What Are the Differences Between a Will and a Revocable Living Trust?
Many people mistakenly believe that, if they have executed a Florida Will, probate will be avoided when they pass away. This is not true.
In Florida, an Estate will go into probate when a person owns any property in his or her name alone without named beneficiaries. For example, if your spouse is deceased and the deed to your home is in both of your names, that home will have to go through the probate process in Court when you die. Likewise, if you have a brokerage account or bank account in your name alone with no one named as payable on death, that asset will also need to be probated upon your death.
The main purpose of a Will is to designate who you want to get certain assets when you die. If you die without a Will in Florida, the law will still require probate of your assets and your beneficiaries will be based on your closest living blood relatives. Florida Law provides for an order of priority of blood relatives if someone dies without a Will. If you are a Florida resident and own real estate in another state, it is likely that two probates will be required: a primary probate in Florida and a secondary probate (known as an ancillary proceeding) in the state where the property is located.
With cash assets such as bank accounts, CD’s, brokerage accounts, annuities, life insurance policies, etc. you can avoid probate by designating one or more beneficiaries on the account. These beneficiaries will be entitled to the proceeds of that account upon your death, regardless of whether you have a Will or what you may have indicated in the Will; in other words, the designation of a beneficiary in a specific account takes precedence over anything stated in a Will. The Will will only apply to those assets where there are no designated beneficiaries (or if the beneficiaries have died before you).
Therefore, one of the primary reasons that many clients choose to create a Revocable Living Trust is to avoid probate on all of their assets, particularly their home and any other real estate. I have many clients who own their primary home in Florida and a vacation home in another state. We create a Revocable Living Trust in Florida and also prepare a Quit Claim Deed to transfer the Florida property into the Trust. An attorney in the other state can then prepare a Deed transferring that property into the the Florida Trust. This legal work will avoid probate in both states and allow for quick and easy sale or distribution of the properties.
Some people choose to avoid probate by putting their intended beneficiary of property on a Deed, either as a joint owner or in what is commonly referred to as a “Life Estate Deed.” However, there are numerous potential risks in putting someone else’s name on the Deed, including problems which arise if that person dies before you, or you later decide to remove that person from the Deed. One of the advantages of a Revocable Living Trust is that it allows you to create an Amendment to the Trust at any time during your lifetime without having to change the Deed. Once you have the Revocable Living Trust created, you can also buy additional property in the name of the Trust at any time, either in Florida or out of state.
The Trust which we prepare also provides that your Successor Trustee (the person or persons you designate to administer the Trust after you pass away) can also take over managing the assets of your Trust if you become legally incapacitated. Legal incapacity is defined in the Trust document with language that requires a written statement from two medical doctors indicating that you are not able to carry on your legal affairs. The language allows your Successor Trustee to take over without a Court Order, but still provides you the protection of requiring written statements from two doctors.
In addition, it is much more difficult to contest a Revocable Living Trust than a Will. Your Successor Trustee can sell your properties and make distributions very quickly following your death, whereas the probate process required for a Will generally takes six to nine months or longer.
This article provides a brief summary of some of the important differences between a Last Will and Testament and a Revocable Living Trust Agreement. I offer a free consultation to review your existing documents or to discuss preparing new ones. During the free consultation, we will also discuss the Durable Power of Attorney, Designation of Health Care Surrogate and Living Will, which are important documents to protect you if you become incapacitated. I am also available for a free consultation regarding any issue pertaining to personal injury claims or car insurance coverage.
I leave you with the words of wisdom that my father left for me: “May you live as long as you want and never want as long as you live.”
Serving Broward and Palm Beach Counties since 1973Be Smart!