Trust a will or will a trust? It all depends on your needs
DEAR BRUCE: My wife and I are planning on setting up a will or living trust but are undecided on what would be better. We own our home and some other real estate. Stocks and mutual funds have transfer-on-death beneficiaries on the accounts. Can a legal assistant create wills and living trusts legally under Florida law? — J.W., via email
DEAR J.W.: You can write your own will, and as long as a legal assistant or some other person doesn't hold themselves out to be an attorney, they can help you draw a will or a trust. You can even buy forms in office-supply stores. That said, I think the only intelligent thing to do is to have your will set up by an attorney. In the event there are no other things to be considered — real estate, personal items, cash, etc. — the will need not be filed.
Whether you are better off with some combination of trusts and a will is another matter. If your estate is substantial, you really should sit down with a qualified planner who can tell you some of the peculiarities of the law and how you can best arrange for the least painful way to transfer those things you have acquired in life.
A lot of people seem to fear probating a will. This is not a painful process. Trusts, however, can offer a couple of benefits. One is privacy, as a will is a public document. Second, if the trust has been set up properly with a professional, it's possible that expenses that might otherwise be charged to probate the will would exceed the costs of setting up the trust. You should make sure that (in most cases) the trusts are fully revocable, which means you can cancel them as long as you are alive and competent, change beneficiaries or eliminate them altogether if you so choose. If you set up a trust and that person predeceases you, there is a question as to whether their beneficiaries would benefit from the trust or it would simply cease to exist and go back into your general estate. Obviously, this can get rather complicated.
DEAR BRUCE: My husband recently transferred $20,000 to one of my accounts, unaware that this could cause tax implications for us. Will this amount be subject to any federal or state taxes? We have since made the account a joint one. — N.M.. via email
DEAR N.M.: I'm a bit confused. You say that your husband put money into one of your accounts. Why would this cause tax implications? Assuming that you file jointly and you haven't separated your funds, I know of no reason why a husband and wife can't give money to each other without any tax implication. There may be something I'm overlooking, and, if I am, I'm confident my readers will be generous and let me know, which I will address in a future column and will respond back to you.
Send your questions to: Smart Money, P.O. Box 7150, Hudson, FL 34674. E-mail to: email@example.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.)