Wills
•A new Florida will is almost always advisable for the divorced client, especially if there are minor children.
•Florida Statute section 732.507 generally provides that after the dissolution the provisions for the former spouse in the will are treated as if the former spouse died at the time of the dissolution of the marriage.
• A subsequent marriage, birth, adoption, or divorce will not revoke a Florida Will.
One common mistake that people make when they have a spouse or children is to transfer their retirement accounts into their Florida Living Trust.
Generally, retirement accounts are not subject to probate because you can name beneficiaries. If you name individual beneficiaries, each beneficiary is given the most flexibility in the way they take and report the proceeds from the IRA.
If you name a Florida Living Trust, the beneficiaries might have to take all of the distributions in the year after death. This can happen when one of the beneficiaries is a charity or not an individual.
You have just been asked to be a successor trustee for a Florida Living Trust. What will your trustee duties and responsibilities be? Do you want to accept? Are their downsides? I ran across an interesting article and have applied some of it to Florida law. This note will help you to understand what some of the common issues are and will help you to discuss your options with a Florida Estate Planning Lawyer. Remember that all Florida trusts are different, and that many of your duties, responsibilities may not be contained in the document. Therefore your document will need to be analyzed with the New Florida Trust code.
First Lets discuss some of the background information that will be necessary to understand your duties and responsibilities.
A Trust is a legal entity. When assets are contributed to the trust, the trust separates the legal ownership (possession) from the beneficial ownership (the principal and income). Often trusts look very much like wills because they include instructions for whom your your assets will benefit after our death. Some trusts are created during the life of the person who creates them ( the settlor or grantor) and some are created after their death (testamentary).
Florida Living Trusts work by separating the equitable ownership (the trustee)from the beneficial ownership (the beneficiary).
Who are the people involved in a Trust? The grantor (also called settlor, trustor, creator or trustmaker) is the person whose trust it is. Married couples who set up one trust together are co-grantors of their trust. Only the grantor(s) can make changes to his or her trust.
The trustee manages the assets that are in the trust. Many people choose to be their own trustee and continue to manage their affairs for as long as they are able. Married couples are often co-trustees, so that when one dies or becomes incapacitated, the surviving spouse can continue to handle their finances with no other actions or steps required, including court interference.
A successor trustee is named to step in and manage the trust when the trustee is no longer able to continue (usually due to incapacity or death). Typically, several are named in succession in case one or more cannot act. Sometimes two or more adult children are named to act together. Sometimes a corporate trustee (bank or trust company) is named. Sometimes it is a combination of the two.
The beneficiaries are the persons or organizations who will receive the trust assets after the grantor dies.
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Often Estate Planning clients struggle with their spouse or self over who to pick as an agent to represent them in a Florida Durable Powers of Attorney ( Financial decisions), Florida Living will & Designation of Health Care Surrogate ( Health care decisions) and Revocable Trusts (Financial Management).
Initially clients might thing of using a Co-Agent. This can cause many problems and unforeseen circumstances and must be done with the correct expectations and knowledge of the potential problems. Michael Keenan has an article discussing several of these issues, titled Be Careful With Co-Agents. In summary, before choosing co-agents you should consider whether they get along well with each other, and what to do if they do not in the future.
In addition, what if one lives far away or moves after the documents are created. Some hospitals or financial institutions may require that both act together unless each co-agent has “several powers” or “joint and several powers” This can be difficult and impracticable. You put your financial and health interest at risk due to delay in execution of the documents.
As a Jacksonville Living Trust Lawyer, I have noticed many changes that effect the administration of Trusts, even those which were already in existence when on July 1, 2007 when the Florida’s New Trust Code became effective. If you are an estate planning attorney in another state and have clients who have trusts in Florida, it is most likely that their trusts must be managed differently than their trust document would imply.
1) A trustee has a duty to act in good faith in the interest of the beneficiaries and in accordance with the terms of the trust, imposed in part by sections 736.0801 and 736.0802.
2) There is a new 6 month statute of limitation sunder section 736.1008 with regard to any item set forth in a trust disclosure statement which contains a limitation notice containing the six-month period of time under 736.0604 within which to contest the validity of the terms of the trust.
Florida Estate Planning Lawyers often tell clients of the many advantages of a Florida trusts. When a client leaves property to heirs in a trust instead of outright, they can control how the property is used. The control can violate public policy or law, but often good estate planning can control the property without risk of having the control stricken. Some of the major advantages are:
1. That a trust can provide a mechanism for better management and investment than the individuals may be capable of on their own.
2. That a trust can prevents the beneficiary(s) from using all of the proceeds quickly, or wasting it on unnecessary items.
3. Than a trust can protect the assets from the claims of creditors.
When you create a Florida Revocable Trust, your Florida Estate Planning Attorney should advise you on how to title accounts.
One common question is about checking accounts. In most cases, the title (ownership) of the checking account should be changed to the name of the Florida Living Trust or Florida Revocable Living Trust, or Trustee of the trust. If on the date of death, the amount in a personal account has not become property of the trust, it may be necessary to open a Florida probate.
NOTE: The checks do not need to show the trust name and reference to the trust may be omitted for check cashing. The signature cards need to be updated to reflect the way in which checks will be signed. When doing this its best not to close the accounts as outstanding checks could bounce and create unnecessary expenses.
Most Jacksonville estate planning attorneys or those in other locations, focus on your heirs (children and grandchildren). As your parents are aging it is also important to consider and evaluate your parent’s estate planning. One you understand the value in creating your own estate plan, you need to understand what effects your parents estate planning will have on you. You may find that your parents should leave the maximum exempt amount to their grandchildren (GST Trust)instead of to you. This can help avoid an extra layer of Death taxes. Its also important to classify their assets and allow the Personal representative or trustee the flexibility and duty to find which assets have the most appreciation (lowest cost value) and allocate those as to be most beneficial to the estate. If you can discuss your parent’s estate planning with them, you may want to. You should speak with an estate planning attorney who can help structure a multi generational estate plan to help you and your parents establish a plan that will pass their values and protect inheritance.
Florida Spendthrift Trust: A trust established to provide a fund for an individual that includes a provision intended to secure it against that person’s lack of caution and protect it against the claims of creditors. A person can typically prevent against their own creditors but they can achieve some asset protection for others they choose to provide for such as children who have a trust but a trustee with discretionary powers whether or not to distribute property.
In Florida wills, Florida Trusts, and Florida Estate Planning it is important to deal with Pretermitted children. Make sure your Florida Estate Planning Attorney and the estate planning documents deal with them or you can have unexpected results.
A Pretermitted Child A child by birth or adoption who became a child after the execution of the current estate planning and was not mentioned in the will or trust. If a person has a child or children after executing their will and do not prepare a codicil after or name the child in the document the child will be entitled to receive the share they would be allowed if the estate were to pass by Florida intestacy laws.
Florida Estate Planning Lawyer Blog