Trust and Estate Planning

Toni B. Ross has extensive experience in all aspects of trust and estate planning including revocable and irrevocable trusts, as well as trust administration and probate. Depending upon our client’s circumstances we create an estate plan specifically tailored to our clients’ individual needs. We can draft all the necessary documents crucial for your estate plan and trust administration, including:

  • Wills.
  • Revocable Trusts.
  • Irrevocable Trusts.
  • Special Needs Trusts.
  • Designation of Health Surrogate Agents.
  • Powers of Attorney.
  • Preneed Guardian Designations.
  • Trust Deeds.
  • Trust Assignments of Personal Property.
  • Formation of Limited Liability Companies.
  • Statutory Notice of Trust
  • Trust Distribution Notice, Waiver, and Releases

Revocable/Living Trust

A revocable trust is a document (the “trust agreement”) created by you to manage your assets during your lifetime and distribute the remaining assets after your death. The person who creates a trust is called the “grantor” or “settlor.” The person responsible for the management of the trust assets is the “trustee.” You can serve as trustee, or you may appoint another person, bank, or trust company to serve as your trustee. The trust is “revocable” since you may modify or terminate the trust during your lifetime, as long as you are not incapacitated. During your lifetime the trustee invests and manages the trust property. Most trust agreements allow the grantor to withdraw money or assets from the trust at any time, and in any amount. If you become incapacitated, the successor trustee is authorized to continue to manage your trust assets, pay your bills, and make investment decisions. This may avoid the need for a court-appointed guardian of your property. This is one of the advantages of a revocable trust. Upon your death, the trustee (or your successor if you were the initial trustee) is responsible for paying all claims and taxes, and then distributing the assets to your beneficiaries as described in the trust agreement. The trustee’s responsibilities at your death are discussed below. Your assets, such as bank accounts, real estate, and investments, must be formally transferred to the trust before your death to get the maximum benefit from the trust. This process is called “funding” the trust and requires changing the ownership of the assets to the trust. Assets that are not properly transferred to the trust may be subject to probate. However, certain assets such as IRA’s, 401K’s should not be transferred to a trust because income tax problems may result. Along with your tax and investment advisor we assist you in determining which of your assets are appropriate for trust ownership.

A revocable trust avoids probate by effecting the transfer of assets during your lifetime to the trustee. This avoids the need to use the probate process to make the transfer after your death. The trustee has immediate authority to manage the trust assets at your death; appointment by the court is not necessary.

As part of funding the Trust the following documents are often prepared and executed to ensure an individual’s assets have been properly transferred.

  • Assignment of Personal Property to a Trust A legal document that declares that certain personal property is held and vested in the name of the trust.
  • Assignment of LLC Ownership Interest to a Trust A legal document that allows members of an LLC to transfer and reassign their membership interest in the LLC to the trust.
  • Assignment of Corporate Shares to a Trust A legal document that allows the shareholders of a corporation to transfer and reassign their shares of stock to the trust.
  • General Assignment is a document that declares that certain property is held and vested in the name of a trust.

Irrevocable Trusts

An Irrevocable Trust is a type of trust that goes into effect immediately upon creation during the grantor’s life and cannot be revoked or dissolved by the grantor once it is created. There are many different types of irrevocable trusts that are utilized for different purposes when creating an estate plan, including those for inheritance tax purposes.

Life Insurance Trusts (ILIT)

An Irrevocable Life Insurance Trust also referred to as an ILIT once established may not be modified or amended. This means that the owner and the beneficiary of one or more life insurance policies, once the ILIT is established, may not be changed. ILITs are commonly utilized to create a source of income to pay inheritance estate taxes that may be due upon the passing of the Grantor/Testator. Creating an irrevocable trust takes the proceeds of the life insurance outside of the estate for estate valuation purposes and provides a source of income to pay inheritance taxes upon the death of the grantor and which is excluded for purposes of valuation of the estate.

Special Needs Trust

A special needs trust is a type of trust used to provide assets and resources to take care of a person with a disability.

IRA Trust

A retirement plan trust is a type of trust that acts as a shield or a barrier to insulate the principal of your qualified retirement account such as an IRA or a 401K from the trusts beneficiary’s creditors, a bankruptcy, a lawsuit, or a divorcing spouse after they inherit the accounts from you. These types of trust are also commonly used to protect a young or immature beneficiary, a special needs beneficiary with spendthrift issues. This type of trust can be drafted to allow the trustee to accumulate the money in the trust for the beneficiary but still utilize the income tax bracket of the beneficiary. bankruptcy, o ensure the passing of a retirement account to a minor or a beneficiary who has not received retirement age

Trust Administration

Upon the passing or incapacity of the settlor or initial trustee, the trust must be administered and the proper statutory notices must be filed with both the court and served upon all interested beneficiaries, along with annual accountings and waivers and releases must be prepared and executed by all beneficiaries upon the termination of the trusts.

Is a Trust a Substitute For a Will?

No, in most situations. A trust will be used in addition to a will. The type of will customarily drafted along with your trust is referred to as a “Pour Over Will”. A pour over will contains language within the document that directs the personal representative and the probate court to transfer any and all of your assets that were inadvertently not transferred to your revocable trust during your lifetime to the trust. This is because a trust can handle only the property that has been put into it. Any property of yours that is not placed in the trust either during your life or at death, in most instances escapes the control of the trust. It is the will that controls all property in your name at the time of death if the will is drafted properly. Trusts can be helpful to speed administration and save taxes if they are drafted properly and funded during your life with the property intended to be transferred by the trust. It is extremely important for your trust to be properly drafted and funded, because improperly drafted or incorrectly funded or administered trusts can add to the cost of settling estates, not lower it, which is why it is so important to properly fund your trust at the time of creation and revisit it frequently to ensure that any new assets acquired since the trust’s creation have been properly transferred to the trust.

Probate

Probate is the court-supervised administration of a decedent’s estate. It is a process created by state law to transfer assets from the decedent’s name to his or her beneficiaries. A personal representative is appointed to handle the estate administration. The probate process ensures that creditors, taxes, and expenses are paid before distribution of the estate to the beneficiaries. The personal representative is accountable to the court as well as the estate beneficiaries for his or her actions during the administration. For probate estates having less than $75,000 of non-exempt assets, Florida law provides a simplified probate procedure, known as summary administration.

What Assets Are Subject to Probate

Only assets owned by a decedent in his or her individual name require probate. Assets owned jointly as “tenants by the entirety” with a spouse, or “with rights of survivorship” with a spouse or any other person will pass to the surviving owner without probate. This is also true for assets with designated beneficiaries, such as life insurance, retirement accounts, annuities, and bank accounts and investments designated as “pay on death” or “in trust for” a named beneficiary. Assets held in trust will also avoid probate.

To avoid Assets that do not pass by operation of law assets owned by the trust will not be subject to probate. Therefore, the “funding” of a revocable trust is critical to successfully avoid probate. Those persons who do not fully fund their trusts often need both a probate administration for the non-trust assets as well as a trust administration to completely distribute the assets. Because the revocable trust may not completely avoid probate, a simple “pour over” will is needed to transfer any probate assets to the trust after death.

By properly setting up and funding the revocable trust it avoids probate by effectuating the transfer of assets during your lifetime to the trustee. This avoids the need to use the probate process to make the transfer of your assets after your death. The trustee has immediate authority to manage the trust assets at your death or disability, avoiding the need for the filing of costly and unnecessary probate proceedings and intervention by the court.

Last Will & Testament

A will is a written direction controlling the disposition of property at death. The laws of each state set the formal requirements for a legal will.

In Florida:

  • You, the maker of the will (called the testator), must be at least 18 years old.
  • You must be of sound mind at the time you sign your will.
  • Your will must be written.
  • Your will must be witnessed and notarized in the special manner provided by law for wills.
  • It is necessary to follow exactly the formalities required by Florida law for the execution of a will.
  • To be effective, your will must be proved valid in and allowed by the probate court.

No will becomes final until the death of the testator, and it may be changed or added to by the testator by drawing a new will or by a “codicil,” which is simply a separately written addition or amendment executed with the same formalities as a will. A will’s terms cannot be changed by writing something in or crossing something out after the will is executed. In fact, writing on the will after its execution may invalidate part of the will or all of it. Through a will, you decide who gets your property instead of the law making the choice for you. You may name the personal representative (executor) of your will as you choose, provided the one named can qualify under Florida law. A personal representative is one who manages an estate, and it may be either an individual or a bank or trust company, subject to certain limitations. A trust may be created in your will whereby the estate or a portion of the estate will be kept intact with income distributed to or accumulated for the benefit of members of the family or others. Minors can be cared for without the expense of proceedings for guardianship of property. You may make gifts, effective at or after your death, to charity. You decide who bears any tax burden, rather than the law making that decision. A guardian may be named for minor children. Should you choose to, you may disinherit a child in your will or trust by including a provision that it is your intent to expressly disinherit your child. However, you may not disinherit your spouse without a properly executed marital agreement. The law gives a surviving spouse a choice to take either the share provided under the will, or a portion of your property determined under Florida’s “elective share” statute. This statute uses a formula to calculate the size of the surviving spouse’s elective share, which includes amounts stemming from your jointly held and trust property, life insurance and other non-probate assets. Because this formula is very complicated, it is should be handled by an attorney with extensive experience in this area of law. Also, if your will was made before the marriage and the will does not either provide for your spouse or show your intention not to provide for your spouse, then your spouse would receive the same share of your estate as if you had died without a will (at least one-half of your estate), unless provision for the spouse was made or waived in a marital agreement.

Passing without a Trust or Will

If you die without a trust or a will (this is called dying “intestate”) specifying how you want your property distributed upon your death, your property will be distributed to your heirs according to a formula fixed by law. Your property does not go to the state of Florida unless there are absolutely no heirs at law, which is very unlikely. In other words, if you fail to make a will, the inheritance statute determines who gets your property. The inheritance statute contains a rigid formula and makes no exception for those in unusual need.

When there is no will, the court appoints a personal representative, known or unknown to you, to manage your estate. The cost of probate will most likely be greater than if you had planned your estate with a trust or a will, and the administration of your estate may be subject to greater court supervision.

Types of Property that may be disposed of by Trust or by a Will

While any sort of property may be transferred by trust or will, there are some particular interests in property that cannot be willed because the right of the owner terminates automatically upon death, or others have been granted rights in the property by Florida law. Some examples of these types of property rights or interests are:

  • Except in certain very specific circumstances, a homestead (that is, the residence and adjoining lands owned by a person who is survived by a spouse or minor child up to one-half acre within limits of an incorporated city or town or up to 160 acres outside those limits).
  • A life estate: property owned only for the life of the owner.
  • Any property owned jointly with another person or persons with the right of survivorship (for example, a tenancy by the entireties, which is limited to joint ownership between a husband and wife, would be a property that automatically passes to the joint owner).

Powers of Attorney

A power of attorney is a legal document delegating authority from one person to another. In the document, the maker of the power of attorney (the “principal”) grants the right to another person (the “agent”) act on the maker’s behalf as that person’s agent. It allows the agent to step in and take care of the principal’s financial affairs without the principal’s consent. What authority is granted depends on the specific language of the power of attorney. A person giving a power of attorney may make it very broad. also known as a “general durable power of attorney” giving the designated agent broad authority to stand in the principals shoes and make all decisions the principal could do for themselves. A “general power of attorney” typically gives the agent very broad powers to perform any legal act on behalf of the principal. A specific list of the types of activities the agent is authorized to perform must be included in the document, which may include the ability of the agent to create trusts and make gifts on the principal’s behalf. The principal need not be incapacitated for the agent to act on the principal’s behalf and the power of attorney is effective as soon as the principal signs it. Because the power of attorney is effective immediately and, the principal need not be incapacitated and a copy is effective, the principal may hold the power of attorney document until such time as help is needed and then give it to the agent. Often, a lawyer may fulfill this important role.

If the power of attorney has been executed with the formalities of a deed and authorizes the sale of the principal’s homestead, the agent may sell the principal’s homestead. However, if the principal is married, the agent also must obtain the authorization of the spouse.

Alternatively, a person giving a power of attorney may wish to grant a “limited power of attorney, which limits the scope of the Power of Attorney to certain specific acts. A power of attorney may be used to give another the right to sell a car, home, or other property. A power of attorney might be used to allow another to access bank accounts, sign a contract, make health care decisions, handle financial transactions, or sign legal documents for the principal. A power of attorney may give others the right to do almost any legal act that the maker of the power of attorney could do, including the ability to create trusts and make gifts. Without the durable power of attorney, in the event the principal lacks capacity, no one can represent the individual unless a court appoints a conservator or guardian.

Designation of a Health Care Surrogate

This legal document is also commonly referred to as a “medical power of attorney”. An individual’s health care surrogate is the person authorized by the maker in the Designation of Health Care Surrogate form to make medical decisions on behalf of the individual when the individual is unable to make his or her own health care decisions. Unlike the financial power of attorney, as long as the principal has capacity the wishes of the principal are controlling. Because of the HPPA laws it is very important for your medical power of attorney or designation of health surrogate document to contain the necessary statutory language authorizing the health Care agent to have access to an individual’s health care records and discuss their health care with the individual’s treating physicians.

Living Wills (advance directives)

A living will which is completely different from a last will and testament and also commonly referred to as an advance healthcare directive. It is a legal document that specifies your wishes for end-of-life healthcare and designates who the authorized individual is to make such decisions. It is a very personal decision and addresses the various circumstances and situations when an individual does not want extreme life sustaining measures to be taken on their behalf.

  • Preneed guardian Designation Form (seniors and minors) A legal document that allows you to recommend a person to serve as a guardian of a senior or minor in the event the individual responsible becomes physically or mentally incapable.
  • Asset protection A component of financial planning intended to protect one’s assets from creditor claims
  • Formation of limited liability companies (LLCs) An LLC is a business structure in the United States that protects its owners from being personally pursued for repayment of the company’s debts or liabilities. Any individual or entity can form an LLC except for banks and insurance companies. The primary reason business owners would opt to register their business as an LLC is to limit the personal responsibility of their partners, investors, and themselves.
  • Transfer of individually owned properties to an LLC An LLC owner, referred to a member, can officially transfer individually owned properties into the LLC is the property is used for business purposes.
  • LLC deeds LLCs can legally purchase and sell real estate. When LLCs dispose of real estate holdings, they must transfer ownership to new owners with a property deed. It is necessary for a person to have legal authority to sign a deed to convey property for an LLC.
  • Trust deeds Transfers the legal title of a property to a third party such as a bank, escrow company, or title company to hold until the borrower repays the debt to the lender.
  • Ladybird deeds With a ladybird deed, an individual can transfer property to a third-party while retain ownership in the property until death.

A Revocable Trust or Living Trust has many important uses for estate planning purposes, and it is a good foundation for a sound estate plan. A Revocable Trust appoints another party—friend, family member or professional—to handle an individual’s affairs in the event of incapacity, thereby reducing the likelihood of a costly guardianship proceeding.

A Revocable Trust that is funded with an individual’s assets at the time of death can also reduce the possibility of a Probate. As outlined under the Wills section, the Probate process can be costly and stressful. A Revocable Trust is a private document and does not get filed with the court or any state department. To maintain privacy, it is thus more advantageous to make testamentary provisions using a Revocable Trust in lieu of a Will.