Most people understand that having some sort of an estate plan is, as Martha Stewart would say, a “good thing.” However, many of us don’t take the steps to get that estate plan in place because we don’t understand the nuances between wills, trusts & dying intestate, that is without either a will or a trust.
Here’s what will generally happen if you die, intestate (without a will or trust), with a will, and with a trust. For this example, we’re assuming you have children, but no spouse:
- If you should die intestate, your estate will go through probate and all the world will know what you owned, what you owed, and who got what. Your mortgage company, car loan company, and credit card companies will all seek payment on balances you owed at the time of your death. In probate, those creditors have priority for your assets compared to your children.
After that, the Florida law of intestacy (Fla. Stat., Chapter 732) dictates who gets what and when, without the exercise of any discretion by your personal representative, or executor.
- For example, if your only heirs are your children and you have not provided any instructions, Florida law mandate divvying up the proceeds of your estate equally.
- Your older children will get their shares immediately if they’ve attained adulthood.
- But, the court will appoint a guardian to manage the money for your minor children until they become adults.
- Shockingly, that guardian can charge a lot of money and be a total stranger – as can the guardian who raises your child.
- Yes, if you die without a valid will, the probate court, not you, will decide who raises your minor children.
Keep in mind that since your death has been published in the local newspaper to alert valid creditors, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if they’re not legally owed anything.
The bottom line? Dying intestate allows Florida law and the probate court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.
- If you should die with a valid will, your assets will still go through the probate process. However, after creditors have been satisfied, the remaining assets go to whom you’ve identified in your will, and in the proportions that you’ve provided.
- So, if you want to leave money to your children and name a guardian for the minor ones, the court will usually abide by your wishes.
- The same holds true if you specified that you wanted to give assets to a charity, your Aunt Betty, or your neighbor.
- Keep in mind that predatory creditors are still an issue as your death has been publicized in the local newspaper. Even with a will, probate is a public process.
The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate to be handled. But, a public probate is still guaranteed.
- If you’ve created a trust, you’ve taken control of your estate plan and your assets. Trust assets are not subject to the probate process and one of the most important benefits of trusts is that they are private. Notices are not published, so you avoid predators coming after your estate.
You’ll have named a trustee to manage your estate with specific instructions on how your assets should be dispersed and when.
- One word of caution – trusts must be funded in order to bypass probate.
- Funding means that your assets have been retitled in the name of your trust.
- Think of your trust as a bushel basket. You must put the apples into the basket as you must put your assets into the trust for either to have value.
You do still need a pour-over will to pour any assets inadvertently or intentionally left out of your trust and to name guardians for minor children. By now you should be seeing some of the differences between wills, trusts & dying intestate.
The bottom line? Trusts allow you to maintain control of your assets through your chosen trustee, avoid probate, and leave specific instructions so that your children are taken care of – without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them.
Don’t let the wills, trusts & dying intestate controversy slow you down. Call the office today; we’ll put together an estate plan that works for you and your family whether it be a will, trust, or both.