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ESTATE PLANNING IN FLORIDA TO PROTECT THE SURVIVING SPOUSE

Wednesday, June 10th, 2009 by

Leaving property outright to a spouse seems like a loving act.  It is easy, natural, and comfortable.  It is also a mistake.  When assets are left outright to a spouse, the survivors may face the uncertainties of guardianship or probate, unforeseen expenses, and delays.  Such problems can be overcome through revocable living trust planning – when a marital trust is established.  This is a special sub-trust created on the death of the first spouse within that deceased spouse’s living trust.

 The estate planning advantages of a marital trust are that it avoids probate, provide the surviving spouse with various forms of assistance, ensures all the rights of that spouse, and saves death taxes.

 Spousal trusts avoid both a living and a death probate for a surviving spouse, and can offer a measure of creditor protection.

 The property that passes into a surviving spouse’s marital trust will avoid probate on the first death, and will therefore not be reduced by the attorney fees and court costs inherent in that probate process.

 If the survivor is disabled or incapacitated and unable to care for him or herself, the marital trust eliminates the dangers of a guardianship.  The instructions in the marital trust (not the orders of a probate judge) become the guidelines that determine the financial care of that spouse.  There are no unnecessary costs or delays in providing care.

 Probate, whether a guardianship or a death probate, is public.  A marital trust is private:  no courts, no prying eyes.

 Also, because the marital trust is irrevocable after the death of the first spouse, it offers a measure of creditor protection for the survivor.  If the surviving spouse is involved in a traffic accident causing injuries to others, for example, his or her own assets are totally at risk – as are any assets left to the spouse outright.  But assets left in trust for the surviving spouse may be protected from his or her future creditors.

 On the death of the second spouse, all the money and property in the marital trust again avoids probate as it passes to other loved ones.

 Help and guidance

 Many spouses are not financial experts.  For one reason or another, they have never participated in handling either money or property.  When their spouse dies, these survivors have no idea what to do or where to turn.  By leaving proper instructions in a marital trust, and by naming a competent trustee and advisors, the client can ensure that his or her surviving spouse will receive the very best financial advice and guidance.

 Even if a spouse has the financial ability and knowledge to carry on, the emotional trauma of death can make day-to-day planning a burden.  By naming a trustee and other helpers, the burden is substantially reduced for the surviving spouse.  Even after time passes, a financial partner can remain a continuing source of help and advice.

 Giving a Surviving Spouse the Ability to Say “No”

 In addition to these benefits, the presence of a trustee often provides, indirectly, another important benefit – the ability for the surviving spouse to say “no”.

 By leaving property outright to a spouse, they can find themselves in a difficult position when it comes time to face relatives or friends who feel they should share in the survivor’s “new-found wealth”.

 With the property in a marital trust, a surviving spouse can truthfully say that because the property is in a trust, the trustee must give approval to all transactions.  The Jacksonville, Florida estate planning attorneys associated with the Cramer Law Center typically recommend that the surviving spouse not be a sole trustee – to maximize creditor protection.  This is another example of why co-trustees are often beneficial.  The hard decisions, such as saying “no” can be delegated to the non-spouse trustee.

 Traditionally, spouses have been wary of having property “tied up” in a trust.  This fear is unwarranted.  A marital trust can be as liberal as the client desires.  A marital trust can give the surviving spouse a broad selection of rights such as:  to receive all the income from the trust property; to remove trust property at any time; or to receive trust property if disabled.

The marital trust will contain instructions based on the clients’ motives.   Clients can be liberal and allow the surviving spouse full control over the property, or they may choose to restrict each other’s use of the property to income only after the first death.

 The only restraint is Florida law, which does state that certain amounts are guaranteed to a surviving spouse on the first spouse’s death.

 Useful in tax planning

 Marital trusts can also be used to accomplish maximum federal estate tax planning.  Leaving assets to a spouse in a marital trust qualifies for the estate tax Unlimited Marital Deduction.

 In summary, leaving property to a surviving spouse outright is an estate planning tactic that should be avoided.  By leaving money and property to a spouse in a marital trust, the first spouse to die can help the surviving spouse cope with or even avoid many problems.

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Categories : Estate Planning

Comments

  1. Miami DUI Attorneys says:

    Thanks for the article ! Yet another consideration to make when developing your estate planning options. Thanks.

  2. Amy Radfar says:

    Excellent direction for those with Florida real estate. Too often, like you said, it seems the loving thing to do to leave the property to the remaining spouse outright. I know a couple who had two Lake Mary homes and after the husband’s death, the wife was faced with lots of taxes. Thanks for posting.

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