Often the decision of whether to use a Florida Will or Florida Revocable Trust depends on issues surrounding distribution of assets, disability, and death. This summary of issues should help you determine which is best for your circumstances.
Privacy
What happens with a Will No privacy. All documents and proceedings after death are public.
What happens with a trust Totally private unless court intervention is required, usually due to improper drafting or lack of funding.
In Jacksonville and around Florida we are often asked about the differences between a Florida Will and a Florida Revocable Trust. Although each persons circumstances are unique, generally the following factors tend to determine which is better in relation to disability and death in relation to the cost of a Florida Probate or avoiding Probate in Florida.
A Will tends to be the best tool if these issues fit your circumstances:
Limited cash flow Limited assets, including life insurance
A Trust tends to be the best tool if these issues fit your circumstances:
Older clients Large qualified retirement plans (IRA, 401k, 403b, etc.)
In Florida all sorts of clerks, customer service people, insurance sales people, brokers, account managers, and other employees of financial institutions give customers advice about how to title accounts and name beneficiaries. In an effort to avoid probate, these seemingly harmless changes can cause many problems with estate plans.
Most new account forms at financial institutions ask you to name a beneficiary. This does not have to be completed and sometimes you are better off to leave it blank than to fill in a name or attempt to name a proper beneficiary.
Often when filling out beneficiary designations people do not understand how a share of the assets will be treated if that person predeceases them. Will the share go to their descendants or to other named beneficiaries and is that what was intended.
Recently we have begun seeing more cases involving agents who abuse their power of attorney in order to benefit themselves.
Most people do not realize that once they have become an agent for an individual, their duty is to act in the best interest of the individual and not for their own benefit. Sometimes agents make gifts to themselves or change the way bank or stock accounts are title so that the become the beneficiary upon the death of the individual. These actions are violations of the agents fiduciary duty and self dealing. Often what is done interferes with someone’s right to an expectancy as a beneficiary or owner of an account.
In addition to creating liability to the beneficiary or the decedent’s estate, in Florida such actions can also create criminal liability under Florida’s Elder Abuse Statutes. If you have been accused of actions like these it is important to coordinate your defense with a Jacksonville Criminal Defense Lawyer who is familiar with Florida Abuse of the Elderly.
Today a client of mine in Mexico contacted me about the transfer of their membership interest in an LLC upon their death. He had recently been told he had the “Pig Flu” or Swine Flu as we call it in the United States. Hopefully his case is not bad and he will make a full recovery.
His question was simple and perhaps the answer may help others so I am writing about it. He wanted to know whether his membership interest would become his business partners upon his death. Generally a business interest will transfer upon death by a will or trust and not have a payable on death designation. While it would be possible to create a payable on death designation on a small business interest it is not very common. As a result I suggested that the simplest way to deal with the transfer of his interest upon his death would be to do so with a will or other estate planning documents.
Every year people unexpectedly die from regular cases of the flu or other illnesses. Many individuals make changes to their estate planning documents when there are significant changes in their life such as a birth, death, child, move, major financial change. Perhaps the Swine Flu should be a wake up call for the majority of Americans who have no estate planning documents. With out Florida Estate Planning Documents the state of Florida will decide who receives your assets and who would raise your minor children. To review your Florida Estate Planning Documents Contact a Jacksonville Estate Planning Lawyer
SB 1718 & HB 5117 dealing with funding the court would create new filing fees in probate and Guardianship cases that would range from $1,000 to $5,000, depending on the value of the estate of the person being protected.
The increase in filing fees is linked to probate cases but includes all guardianship proceedings. In addition to the current fee of $280, the additional fees will be tied to the person’s estate. Depending on the value of the estate and whether the House or Senate version of the legislation prevails, the additional cost could range from $1,000, to as high as $5,000 if the person being cared for has a large estate.
If you have been waiting to start a Florida Probate or Guardianship proceeding, now may be the time start before the fees increase.
Often when someone dies, they have money in a bank account that does not have a joint owner or a payable on death designation (POD). These banks often tell family members that they need “Letters of Administration” to distribute the funds. While this may be trust in some cases, most Florida Probate Courts will only issue Letters of Administration for Formal Probate Cases. If the decedent has been dead for more than 2 years or the assets subject to probate are less than $75,000 then you qualify under the Florida Probate code for a abbreviated probate process. This small estate administration is called Florida Summary Administration.
Once the court enters an order of summary administration, the court order can be used to collect and distribute the money in a bank account or other assets of the decedent.
Even if you qualify for the summary administration there may be reasons why a formal administration is preferable. You should discuss all the issue dealing with the assets, actions of the beneficiaries, and actions of fiduciaries while the decedent was alive with a Florida Probate Attorney to discuss which options make the most sense for you and your family.
Back in 2006 and 2007 I wrote several articles on Digital Assets and Estate Planning. Now that we are in 2009, there is even more need for Digital Asset protection in your Florida Estate Planning Documents.
Digital assets are those that expire upon your death and are often associated with Email and website accounts. Most of these accounts are not actual property. They are licenses and these licenses generally expire upon your death. A new company Legacy Locker is attempting to solve this problem through a web based tool that stores account login and passwords and purports to transfer this information to the designated beneficiary upon your death or incapacity.
While their software is a good idea it has some issues in that it does not resolve the fact that the license expires upon the death of the person who creates it. One solution to this problem is to create the accounts in the name of a trust of business so that when you die, the entity that owns the license is still in existence. There are other companies that do similar things such as DeathSwitch.com
One of the most difficult processes with a probate it dealing with all of the stuff that is left over. After all of the valuable assets have been collected and distributed there are still many items that are of value to some but often get thrown away because of the difficulty and cost in dealing with them. If you are the PR of an estate you may consider using a service like JustJunk.com to remove, recycle, and donate the remainder of an estate. Sometimes it is just to costly to hire someone to collect and sell off the remaining assets.
Remember that if you are contemplating something like this to make sure that you obtain waivers from all the beneficiaries so that you do not expose yourself to liability in the future. A service like this can reduce the stress and responsibility of a PR in dealing with their family members unwanted possessions.
Update:
Jonathan G. Blattmachr, a partner at Milbank, Tweed, Hadley & McCoy LLP, has published “Reducing Estate and Trust Litigation Through Disclosure, In Terrorem Clauses, Mediation and Arbitration” in the Cardozo Journal of Conflict Resolution, 9 Cardozo J. Conflict Resol. 237 (2008).
He suggests six methods to reduce litigation.
1. Advise Inheritors of Inheritance Plans. Especially when children of the decedent are treated unequally, will contests and litigation arise from disappointed feelings of entitlement. Telling the children ahead of time what their shares will be may avoid a later dispute. Blattmachr even suggests that one could enter into a contract (for consideration) with such a person that he or she will not object to the validity of the document. (Of course, as Blattmachr says, “advising a child that he or she will not receive an equal share may have adverse effects even if it prevents litigation after death.” You think?)
Florida Estate Planning Lawyer Blog