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Creating Wills & Trusts

A will is intended to pass down your property and assets to your descendants.  If a person dies without a will, it is called intestate, in which case the law dictates on how the property is distributed. Intestate law varies by State so it is important to know that a will created in one state may conflict with the laws of another.  Also, laws regarding intestate recently experienced some changes which could impact pre-existing wills and trusts. For example, under the new State of Florida law, if the children of the deceased are all also children of the surviving spouse, and the surviving spouse does not have any children who are not descendants of the deceased, then the surviving spouse receives the entire estate.  This could present a problem if the original intention was to leave the estate directly to the descendants.  Therefore, it is important to have a will or trust examined and updated according to current state laws.  

Do you need a will or trust created according to your state’s laws?  Contact a financial planner in your area who can help.

When you have a living will, you there is a security in knowing that your children, property and assets, and estate will be taken care of according to your wishes.  If you don't have a will, the state can determine who gets your property and a judge may decide who will raise your children.  The basic elements of a will determine the following: your executor meaning the person who is authorized to carry out your will, who will get your property and assets, who will take custody of your minor children, and who will manage your property and assets for your minor children until they become adults. A will cannot resolve issues such as the estate taxes that may be owed at the time you or your spouse pass away, children from previous marriages, or property or assets intended to be passed down two generations to grandchildren.  These types of situations require further legal attention.

A local financial planner can help clarify some of the following issues associated with creating wills and trusts:

  • Intestate
  • Conflicting State Laws
  • Living Will
  • Revocable Trust
  • Irrevocable Trust
  • Taxation of Wills and Trusts
A trust is a written legal agreement by which your assets are managed by one person and transferred to others. Property and assets can be transferred to a trust, including real estate, a business, cash, stocks, and bonds. Revocable trusts can be changed at any point, but they don't offer the same asset protection as an irrevocable trust. Income from revocable trusts goes to the grantor, and the assets are still owned by the grantor. The trust grantor earns all income from assets, and still owns the assets even as they are held in the revocable trust. The assets pass to the trust beneficiary upon the passing away of the grantor.

A setback is that assets in revocable trusts are subject to being seized by creditors. Also, since the income goes directly to the grantor, it is applied to the grantor's annual income and can incur income taxes. Also, because the assets in revocable trusts are still owned by the grantor, they are subject to estate taxes along with all the other assets at the time of the grantor's death. While revocable trusts are more flexible, they don’t have the advantages of irrevocable trusts. When choosing between a revocable trust and an irrevocable trust, you must decide if you're looking for a trust that is flexible and provides income or if you're looking for asset protection and tax benefits.

When an estate is disbursed through a will, the taxes can either be paid on the calendar year or the fiscal year. According to Florida Probate law, tax exemptions vary for estates taxed through trusts versus wills, with income tax exemptions for trusts being lower.

If you are interested in finding out more about creating wills and trusts, find a local professional in your area.