If asked whether they have an estate plan in place, many Florida citizens would answer yes, they have a will, or no, they don’t. While a will is a basic foundational document in any estate plan, it is not the best choice for most people. Although not the only purpose, the primary function of estate planning is to create an orderly distribution of assets from a decedent to his or her beneficiaries. A properly executed will can suffice to do so, but a living trust provides advantages a will does not.
A primary difference between the two legal documents is when they become effective. Legal experts explain that a will has no legal effect until its creator, called the testator, dies. A living trust created for the purposes of transferring assets upon the death of the creator of the trust, called the settlor, becomes effective immediately upon proper execution. Importantly, this includes the funding of the trust.
Funding the trust means that the title to an asset has been transferred from the name of the settlor to the trust as owner. The settlor typically is also the initial trustee and retains total control over the asset while alive. Upon death, a successor trustee takes over and distributes the asset as indicated in the trust. The trust, as a legal entity, at all times owns the asset. Without a trust, a will can direct the asset to the beneficiary, but if the title is held solely in the name of the decedent, it will be necessary to open a probate to transfer title to the beneficiary.
An estate planning lawyer will advise that not only is probate a lengthy and costly process, it is also a public one. Probate may also be avoided by the use of pay on death beneficiary designations where available.