When it comes time to discuss estate planning options, Florida residents may wish to investigate creating either a trust or a will. Both types of documents give people the ability to stipulate in writing their wishes for how assets should be handled after they die. However, the way in which a trust does this is different than the way in which a will does this.
OnTheMoneyRadio.org indicates that trusts may be more effective in preserving more of a person’s assets. This is because with a trust, the probate process can be bypassed. In probate, a judge oversees the distribution of assets as laid out in a will. Probate can also take place when there is no will or other estate plan in place. Probate is not free and can cost nearly 10 percent of an estate’s value.
In addition to the costs involved with probate, there is a time sink as well. Sometimes probate is not completed for a year or more and, in the process, no assets can be distributed. This means that beneficiaries must wait for long periods of time before they receive anything from an estate. The contents of a person’s will as well as probate proceedings are public record. This prevents confidentiality for people with businesses or other reasons that make privacy important. In contrast, trust documents are completely private.
When it comes to taxes, the Palm Beach Daily News explains that irrevocable trusts are the only ones that offer benefits for tax exemptions. Many people incorrectly believe that taxes are avoided with all forms of trusts.
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