Estate Planning and Trust Services

Estate Planning and Trust Services

What Is A Trust

A trust is a management tool and a form of titling property, typically for the benefit of you and members of your family. Technically, property is conveyed to a person or institution that serves as trustee, who is legally bound to adhere to the terms of a legal document - a trust instrument. The trustee is only empowered to manage the property in the way the trust instrument permits. The trust property is managed for the benefit of the beneficiaries and particular rules must be followed. You are often a beneficiary and trustee of a living revocable trust while alive. You totally control its operations. The revocable trust is then controlled by whomever you direct at the time of your incapacity or death. You maintain total control while capable, and often gain greater control over your life and property than you would have without the use of a trust.


At death, a trust can act very much like a will, but without having to be probated. Trusts created after your death often provide protection for your heirs, like a coat of armor, from the claims of creditors, divorce, taxes, and other threats against your accumulated wealth and can be used to instill and preserve family values. A trust can serve many purposes, and there are many types of trusts, only some of which are discussed in these materials.

Incapacity & Guardianship

Perhaps more important than probate avoidance and avoidance of government bureaucracy at death, is avoidance of government intrusion into your privacy during your lifetime because you experience a period of mental incapacity. We generally tell our clients that incapacity is guaranteed, it is the duration of the incapacity that is unknown. Dealing with assets, even some that are jointly owned, or making medical decisions, even if a spouse is alive, are often impossible to undertake if you become mentally incapacitated. If you should become incapacitated, a court petition to appoint a guardian is usually necessary to make critical decisions. Furthermore, tax planning opportunities can forever be lost after you have become incapacitated.


Guardianships generally require that the appointed guardian receive education and training. This can be required whether or not your nominated guardian is a family member, such as a spouse or child. Your guardian must file an inventory of all of your assets and must annually file an accounting and various reports. Generally, you and your guardian are represented by attorneys. The purposes of the inventory and reports are to permit the court to monitor how the guardian is taking care of you and to ensure that your assets are being properly managed. Guardianship processes are often more expensive than the costs of probate administration because a guardianship can go on for years.

An estate plan should contemplate the possibility, if not probability, of incapacity. Avoidance of guardianship processes is often easily accomplished with a well-prepared estate plan. Many estate plans, however, fail to contemplate the possibility that the overall estate plan will not have been fully completed or implemented by the time of a senior family member's incapacity and subsequent death. Failure to provide for flexibility and preservation of planning opportunities if an incapacity occurs, even if an otherwise adequate estate plan exists, can cause substantial cost, family disharmony, and an inability to reduce estate or death taxes.


Upon your death, required legal processes force a reconciliation of your assets and liabilities. These processes are generally required to clear title to your assets, satisfy any creditor claims, and to assess whether any federal or state death taxes are due. Failure to undergo these processes will generally leave your assets unmarketable, subject to automatic government liens, and may cause members of your family to become responsible for any actual taxes or claims and any penalties and interest associated with a failure to satisfy these liabilities. These problems can and often do occur in the state of your primary residence (your "domicile") and also in any state where you own real property or from which you receive income.

Creating an optimum estate plan involves an organizational process using various legal documents, which are intended to avoid many of the time consuming probate processes otherwise required at death. Furthermore, and perhaps more importantly, an estate plan should involve foresight and flexibility in order to create "post mortem" (after death) planning opportunities that are often wasted.

Basic Estate Plan

A basic estate plan should reduce the costs associated with the inefficiencies and bureaucracy of guardianship and probate, and should preserve your available tax exemptions. Furthermore, and when appropriate, it should seek to provide an umbrella of asset and tax protection after your death for your surviving spouse, children, and grandchildren. These valuable opportunities may be forever lost if not implemented through a basic estate plan. A basic estate plan will typically consist of the following:

A Revocable Living Trust

This is a legal document which provides a means of holding title to your assets which will avoid probate of your assets when you die and avoid guardianship of those assets if you become incapacitated. For example, your assets would be titled: "John A. Smith, Trustee of the John A. Smith Trust," dated January 1, 2001. You may change the terms or revoke the trust at any time. It is a management tool which you totally control during life and while capable. You direct what happens to your assets in the event of your incapacity or death. At death, it serves as a will, but a revocable living trust does not need to be probated. As a will substitute, it should be drafted to utilize your available tax exemptions and post death planning opportunities.

A "Pour-Over" Will

This is a legal document that serves as a back-up to your revocable living trust. Upon your death, it generally will dispose of personal effects of nominal value, with all other assets passing to your revocable living trust. If you have failed to properly retitle assets to your revocable living trust, the will catches them. If valuable assets are not retitled properly and the will catches them, probate will be necessary. Therefore, the proper retitling of assets to your revocable living trust is important when undertaking the estate planning process. Proper legal advice is necessary to assure proper titling and division of your assets.

A Durable Power Of Attorney

This is a legal document which permits the management of your affairs by someone you appoint prior to a court's adjudication of your mental incapacity. It permits management without the need for guardianship, which may otherwise be required where your mental capacity is questioned.

A Health Care Proxy

Medical decisions may often not be made for you without the appointment of a guardian when you are unable to make medical decisions for yourself. Most states have passed laws which permit you to designate someone in advance, known as a "surrogate," using this legal document, so that the appointment of a guardian becomes unnecessary.

Death With Dignity Statement

This directive is commonly referred to as a "Living Will" and expresses your wishes to avoid life-prolonging medical procedures when your death is imminent or otherwise would occur naturally. It will typically express your desire to make this process as painless as medically possible.

Establishing Domicile In Florida

This section concerns "domicile." It is meant to present you with information concerning perfection of your domicile in Florida. More than 75% of our clients maintain residences in more than one state. It is very important to clearly perfect your domicile in the state of your choosing. We often jokingly ask our northern clients if they are prepared to call Florida "home" or are "coming home for the winter" rather than that of their northern residence.


Your "domicile" is the state where you live, with the intention to remain indefinitely. You generally would maintain your principal residence in the state of your domicile, and your principal financial and other ties would be to that state.

If you spend time in two or more states during the year, domicile will be a question of your intent, which can be manifested in your everyday activities and relationships. In these cases, it is important to select one of the states and to clearly indicate your choice of domicile by establishing key relationships to that state.

Establishing domicile is a very important consideration for you if you have significant wealth. Court cases have held that individuals can have two residences for state tax purposes. This can result in time-consuming and costly litigation over which state is your primary residence or "domicile."


Once you decide to become a Florida domiciliary, you should take the following steps to perfect your domicile:

  1. File a "Declaration of Domicile" in the office of the clerk of the county in which you reside in Florida. We can assist you with this filing. A copy of the Declaration should also be sent to the Department of Revenue of the state of your prior domicile.
  2. On or before March 1, you should apply for the homestead exemption for your Florida residence.
  3. You should use your Florida residence address in all legal documents (such as your Will, Federal and state tax returns, credit card applications, insurance policies, charge accounts, etc.). You should notify the Internal Revenue Service of your change of address using prescribed forms.
  4. You should pay taxes imposed on Florida residents, such as the intangible personal property tax, unless you take additional steps to avoid it.
  5. You should obtain an unrestricted Florida driver's license and determine whether your cars and boats should be registered in Florida.
  6. You should register to vote in Florida and vote as soon as you are eligible.
  7. You should consider establishing memberships in social, religious, and community organizations, and in Florida chapters of national organizations.
  8. You should consider transferring valuables and major bank and brokerage accounts to Florida.
  9. Your near and dear personal possessions should be located in your Florida residence.


There is generally no difficulty in establishing a Florida domicile because you will face no objection from the State of Florida. The more difficult aspect of changing domicile is persuading the former state of domicile that it has in fact been abandoned. This aspect has resulted in litigation in a number of cases and is unique to your particular affairs. We are often called upon to assist our clients in addressing the factors necessary in their circumstances to evidence proper abandonment of a former domicile.

Common Mistakes & Misunderstandings


A spouse's share of an estate often differs depending upon whether you die with or without a will.

The state of your domicile determines who receives your property if you die without a will.

If you die without heirs, the state of your domicile receives your property rather than a friend or a charity.


Holding all of your property jointly with a spouse can waste the estate tax exemption of the first spouse to die and results in a substantial increase in death tax exposure.


Any incidents of ownership held at death will cause life insurance policies to be taxable in your estate; i.e., ownership, the ability to change beneficiaries, or to borrow from a life insurance policy on your life will cause the full death benefit to be taxed in your estate.

Estate taxation of life insurance is often avoided through the use of an irrevocable life insurance trust.


The value at death of these and other types of deferred compensation plans are subject to estate tax.

The recipients of distributions from these plans or accounts, unlike life insurance, are also subject to income tax on receipt.

It is often very important to integrate retirement plans with trusts to capture all available exemptions.


Life insurance, IRAs, pension plans, property held jointly with rights of survivorship, annuities, and property held in revocable living trusts are generally not subject to probate, but this does not mean that they are not subject to federal and state death taxes.


99% of individuals waste their generation-skipping tax exemption. However, the vast majority of us would use our generation-skipping tax exemption if we really understood it.

Use of your generation-skipping tax exemption provides an umbrella of protection for your assets when they pass to your children, grandchildren, etc., protecting it from divorce risks, taxation, and other risks.

Advanced Estate & Tax Planning

If your estate is exposed to estate tax, you may want to consider ways of reducing that exposure. Doing so will often involve the use of less widely-known techniques and trusts which assure your financial security and your lifestyle, but which substantially reduce the impact of federal and state wealth transfer taxes.

More advanced planning is typically undertaken by individuals that have retired and have reached age 60. The size of your estate will often create exceptions to this rule. Some advanced estate planning is simple, can be completed in a short amount of time, and can generate substantial benefits, while others are more of a process which involves ongoing implementation and refinement.

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