Wills and Living Trusts, Part I

Estate planning may not be on many people's minds these days. The tough economic environment has many people feeling like they are poor, and the $5 million federal estate tax exemption for people who die in 2011 or 2012 has made a lot of people feel that estate planning is not very urgent.

The thing is, if people have even a few assets, or if they have minor children, they should have an estate plan. Estate taxes are not the only issue.

When people die intestate, which means they die without having a will, the disposition of their assets and what happens to their minor children will be determined by state law. Most people like the idea of making their own plan better than leaving it up to the Florida state legislature.

Two basic estate planning documents are a will and a living trust. A living trust allows you to transfer assets without going through probate. For both instruments, it is always advisable to have a will or a living trust drafted by an experienced Florida wills and trusts attorney.

The basic purposes of a will are to name a guardian for your minor children (if any), name an executor for your estate, and specify which beneficiaries (including charities) should receive which of your assets.

The guardian's task is to take care of your children until they reach legal adulthood. The executor's job is to pay your estate's bills, pay any taxes due, and deliver what's left to your heirs.

In the next post, we will go into greater detail on living trusts.

Source: Wall Street Journal Smart Money "Why Most People Need an Estate Plan" 3/22/2011