An estate consists of the assets you own at the time of your death or disability. Estate planning is the process by which a person plans in advance and names who they want to receive their assets upon their death or at disability.
Why is Estate Planning Important?
Estate planning allows a person to decide who gets what and when they can receive it. Without an estate plan, a person would be considered to have passed away “intestate.” Passing away intestate empowers the state to decide how your assets get distributed, because the laws of intestacy would govern. This is an unfortunate situation because the person may not want their assets distributed how it is specified through the state’s laws of intestacy.
What is a Trust?
Trusts allow a third party of your choosing, called a trustee, to hold assets on behalf of a beneficiary or beneficiaries. One of the great benefits of a trust, is that trusts tend to avoid probate. Probate is the judicial process by which a person’s assets are legally distributed to beneficiaries. The probate process authenticates, or proves, a Last Will and Testament of the deceased and accepts the Will as a valid public document. If a person passes away without a Last Will and Testament, then their assets would pass through the laws of intestacy. Probate can be a long and stressful process for loved ones. Since trusts tend to avoid probate, beneficiaries may be able to receive assets immediately or as detailed but the trust’s dispositive provisions. Additionally, some trusts help in avoiding estate taxes and reduce other costs, such as court fees.
Are There Different Types of Trusts?
Yes, there are many types of trust. The main distinguishing feature of a trust is whether it is a revocable trust or an irrevocable trust. Revocable trusts can be changed at any time and for any reason; whether you want to change a provision in the trust or if you want to change a beneficiary. Revocable trusts can essentially be undone entirely. Irrevocable trusts, on the other hand, are almost impossible to be changed after enactment. Revocable trusts become irrevocable when the settlor, or the person which established the trust, passes away because he or she is no longer alive to make changes.
How does Florida deal with Revocable Trusts?
Florida Statute §735.0602 pertains to the revocation or amendment of revocable trust and states that “the settlor may revoke or amend a revocable trust: (a) By substantial compliance with a method provided in the terms of the trust; or (b) If the terms of the trust do not provide a method, by: (1) A later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust; or (2) Any other method manifesting clear and convincing evidence of the settlor’s intent.” Case law has held that a “settlor may revoke or amend a trust by substantially complying with the method provided in the terms of the trust, or, if the terms of the trust do not provide a method, by executing a later will or codicil that expressly refers to the trust or specifically devises the property that would otherwise have passed according to terms of the trust.”
Bernal v. Marin, 196 So. 3d 432 (Fla. 3d DCA 2016).