Disclaimer: This blog is intended for educational purposes only and should not be considered legal advice. Every individual’s situation is unique, and estate planning decisions should be made based on personalized legal guidance. For advice tailored to your specific needs, please contact Blackburn Law for a free consultation at (727) 826-0923 or visit LifePlanLaw.com.
When does a trust make sense for you? Use this checklist to find out how a trust may help you and your beneficiaries.
Do You Have More Than $15 Million in Assets?
If you do, a trust makes sense for you.
A trust can include strategies to minimize federal estate taxes. Currently, the federal estate-tax exemption is $15 million per person. This means a married couple has $30 million in estate-tax exemption.
Do You Own Real Estate in More Than One State?
If you do, a trust makes sense for you.
Without a trust, your beneficiaries will have to open a probate estate in every state in which you own real estate.
This multiplies the cost of probate by the number of states in which you own real estate. Even if you own real estate in only two states, the cost of probate in both states will far exceed the cost of creating a trust.
How Many Asset Accounts Do You Have?
The more asset accounts you have, the more a trust makes sense for you.
The more asset accounts you have, the more likely the total value of your assets will be high.
Attorneys’ fees and Personal Representative fees in most states are based on the value of your assets. The more valuable the assets, the higher the fees.
The more asset accounts you have, the more difficult it will be to pass those accounts to beneficiaries.
Even if you are very careful to name beneficiaries on all your accounts, each individual beneficiary must know they are a beneficiary and must submit documentation to claim their share.
It is often more efficient to have a trustee submit all of the documentation, collect all of the assets, and then divide the assets among your beneficiaries.
How Many Beneficiaries Do You Have?
The more beneficiaries you have, the more a trust makes sense for you.
Each of your beneficiaries must know they are a beneficiary. Each must know what assets you have. Each beneficiary must submit documentation to claim their share.
It is often more efficient to have a trustee submit all of the documentation, collect all of the assets, and then divide the assets among your beneficiaries.
Do You Own Real Estate That You Want Sold After Your Death?
If you want your real estate sold upon your death, or your real estate may need to be sold in order to give several beneficiaries separate shares, a trust makes sense for you.
Real estate can be sold in a probate estate. However, in Florida, the probate estate must account for the Florida Constitution’s homestead provisions.
It is often difficult to sell homestead property in a probate estate, and it certainly takes more time to sell it through probate.
While the Personal Representative of your estate waits for the opportunity to sell homestead property, homeowners’ or condominium association fees keep adding up. Mortgage payments keep adding up. Utility and maintenance expenses keep adding up.
Selling real estate from a trust is a straightforward process. It is not delayed by court approval or court rules.
Even passing title to real estate from a trust is a straightforward process. It, too, is not delayed by court approval or court rules.
Do You Want to Give Real Estate to Several People?
The more people you want to receive your real estate, the more a trust makes sense for you.
You can give your real estate to several people in a will or even by a “Lady Bird” deed. See “Lady Bird deeds.”
However, what are those people going to do with the property?
Are several people all going to live in the property? If so, can they agree on how to manage the occupancy and pay the expenses?
Do you expect that several people will sell the property? Can you guarantee that they will all get along and agree on the price?
The more people who receive the property, the more likely they will disagree about when, how, and for how much to sell it.
If they disagree, they may end up in litigation, spending the value of the property while arguing among themselves.
Passing title to several people from a trust is a straightforward process after ensuring they can get along, manage the occupancy, and pay the expenses.
Selling real estate from a trust and distributing the proceeds to several beneficiaries is also a straightforward process.
Do You Have a Blended Family?
Do you or your spouse have children from a prior marriage?
If you have a blended family, a trust makes sense for you. A trust is very flexible and can account for several different circumstances.
For example, if one spouse brings most of the assets to the marriage, a trust can hold all or some of those assets for the surviving spouse while also ensuring that the assets pass to the children of the first spouse to die when the second spouse dies.
If you leave all of your assets to your spouse, he or she will own those assets. The spouse is not required to pass those assets on to your children unless you use a trust to require it.
Even if both spouses bring equal or nearly equal assets to the marriage, a trust can efficiently pass those assets to the children in whatever percentages you desire.
You can create separate trusts. You can create a joint trust.
Either form of trust can ensure that the Florida constitutional rights of a surviving spouse are respected while also passing assets to each spouse’s children.
The children do not need to manage the inheritance themselves. Your successor trustee will ensure that assets are distributed to the children you designate and in the amounts you designate.
Do You Want to Make Managing Your Assets Easier If You Become Incapacitated?
The more types of assets you have, the more a trust makes sense for you.
If you do not have a trust and are unable to manage your own assets, the agent under your power of attorney must manage those assets for you.
Using a power of attorney is not easy. Financial institutions are suspicious when a stranger shows up with a 12-page document and wants access to your accounts.
Every institution will have strict procedures for recognizing the power of attorney and authorizing access to the accounts.
This will take time and can be very burdensome for your agent under the power of attorney.
Having a successor trustee access your assets and manage them on your behalf is more straightforward and less burdensome than using a power of attorney.
You set up your accounts in the name of your trust. In this way, each financial institution knows you have a trust.
They know you have named a successor trustee to act in your place if you become unable to manage your own assets.
They know the trust is not a fraud because you, their customer, told them about it.
Therefore, institutions treat trusts with much less suspicion than they treat powers of attorney.
Do You Want to Make Inheritance Easy and Efficient for Your Beneficiaries?
If you have several types of assets and several beneficiaries—and you want to make passing assets to those beneficiaries easy and efficient—a trust makes sense for you.
A trust is a private document. It does not require a court proceeding, or probate.
Usually, one or two people are designated as your successor trustees.
As soon as a death certificate is available, the trust assets are available to the successor trustee or trustees.
The successor trustees can access your assets, manage them, and prepare them for distribution—all outside probate and immediately following your death.
