In these videos, attorney James Nici addresses some of our client’s most common questions about wills, trusts, probate, and Florida estate planning.
4 Things You Need to Know About Wills & Trusts
What’s the difference between a will and trust?
The difference between a will and a revocable trust is twofold. First, both documents will dispose of an individual's assets at death. However, a revocable trust is also operative during the individual's lifetime, which means it can also avoid guardianship for those assets properly titled in the name of that revocable trust.
Does my will or trust get filed with the state?
A will is a revocable trust, that does not get filed with the state. However, when someone dies, their will is deposited with the clerk of court for the county in which the individual resided. A revocable trust is generally never deposited or filed anywhere else.
How do I protect my children’s inheritance from creditors or divorce?
This is a very important question. Many of my clients are concerned that when they pass away and they leave their assets to their children, they're concerned that those assets may be taken from their children in the form of a lawsuit. Maybe a bankruptcy or even divorce. At our firm, we create what's often referred to as a creditor-protected inheritance trust, in which case the individuals can decide whom their assets would go to. Presumably, their children and then their children would inherit those assets in a way that's protected from their creditors or potential future divorce.
What’s the difference between a testamentary trust and a living trust?
The difference between a testamentary trust and a living trust is that a living trust is created while someone is alive, often referred to as a revocable living trust. A testamentary trust, however, comes into existence when the individual dies and is usually created under that individual will.
4 Things You Need to Know About Probate
What is probate?
Probate is the court-supervised disposition of assets when someone passes away. If someone has a will that's referred to as dying testate, which means with a will. That's where the court will make sure that the beneficiaries designated under the will, will receive the assets, but also creditors will be paid. If an individual dies without a will, that's referred to as dying intestate.
Do all assets go through probate?
All assets do not go through probate. Those assets that are owned in a decedent's name at the time of their death, will pass through probate. However, assets such as life insurance, annuities, and retirement plans where there's a beneficiary designation will pass according to the terms of that beneficiary designation. Additionally, assets that are owned jointly with rights of survivorship or assets titled in the name of a Revocable Trust will also avoid probate.
Should all assets be titled jointly with my child to avoid probate?
Generally speaking, I do not recommend that my clients own their assets jointly with their children. The main reason for this is those assets that are owned jointly with the child, are exposed to that child's creditors. I would hate for my clients to lose their assets because their child was embroiled in a lawsuit.
What happens if I die without a will?
An individual who dies without a will is said to have died intestate. In such a case, there are Florida statutes that specifically provide who will inherit that individual's assets.
4 Things You Need to Know About Estate Planning
What Is An Estate Plan?
An estate plan is a set of legal documents created by a lawyer for a client in which the individual designates who should inherit their assets, how, and when. A typical estate plan will include at least three documents. First, an advanced directive that includes a living will and a designation of health care surrogate. Second, a durable general power of attorney. Third, a will. Some individuals have two other documents as part of their state plan. First, a revocable living trust, and second a beneficiary designation.
Do I need to be wealthy to have an estate plan?
An individual does not need to be wealthy to have an estate plan. Everyone should have an estate plan because we never know when we might become incapacitated. So, it’s not just about when we die. For instance, if I became incapacitated, who would make business and financial decisions for me? Who would make medical decisions and speak to the doctors? Those are very important decisions that have nothing to do with how wealthy I am.
What is an advanced directive?
An advanced directive is a document in which an individual designates someone to make medical decisions for them if they're unable. Everyone needs an advanced directive. This includes 2 components; first a designation of a health care surrogate and second, a living will.
What is a durable power of attorney?
A durable general power of attorney is a document in which an individual designates someone to make business and financial decisions for them, everyone should have a durable general power of attorney.
4 More Things You Need to Know About Estate Planning
Do I need to update my estate plan after moving to Florida?
When changing your residency from one state to the other, or more particularly changing your domicile to Florida, you should have an attorney licensed in Florida review your estate plan. It's very important to make sure that the documents you have will be properly implemented in Florida. Sometimes, that requires redoing an entire document, or maybe an amendment would be appropriate. It depends on the particular circumstances.
How do I establish a Florida domicile?
To establish a Florida domicile, it's very important to do a few things. Typically, this includes obtaining a Florida driver’s license. Next registering to vote. Third, if you own real estate in the state, consider applying for your Florida homestead property tax exemption. Last, but not least, you could consider filing a declaration of domicile affidavit in the county in which you reside. It's also just as important to let the state that you've left know that you're no longer a resident of that state.
Does it matter how my assets are titled?
One of the most important things as part of the estate planning process, in addition to having the appropriate legal documents drafted, is to make sure that the assets are titled correctly. Titling your assets properly to coordinate with your estate plan is critical.
How important are my beneficiary designations?
Beneficiary designations for life insurance, annuities, and retirement plans are another critical component of a properly designed estate plan. Those beneficiary designations need to be coordinated with the estate planning documents and drafted by the attorney so that everything will be coordinated at the time of someone’s passing.