I have a will. Why do I need anything else?
Having only a will may not be the best plan for you and your family. A will does not avoid probate when you die. A will must be filed and admitted to probate before it can be enforced.
What is Probate?
Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don’t have a valid will, your assets are distributed according to state law. These laws are known as the intestacy laws. Through the intestacy laws, your assets will be distributed to your spouse, descendants, or next of kin. This might not be your plan!
What’s so bad about Probate?
It can be expensive. Legal fees and other costs, such as filing and publication fees, must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your heirs could face multiple probates, each one according to the laws in that state.
It takes time, usually at least 6 months or more. This is because nothing can be distributed or sold without court or personal representative approval until the creditor notice period has elapsed. In Florida, the creditor period is 3 month from the first date of publication.
There are privacy issues. Probate is a public process, any “interested party” can see what you owned and who you owed at the time of your death.
What is a Living Trust?
A living trust is a legal document that, just like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death. When you set up a living trust, you also transfer assets from your name to your trustee. Legally, you no longer own your assets, everything belongs to your trust, so there is nothing for the courts to control when you die! This simple estate planning tool keeps your heirs out of the courts. And Living Trusts are private arrangements; they are not part of the public record.
Do you lose control of your assets that are in your Living Trust?
Absolutely not! You keep full control of your assets. As the trustee of your trust, you can do anything you could do before- buy, sell, reinvest, and you even file the same tax returns. Nothing changes except the way the assets are titled.
Doesn’t joint ownership avoid probate?
No, it usually just postpones probate. When the first owner dies, full ownership does transfer to the survivor without probate, but when the survivor dies, or both die at the same time, the asset must be probated before it can go the heirs. There are other problems with joint ownership, for example, the creditors or ex-spouse of the co-owner could be entitled to these funds. With real estate, if you own it jointly with another, remember that all owners must sign to sell or refinance. If a co-owner is unwilling or becomes incapacitated, the court will become your new co-owner.
Why would a court become involved with you or your property if you become incapacitated?
If you cannot take care of your own personal, legal, or financial affairs due to a physical or mental incapacity, only a court appointee, in Florida, called a guardian, can do so. Guardianships are a public process and can be expensive, embarrassing, time-consuming and difficult to end if you recover. It does not replace probate at death, so your heirs may have to go through the probate court again.
How can you avoid a Guardianship if you do become ill?
A Durable Power of Attorney can prevent a guardianship. A Durable Power of Attorney lets you name some you trust to manage your financial and legal affairs if you are unable to do so. These are very powerful documents – it is like giving someone a “blank check” to do whatever he or she wants with your assets- so it should be well thought out, and the person you name should be someone you completely trust. You can also have a Pre-need Guardianship Designation, which allows you to name your own guardian if that is ever necessary.
A Living Trust is another technique to avoid court intervention if you become incapacitated. As mentioned, when you set up a living trust, you transfer your assets to the trustee of the trust. Legally speaking, you no longer own the assets, your trust does. Your successor trustee will have the legal authority to manage your assets according to your instructions in your trust and will not need court approval.
Isn’t a Living Trust expensive?
It does cost more to have a trust than just a will. But you can pay for it now, or you can pay the courts and attorneys to do it later.
For more information on how you can avoid probate and guardianship with a living trust, contact our office for a free consultation.
This blog post is not case-specific and is provided only for educational purposes and is not intended to provide specific legal advice. Blog topics may or may not be updated and entries may be out-of-date at the time you view them.