When Florida residents put an estate plan in place, they are often primarily concerned with ensuring that their assets will be passed to their heirs in accordance with their wishes. While this can be accomplished by drafting a last will and testament, adding trusts to an estate plan provides people with a number of important advantages. Trusts allow estates to avoid the time consuming and public probate process, they can prevent heirs from losing assets to their creditors and they can also reduce the amount of estate tax that must be paid.
An estate is unable to pay its bills or manage its assets while it is waiting for a probate court to approve the will, but assets placed into a trust are available immediately because they are owned by the trust. Placing assets in trusts rather than transferring them to beneficiaries also prevents creditors from filing claims and gives people more control over how their estates are administered. Assets can be made available only when heirs have graduated college or overcome substance abuse problems, or people can give their beneficiaries control over their inheritances by naming them as trustees.
Many Florida residents choose to leave all of their assets to their surviving spouses, but this can result in hefty federal estate tax bills when the surviving spouse passes away. Placing assets in trusts allows estates to pass assets to family members and avoid this tax liability. This is a standard estate planning practice for married couples and is permissible under federal law. Florida no longer has a separate estate tax.
Experienced estate planning attorneys may suggest that trusts be used when beneficiaries are under the age of 18 or receive need-based government benefits. Trusts allow assets to be distributed to minors without interference from probate courts, and they can also allow heirs to continue to receive benefits like Supplemental Security Income and Medicaid.
Source: The Florida Department of Revenue, “Florida Estate Tax”
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