A properly drafted Will provides many benefits. One important benefit is avoiding conflict. A Will can help minimize dispute by clear direction for distribution of estate assets.
A Will can provide other benefits. An estate plan can be created to minimize or eliminate debt or inheritance taxes. Although Florida has no estate tax, there is still a tax at the federal level (albeit there is an exemption for estates of 11.2 million dollars or less). Northern states are not so tax friendly and some Floridians have significant northern assets.
A Will can be used to protect the beneficiary. Direct payment of a significant gift to a beneficiary can quickly be lost if the beneficiary is improvident or if the beneficiary has creditors. A Will can establish a trust under which distribution is delayed or made over time. Even when a beneficiary is not likely to be improvident in use of a gift, a gift can still be made in a manner that will provide a rainy day or emergency fund rather than simply being poured into the beneficiary’s bank account.
A Will can appoint the personal representative (also known as executor) of the decedent’s choice. That helps avoid conflict among competing beneficiaries or others with interest in the estate and helps insure a person or entity preferred by the person creating the Will is appointed by the court.
A Will can also be used to appoint a guardian for minor children. Such appointments are not binding on the court, but are extremely persuasive and allow a parent to choose a guardian that he or she feels will do a good job taking care of their children. A Will can also establish and fund a trust for benefit of the guardian and minor children, with use of the funds limited to purposes and in the manner directed by the testator.
A properly drafted Will can also be used to establish domicile and help avoid the clutches of a northern state tax collector. Most Wills reference the domicile of the testator at time the Will is drafted and further direct that the law of that state govern the Will. If that is not changed, it may be all that is needed for a tax collector in the northern state to claim a testator died a resident of that state and owes estate or inheritance taxes. Worse, the tax collector might claim back income taxes. That might not matter to the testator, who is no longer with us, but it would be of concern to the beneficiaries paying to fight the tax collector and possibly having to pay a tax that could have been avoided.
Many believe that if you do not have Will, your assets passed to the state when you die. That is not generally true. Florida’s legislature recognizes that some Floridians do not get around to completing a Will before they die. Assets of a person dying without a Will or assets which are not addressed within a Will, pass by what is known as intestate succession. Florida’s legislature has adopted statutes that direct distribution of intestate assets, which the legislature feels follow a typical Floridian’s intent. The legislature believes that distribution of a typical Floridian would follow the family tree, with some accommodation for marriage and remarriage.
By statute, that a surviving spouse gets all of the assets if there are no descendants of the decedent or if all of the descendants are also descendants of the surviving spouse. The surviving spouse only gets half if there are one or more surviving descendants of the decedent who are not descendants of the surviving spouse. And, if there are one or more surviving descendants of the decedent, even if all of them are also descendants of the surviving spouse, the surviving spouse is cut back to half if the surviving spouse has one or more descendants who are not descendants of the decedent.
After addressing surviving spouse’s share, the statutes go on to address distribution to other heirs. The part of the intestate estate that does not pass to the surviving spouse is distributed as follows:
- To descendants of the decedent;
- If there is no descendant, to the decedent’s father and mother equally or to the survivor;
- If there is none of the foregoing, to the decedent’s brothers and sisters and the descendants of deceased brothers and sisters;
- If there is none of the foregoing, one half of the estate goes to the decedent’s paternal and the other half of the decedent’s maternal kindred.
- And, if there is no paternal or maternal kindred, the assets go to the kindred of the last deceased spouse of the decent as if the deceased spouse had survived the decedent and then died intestate entitled to the estate.
In the unlikely event that not even the most distant of relatives can be found, the assets go to the State of Florida. Those assets are sold and proceeds deposited in the State School Fund. A person claiming entitlement to the proceeds may reopen probate and assert entitlement at any time within 10 years after payment to the State School Fund. After that, the State’s right to the funds becomes absolute.
Florida statutes give special treatment to homestead and provide additional protection for families even in intestate estate. Homestead goes in the same manner as other intestate property, but if the decedent is survived by spouse and one or more descendants, the surviving spouse takes a life estate in the homestead and the descendants get the homestead after the surviving spouse’s death. Alternatively, the surviving spouse may elect to take a one-half interest in the homestead, which means the surviving spouse could also petition the court to sell the homestead and get half of the proceeds.
The surviving spouse, or if no surviving spouse, children of the decedent, also have the right to a share of the estate known as exempt property. That is particularly important when creditor claims may gobble up the assets. Exempt property consists of household furniture, furnishings and appliances in the decedent’s usual place of abode up to a net value of $20,000, two motor vehicles, all Section 529 Tuition Programs (pre-paid college funds) and teacher school administrator death benefits. Exempt property can be claimed with or without a Will. In addition to protected homestead and exempt property, the surviving spouse and lineal heirs of a Florida domicile decedent, may also apply for and obtain a family allowance not to exceed $18,000. This benefit, too, is available with or without a Will. It is not chargeable against any benefit or share otherwise passing to the surviving spouse or to the dependent lineal heirs in an intestate estate.
Florida’s legislature has crafted a distribution plan the legislatures believes is consist of desires of a typical Floridian. But, one size does not fit all. Using the statutes as a Will substitute means opportunity for a well concerned plan is lost. Floridians should not intentionally allow the legislature to establish their estate plan.
William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.