Wills and Trusts
Wills and Trusts
It is important for you to have properly structured estate planning documents to effectuate your intentions. This is most frequently accomplished through a combination of a Will and one or more Trust Agreements. Wills and Trusts are legal documents that name a beneficiary for your assets.
If your estate planning documents are not properly structured, or are out of date, problems may be triggered, including payment of unnecessary taxes, exposure to creditor claims and potentially exposing the assets loss in the event of a child’s or other beneficiary’s future divorce.
If you die without a valid Will or Trust, your will have an “intestate estate” and the default laws of the state of Florida will decide how your assets will be distributed. This may result in many negative implications. Therefore, it is important to have a well designed estate plan in place.
A Will is a written legal document with instructions for disposing of assets after death. A Will can also contain the nomination of a guardian for minor children.
A Will is a public document, which may pose an issue to you. Additionally, any assets passing under a Will will pass through a court administered process of “probate” and is enforced through a Probate Court, which can increase costs and cause time delays in the administration of your estate.
A Trust is typically also a written document which creates a fiduciary relationship between one party (the “Grantor” or creator of the trust), who transfers assets to a second party or parties, known as the “Trustee.” The Trustee manages, invests and distributes the assets under the instructions provided by the Grantor of the Trust for the benefit of the beneficiary or beneficiaries designated under the Trust.
Many tax minimization and wealth preservation benefits may be achieved through the bifurcation of legal ownership of the assets (which is held by the Trustee) from the beneficial ownership of the assets (which is held by the beneficiary or beneficiaries). The Trustee generally has a duty to account to the beneficiaries of the trust.
A Trust also has the ability to avoid probate and unlike a Will, a Trust is a private document. When probated, a Will becomes part of the public record, while a Trust remains private and only the beneficiaries know the contents of the Trust. The establishment of only a Will is initially less expensive, but when it comes time to distribute property, a Trust can avoid the costly probate process while a Will cannot.
Typically, a Revocable Trust is established and funded with the assets which would otherwise pass under your Will, so that they can pass outside of probate. If structured as a “Revocable Trust” rather than an “Irrevocable Trust,” the Trust can be modified at any time before you die.
However, a Revocable Trust cannot provide the additional creditor protection and certain tax savings which an Irrevocable Trust can offer. Many clients have both a Will, a Revocable Trust and one or more Irrevocable Trusts to optimize income tax and estate tax minimization and wealth protection maximization.
Guerra TWP is able to evaluate your specific situation and analyze any existing Wills and/or Trusts to determine the structure which will effectuate your goals. It is specifically important to have your estate planning documents reviewed after certain events occur, such as a birth, death, marriage or divorce in the family. It is also important to have your estate planning adjusted if you have moved to a new state.