Florida residents usually put estate plans into place to reduce their tax burdens and ensure that their assets are passed to their loved ones in accordance with their wishes. This is generally done by using wills. Wills must go through the long and sometimes costly probate process before property can be distributed, but this step may be avoided by placing assets into trusts or using beneficiary designations.
Money from life insurance policies and retirement plans like IRAs and 401(k) accounts can be transferred to the beneficiary listed on the documents without first going through probate. This is why it is important for individuals with such assets to check their beneficiary designations regularly and list backup as well as primary beneficiaries. This becomes especially important following a major life event such as a marriage, divorce or the birth of a child or grandchild. In some cases, account holders may name several beneficiaries who will all receive a designated amount.
Placing assets into trusts is another way to avoid probate. Assets placed into trusts are not subject to probate because they are no longer owned by the grantor. Assets placed into revocable trusts can still be used by the grantor, and they are only distributed upon his or her death. However, revocable trusts do not provide as much protection against creditors as irrevocable trusts, which generally cannot be modified.
Attorneys with estate planning experience could explain the advantages and disadvantages of trusts. Trusts are more complex than wills to draft, but they provide far more control over when and how assets are distributed. This could be an important consideration if heirs are young or have had problems with money in the past.