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ESTATE PLANNING BASICS


WHAT IS AN ESTATE PLAN?

An estate plan gives a person control over his or her assets and their distribution upon death. A person’s assets may include homes, automobiles, stocks, bonds, bank accounts, household furniture, personal property, etc.


WHY HAVE AN ESTATE PLAN?

A person who dies without an estate plan will not control the distribution of his/her assets. The State of Florida through the court system will appoint a personal representative to be in control of the distribution of the assets. In addition, the court is authorized to appoint a guardian of minor children without consideration of the deceased’s religious and moral expectations. Estate planning will minimize taxes, legal fees, and court costs. 


WHAT ARE TWO WAYS TO PLAN AN ESTATE?

Last Will and Testament. A Last Will and Testament is written during a person’s lifetime, and becomes effective only upon death. The Will states who will inherit the person’s assets. The Will appoints a personal representative responsible for carrying out the distribution of the decedent’s assets. The Will also names the guardian chosen to raise minor children.

 

Revocable Living Trust. A Revocable Living Trust is a written document established during a person’s lifetime. However, it is a mechanism to manage a person’s property before and after death.


In a Living Trust:

a) The person and his or her spouse are the Trustors or the makers of the trust (unmarried persons can also establish a Living Trust).

b) As the Trustors they transfer their assets into the Trust and the Trust takes title to the assets..

c) The Trustors are also the Trustees or managers of the Trusts assets.

d) The Trustors/Trustees are the Beneficiaries of the Trust giving them the ability to receive income and proceeds from their assets during their lifetime.

e) Upon death of the Trustors, their named successor trustee will distribute the assets according to the provisions of the Trust and the named guardian will raise the minor children according to the wishes of the Trustors.


WHAT ARE THE ADVANTAGES OF A LIVING TRUST?

A Living Trust avoids probate. Probate results in expensive legal fees, court costs and lengthy time for approval of asset distribution.

A Living Trust can be administered very quickly with minimum legal fees and expense.

A Living Trust can be modified or revoked by Trustors at any time. Assets may be easily moved in or out of the Trust.

A Living Trust is a private document held by the Trustees and not filed with a court as a public document.

If one or both Trustors become incapacitated for any reason, the assets in your Living Trust will be managed by the other Trustee or named successor trustee and allows them to take care of your financial affairs while you are unable.


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