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The Difference between Wills and Trusts

We are often asked to explain the difference between Wills and Trusts in Florida. Laws governing estate planning and probate are state-specific, so this is often a source of confusion for people who have moved to Florida from another state which may not treat these types of documents the same way.

The similarities

At a high level, both Wills and Trusts can be used to transfer assets when someone dies. Both of them designate how, and to whom, assets should pass, and both documents identify someone who is in charge of administering the distributions. In a Will, this person is called a Personal Representative, and in a Trust, they are known as the Trustee.

The differences

Wills

Wills handle the distribution of “probate assets.” A probate asset is an asset that is in your name alone at the time of your death, with no beneficiaries and no joint owner. Assets that you do own jointly with someone else, or assets like life insurance accounts or retirement accounts for which you have already named one or more beneficiaries, pass to the other joint owner(s) or beneficiaries by contract, outside of your Will. Those types of assets (and a few others) are considered “non-probate assets”, and a Will does not control their distribution.

Trusts

A revocable Trust is another type of a non-probate asset. When you create and properly fund a Trust, the Trust owns the assets you put into it. Where assets that pass through a Will are distributed to the beneficiaries after the estate administration is complete, Trusts allow you to pass assets to beneficiaries over a longer period of time. For example, parents concerned about their children’s ability to manage an inheritance may use a Trust to allow assets to be distributed to their children over a period of years rather than being distributed shortly after the parents’ deaths. Trusts are also an efficient way of distributing assets to multiple beneficiaries.

Trusts are still subject to claims from creditors, including the IRS and state of Florida, so Trustees are required by law to provide the county with notice of the Trust. However the assets inside the Trust generally do not need to be tied up in court for a lengthy time period as can happen when someone had just a Will, or no estate planning documents at all. In most cases, the costs to administer someone’s estate after they have died are significantly less when there was a valid Trust, and when that Trust was funded correctly.

Planning ahead

The probate process in Florida can be cumbersome, time consuming, inefficient and expensive. Estate planning law can be confusing, but taking the time to plan ahead can ensure your wishes will be carried out. Planning ahead through the use of revocable Trusts can eliminate the headaches that come with probate court proceedings, making passing assets to your intended beneficiaries a much easier and more efficient process.

To learn more, contact Attorney Ido Stern at Stern Zwelling today online or by calling 561-609-3556.

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