As Americans make their way back to work after a July 4th weekend full of beaches, beer, and burgers, we can take a moment to think about what we were actually celebrating. We live in a country that prides itself on freedom and one of those freedoms is the right to devise, to decide what happens with your property once you die. However, this right is one you must take active participation in for it to apply. In fact, if you do not exercise your freedom and execute a valid estate plan, then the state will decide how your assets are distributed.
About 70% of people in the state of Florida do not have an estate plan currently in place. If you die without a will, the rules of intestate succession determine how your property is distributed. These rules are designed to distribute your property how the state believes most people would distribute their property. If you are married and have minor children, your entire estate would go to your wife. This might be what you wanted anyway, but what happens if your wife remarries? A large portion of your estate could go to your new husband when she passes or if they get divorced. And this is just one example where intestacy laws could lead to a bad situation. Put simply, do not let the state decide when you have the ability to decide for yourself.
Once you’ve decided that you are going to exercise your right to devise your property, the next issue is what type of plan will you use: a will based plan or a trust based plan. When most people think of estate planning, they think of wills. Wills are a valid way of transferring ownership of property at your death. However, wills have a few drawbacks. The first is that a will must be probated. Probate is the processof a validating a will and distributing the estate’s assets. Ownership of property can not be transferred from the deceased to the beneficiary without probate and during this extended process, the future owners will likely not have access to the property. Bank accounts are frozen, shares of stock tied up, etc. The second drawback is that a will is a public document, meaning everyone would be able to see your distributions. The third drawback is that the only control you have over the asset is the first bequest. After that, the assets belong to the beneficiary and they can do whatever they want with it.
When discussing trusts, it is important to first dispel the notion that trust funds are only for the wealthy. This is not true. Trust funds have a variety of advantages over a will and are suitable for almost all estate plans. First, a trust avoids probate, the benefits of which have already been enumerated. Secondly, a trust offers more control than a will does. With a trust, you can control an asset for multiple generations, such as to your children for their lives and then to their grandchildren; you cannot do this with a will. Third, the trust offers creditor protection for your beneficiaries’ inheritance. Because each beneficiary receives their inheritance in a trust fund, the assets will be unaffected by creditors or divorce.
Don’t just celebrate your freedom by grilling out or hanging by the pool. Talk to an estate planning attorney today about exercising your freedom and getting an estate plan in place today.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.
It’s a Wild world. Are you protected?SM