Picture of a last will and testament as discussed in this estate planning FAQ.

Estate Planning FAQ – Wills and intestacy

The first section of this Estate Planning FAQ discusses Last Wills & Testaments and what happens to your assets if you don’t have a will.

Q. What happens to my assets if I die without a will?

A. Florida law provides essentially for distribution to closest family members. A surviving spouse inherits everything if there are no children. If there are children, (whether or not minors or adults), the spouse must share the estate with the children. If there is no spouse, then children (or grandchildren in place of a deceased child) share the estate. If there is no spouse, children nor grandchildren, first parents inherit, then brothers and sisters, then nieces and nephews, etc. take down the bloodline.

Q. Who must be left property in a Florida will?

A. Florida requires that you only have to leave your estate to your surviving spouse and minor children. You do not have to leave anything to your adult children. A surviving spouse must be left 30% of your estate. This 30% right is called the “elective share” and replaced the old “dower” right of 1/3 of the estate.

Q. What is a pour-over will?

A. This is a will of a person who has a revocable living trust to avoid probate. The “pour-over” will probates any assets that didn’t get into the trust before death. These assets which are added to the trust by the pour-over will do not escape probate. The pour-over will is thus a safety net to gather any loose ends for the living revocable trust.

Q. How can I change my will? Can it be done by a codicil?

A. A codicil is an amendment to your will. Although a codicil is simpler and cheaper than a new will, you may want to prepare a new will instead of a codicil if you are changing beneficiaries. This is because the beneficiary who was removed can see his removal and may want to contest the codicil.

The next section of the Estate Planning FAQ will talk about making medical decisions for incapacitated loved ones.

Estate Planning FAQDurable medical power of attorney

This section of the Estate Planning FAQ concerns durable medical powers of attorney and other documents that let you make medical decisions for an incapacitated loved one.

Q. I need a legal plan that would provide protection for my husband and me, in case of incapacity in the future. We have no children and a few close relatives.

A. You need to give each other a durable power of attorney, which will protect you in the event of incapacity. The power allows each of you to handle each other’s affairs. When one of you dies, the survivor must give a relative the power of attorney. Also, consider a living trust to avoid probate and provide for continuity of management of your estate.

Durable family power of attorney

Q. When would I use a durable medical power of attorney?

A. This legal document allows a family member to make health, medical and surgical decisions for you if you become incompetent or disabled. It eliminates the need for guardianship.

Living will

Q. What is a Florida living will?

A. This legal document tells your family and doctor to terminate life prolonging procedures when you are terminally ill. It has been legal in Florida since Oct. 1, 1984.

The next section of this Estate Planning FAQ will discuss trusts and the questions that surround them.

Estate Planning FAQ – Living trusts and probate

This section of the Estate Planning FAQ discusses living trusts also known as revocable living trusts or revocable trusts. These are estate planning documents that help you avoid probate.

Q. I realize that living trusts cost more than wills, but do I have to pay another big fee if I want to change my trust?

A. No. A trust can be amended by a simple document called a “trust amendment.” This is a low-cost document.

Q. What does a trustee do?

A. While you are alive, the trustee invests the trust and follows your instructions. If you become incompetent, the trustee pays bills and has overall responsibility for trust finances. After your death, the trustee pays final bills and taxes much like a personal representative (except without the supervision of the probate court.) The trustee’s last duty is to distribute the trust in accordance with your wishes written in the trust.

Q. Who can be my personal representative (executor) in Florida?

A. Anyone who is a Florida resident can be your personal representative. Non-Florida residents must be blood relatives. Out of state banks cannot act unless they have Florida-approved powers to do so.

Q. What do the terms settler and grantor mean?

A. These terms mean the same thing and are interchangeable. They are the words we use for the person who creates a living trust agreement and activates it before death. I prefer the word “settler” because it communicates best (i.e., the “settler” sets up the trust.)

Q. My daughter is divorced and is a spendthrift. Her friends and children always take advantage of her. We need to protect her and the money we want to leave her. How can this be accomplished?

A. You must set up a spendthrift trust for your daughter. She can receive a monthly income and principal if she needs it. Consider a bank trust department or relative to manage the trust for your daughter.

Q. What is a joint trust and how is it used?

A. A “joint” trust is one trust set up together by 2 settlers (usually spouses). The trust usually says that both are co-trustees and both control the trust together until one party dies. After the first death, the surviving co-trustee continues the trust and has full control over it. When the second spouse dies, a final successor trustee distributes the trust free of probate. A joint trust is used by married people who want to avoid probate and whose estate is not large enough to have a tax problem. The joint trust guards against probate if both are killed simultaneously and also can provide the normal trust help against possible incompetency for the survivor. A joint trust is a simple probate avoidance tool that allows a married couple of modest means an excellent tool to guard against incompetency and pass their assets to their loved ones without probate.

Q. If my husband and I have all our bank accounts in joint ownership in trust for our son, is it necessary to have a living trust to avoid probate?

A. Not for the bank accounts, but what about your home, stocks, bonds, car and other assets? These assets will automatically go to probate if they are not held in a living trust.

Q. Is it true that probate is a matter of open public record?

A. Yes, the probate court is open to the public. Anyone for any reason can examine most of the court files and see your will and any codicils to it after your death.

Q. I want to set up a living trust. Can I be the settler and trustee of my own trust?

A. Yes. This is what is always done. Upon your death or disability, you name a successor trustee. The living trust avoids probate of your estate.

Q. I own a lot of stocks and bonds in my individual name. Can I re-register them in my name in trust for my daughter? Also, will this avoid probate?

A. You cannot register stocks or bonds in your name in trust for your daughter. Only a bank account can be retitled that way. If the stocks and bonds are in your name, they will have to be probated upon death.

Q. All of my bank accounts are in my name in trust for my son, with the exception of my condo. I want to avoid probate. What do you suggest?

A. Give your son a life estate deed. Upon your death, it avoids probate and goes directly to him. It is a very inexpensive legal procedure. You would also still get your homestead exemption.

Q. Is there any amount that my estate can be and not have to pass through a full probate?

A. Yes, if the assets solely in your name are less than $75,000, then a summary administration can take place in one day instead of a full probate administration that may take months or years.

Q. My wife and I have everything in joint names. We are concerned about a common disaster or what happens upon the death of a second spouse. Can a living trust avoid expensive probate proceedings?

Yes, a joint living trust can avoid probate of your assets and protect both of you in the event you are disabled. Don’t wait — set up the trust now, and you won’t have to worry about your estate in the future.

Q. Why should I name a family member or friend as my trustee or personal representative instead of a bank trust department?

A. There are many factors to consider in selecting a personal representative. Reasons to select a family member or friend as a trustee include: (1) The bank’s fee will be saved, (2) The family or trusted friend will take a closer more personal interest. (However, keep in mind that disgruntled family members may mean bad family relationships for years to come if the settlement is not smooth.)

Q. When should I name a bank trust department as my personal representative or trustee instead of family member?

A. There are many reasons to name a trust department as personal representative of your estate. (1) The bank has tax, probate and investment expertise, (2) The bank is local and your children may be scattered around the county or world, (3) The bank is reliable and will always be there, (4) The bank is bonded and highly regulated by treasury officials, (5) The bank is impartial, and because of this, family jealousies will not play a part in your settlement.

Q. If I use a bank trust department as my trustee, what happens if the bank fails?

A. A trust account handled by a bank’s trust department is legally separate from the bank’s assets. The bank’s creditors have no claim to the trust assets. If the bank fails, your trust assets are not lost. The bank’s successor (supervised by federal or state officials) will take over the trust without loss to your family.

Q. We understand that if the value of our estate is less than $12.92 million in 2023, it is unnecessary to put our wills through probate?

A. The $12.92 million figure is for estate tax purposes. It has nothing to do with probate. If you had $100,000 in your name and died, your estate would have to be probated. Probate is expensive (6% of your estate) and usually takes a long time. Consider a living trust to avoid probate. It will protect you in the event of disability and is private and easy to set up.

Q. If I create a revocable living trust, must I file an extra income tax return each year for the trust?

A. If you are your own trustee, you do not file any extra tax return for the trust. You continue to file the normal personal tax return or the Form 1040 and register the trust assets under your own social security number

Q. What is an irrevocable trust and when is it used?

A. An irrevocable trust is just as its name implies, it cannot be revoked or changed once it is established. An irrevocable trust is used to lower estate taxes by gifting property to it. To save estate taxes, however, property must be “given away” to the trust. This means that once the property is given away, you cannot receive any benefits from it. Thus, one does not use an irrevocable trust as an estate planning vehicle unless you’re willing to part with all control and benefits from the property to be placed in the irrevocable trust. One uses an irrevocable trust in place of an outright gift to a beneficiary because you want the money for the beneficiary in the hands of a trustee instead of the beneficiary (minor grandchild, adult child you cannot handle money, etc.).

Q. What taxes do Florida residents pay?

A. Florida residents have no state income tax and no true estate tax. Florida residents are subject to the Florida Intangibles Tax. The tax is levied on the fair market value of certain intangibles valued each Dec, 31. Intangibles that are taxed include stocks, corporate bonds, mutual funds, non-Florida municipal bonds and certain notes and receivables. Nontaxed assets are money in the banks, Florida municipal bonds and all U.S. government securities.

Q. Does Florida require that I own real estate to be a Florida resident?

A. No.

Q. Does Florida require that I spend 6 months or more per year in Florida to be a Florida resident?

A. Yes, in order to be a Florida resident, you must live in Florida for 6 months out of the year or 183 days.

Q. How do I establish Florida domicile?

A. There are several steps that a new Florida resident should take to establish Florida domicile. Please try to complete as many steps as possible to establish Florida domicile.
(1) Go to the courthouse and sign a declaration of domicile which states under oath you now consider yourself a Florida resident
(2) Register to vote in Florida
(3) Change drivers license and auto tags
(4) File federal income tax returns in Florida
(5) Execute new will and/or trust declaring Florida domicile
(6) Minimize financial contacts in other states by transferring as much as possible to Florida such as bank accounts, safe deposit boxes, stock brokerage accounts and IRA accounts

Q. If I create a living trust and place my home in it to avoid probate, will I still get the homestead tax deduction and the once-in-a-lifetime federal income tax exclusion for taxpayers over age 55?

A. Yes to both. Any asset can be placed in a revocable living trust. Real estate in a living trust does not lose your homestead exemption

General Questions

This last section of the Estate Planning FAQ answers general questions that did not fall into the previous categories discussed in this Estate Planning FAQ.

Q. When is pre-marital agreement valid in Florida?

A. A pre-marital agreement is a written contract executed before marriage that spells out what property rights apply should a death or divorce occur. All spousal rights can be contracted away if the agreement is valid. A valid agreement calls for each party to fully understand it and this means that both parties must have their own separate attorney.

Q. When I make a gift to my child, who pays the tax?

A. If the gift is less than $17,000 or $34,000 per couple, there is no gift tax to pay. If the gift exceeds $17,000, the donor pays the gift tax. There is no income tax to your children for gifts to them. There are no income tax deductions for the donor on gifts to a child (only gifts to charities will give a donor an income tax deduction.) Once the donated property is in your child’s name, he will then pay income tax on the earnings from the donated property (i.e., dividends received on the gifted stock).

Q. I want to come and see you but I need to know what you charge. Please advise.

A. It is very difficult to tell you what I charge without finding out more about you. I always tell a new client to bring in a copy of their will (if they have one), a list of assets, and a copy of their income tax return. After reviewing these documents and getting to know the client, I am in a position to set a fee. I do not charge for the first appointment. A client, though, must call for an appointment.

Q. When should I review my will or trust?

A. It is vital to review your will or trust whenever: (1) You plan to get married, (2) You consider divorce, (3) A child is born or adopted, (4) You move to another state, (5) New tax laws are passed.

Q. What are the top items that may require an estate plan review?

A. The following is a list of events that would suggest your estate plan be reviewed. Of course, this list is not exhaustive; there are other items that would trigger a review of your estate plan.
1. Your estate plan has not been reviewed within the last 12 months.
2. You or a child has gotten married or divorced.
3. There has been a change in your health or the health of your spouse or an immediate family member.
4. There have been significant changes in the financial situation of you or your immediate family.
5. There have been significant changes in the relationship between you and the people you have named as beneficiaries, trustees, guardians, or other fiduciaries of your estate plan.
6. You want to do tax planning to save you or your family money and taxes.
7. You have inherited or will be inheriting money or assets.
8. You have invested in or are going to invest in a new business and need to form an entity or enter into a buy-sell agreement.
9. You have retired or are contemplating retiring from a business or profession.
10. You would like to do estate planning for your parents to a. minimize their estate taxes b. protect your inheritance in case you get sued or divorced c. eliminate estate taxes at your death on your inheritance.
11. There have been changes in the law that may affect your estate plan