Planning for your eventual demise can help you protect your assets and ensure their smooth transfer of your heirs. However, estate planning can be a complicated process. There are two primary vehicles for estate planning: last wills and testaments, or simply wills, and revocable trusts, or simply trusts. Each legal instrument is governed by Florida state law for Florida residents.
A testator is the person who drafts a will or uses the assistance of an attorney to draft a will, setting out how she wants her assets distributed upon her death. The testator must appoint someone to serve as the executor of the estate. This person administers these transfers after the testator's death pursuant to the will’s instruction by filing the will in probate court and overseeing the entire probate process. Wills can be destroyed or amended by the testator by following specific requirements under Florida law. However, they cannot be altered after the testator dies.
With a trust, the testator transfers the assets while he is still alive. However, rather than transfer them to his heirs and beneficiaries, he transfers the assets to a trust. Usually, but not always, a testator appoints himself the trustee so that he can maintain control over the assets while he is alive. Once he dies, the person named as the successor trustee takes control of the assets and is responsible for transferring them to the heirs named in the trust.
There are two main differences between a will and a trust. With a trust, the successor trustee does not have to go to probate court, and can make asset transfers without court supervision. An executor of a will, on the other hand, must file the will in probate court and transfer assets through the probate process. Accordingly, a trust may save the estate money by not having to pay out probate costs. The second major difference is that, in Florida, when a will gets probated, the will and other court documents become public records. In a trust, this does not occur, making a trust a desirable option for individuals who value privacy.
While creating a trust helps avoid probate, some people use both a will and a trust. In such cases, any assets that don't get legally transferred to a trust must be probated to effect their transfer. For example, if you do not transfer stocks or properties obtained after you've created a living trust, those assets will have to go through probate.