred to as an “intestate” estate.  If you are a resident of Florida and you die intestate, the State of Florida decides how your estate assets are distributed using the Florida intestate succession laws. Usually, this means that only close relatives will inherit from the estate. Dying without a Will also means you give up the ability to decide who administers your estate.

• • What happens to my Will after my death?

• • The person you appointed as Executor of your Will submits the original Will to the appropriate court for probate shortly after your death. The Executor also notifies beneficiaries and heirs as well as creditors that probate is underway. Creditor claims are reviewed and paid if approved. Any federal (and/or state if applicable) gift and estate taxes due must also be paid. At the end of the probate process, the terms of your Will are used to determine how the assets remaining in your estate are distributed.

• • What is a Trust?

• • At its most basic, trust is a relationship whereby property is held by one party for the benefit of another (or others). Trusts are broadly divided into living trusts and testamentary trusts with the former activating during the lifetime of the Settlor (the creator of the trust) and the latter typically being activated at the time of the Settlor’s death by a provision in the Settlor’s Will. Living trusts can be revocable or irrevocable.

• • Should I use a Will or Trust to distribute my estate assets?

• • Although your Last Will and Testament may always be the foundation of your estate plan, you may eventually choose to use a trust as your primary asset distribution method. Whether you want to use a Will or a trust to distribute your estate is something that can truly only be decided after consulting with an experienced estate planning attorney; however, there are some common considerations when deciding whether a Will or a trust should be used. If your estate is small enough to qualify for small estate administration, and you do not have minor children (nor plan to have any), a simple Will may suffice for distributing your assets. If, however, your estate is large enough that you need to plan for avoiding probate and/or you have minor children who will inherit from your estate, a trust may be a better choice for distributing your estate assets.

• • Can a Trust help me in other ways?

• • Trusts can help further a wide range of estate planning goals which is why trusts are so often found in an estate plan. Among the numerous and varied estate planning goals that can be furthered using a trust are:

    • • Incapacity avoidance
      • Medicaid planning
      • Probate avoidance
      • Tax planning
      • Protecting the inheritance of a minor child
      • Asset protection
      • Pet planning
      • Special needs planning
      • Charitable gifting
      • Funeral planning
      • Blended family planning

• • Do I need a lawyer to create a Will or Trust?

• • People often make the mistake of thinking they can save time and money by using a “DIY” Will or trust agreement form found on the internet. Unfortunately, you are more likely to cost your beneficiaries and heirs time and money during probate if you go the DIY route. DIY forms are notorious for having errors and omissions that lead to litigation during the probate of an estate. Given the importance of your estate plan, working with an experienced attorney is advisable.