Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

THE IMPORTANCE OF SELECTING THE RIGHT ESTATE PLANNING DOCUMENTS

When creating a Trust it is important to understand the differences between the different types. Similar to a Power of Attorney or Health Care Surrogate they can range from simple to extremely complex.  Most individuals are familiar with the terms "Family Trust" or "Marital Trust," but there are many different types that can be utilized as a part of your estate plan. The only rule is that if the trust benefits a spouse, “you must cause the trust to be included in the second spouse’s estate, for estate-tax purposes.”  If it is not included in the second spouse’s estate, the assets would have the same basis as at the first spouse’s death. 

Trust options include, a Credit Shelter Trust, Special Needs Trust, Elective Share Trust, Trust for non-US spouse, Life Insurance Trust and Charitable Trusts.

Credit Shelter Trust.  A Trust created upon the first spouse's death to shelter a portion or all of their estate tax exemption amount.  This makes certain the estate-tax exemption is in place.

Special Needs Trust. A Trust established for a special needs child or adult to protect the assets from government attachment and allow the individual to maintain all of their government benefits.

Elective Share Trust.  A Trust established, upon the death of the first spouse, which provides the surviving spouse with the required 30% share of the deceased spouse's estate and ensures the assets pass, upon the death of the surviving spouse, to their designated beneficiaries of the predeceased spouse. Typically utilized in the case of second marriages.

Trust for Non-US Spouse. A non-US citizen spouse is not entitled to the unlimited marital deduction. As a result, to protect the assets that would pass to them upon the death of the first spouse, the funds would pass into this Trust. The assets would then be held for their lifetime or distributed to them should they become a US citizen.  

Irrevocable Life Insurance Trust.  Life insurance can help beneficiaries pay estate taxes. The death benefit is paid to a Trust instead of an estate or individual and stays outside the estate’s taxable value. 

Charitable Remainder Trusts.  “Assets can pay to a client for life, to children for life, and to grandchildren for a period of time, and then go to a charity.”