One interesting aspect to estate planning in Florida is that (almost) everyone wants to avoid probate upon their death. While most people do not know what probate is, they just know they want to avoid it. Along with trying to avoid probate, many people read that they should have a revocable living trust to help them avoid probate. While a living trust makes sense in many different situations, it is our opinion that not everyone should have a "trust based" estate plan.
One reason that we do not recommend trust based estate plans is because people mess them up all the time. The reality is that when a client meets with their attorney, the client says they want to avoid probate upon their death. The attorney will tell the client that a trust is the way to do this. The client agrees to this, but the client probably does not understand what a trust is. What happens next is that the client signs the trust and generally does not fund their trust. This means that the client does not place their assets into their trust. (As a side note, our estate planning practice follows a four step process to make sure our client's trusts are funded).
The big picture is this - clients end up with trusts when they do not understand them and they do not actually transfer their assets to them. This happens all the time. In my 17 years of practice, I have executed wills for people who have had trusts, I have amended trusts that clients did not inform me had been amended a number of times, and I have seen forgotten trusts actually have assets when someone dies. In short, estate planning with trusts can be complex, to say the least. Now comes the case of Bernal v. Marin, (196 So. 3d 432 (Fla. 3d DCA 2016).
This is a very interesting case. Here. the decedent created a revocable living trust in 2004 mostly leaving her assets to charity. In 2008, the decedent created a last will and testament that said that she was "revoking all other will, trust and codicils made by me." Having the provision to revoke any previous wills in a last will and testament is exceedingly common, but revoking previously created trusts would be very rare.
Of course, when the decedent died in 2013, the heirs argued over which document controlled - the trust giving the assets to charity or the last will and testament, which may have revoked the living trust. Here, the courts looked at section 736.0602, Florida statutes, that allows a trust to be revoked in 3 ways:
- By substantial compliance with a method provided in the trust:
- A later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed according to the terms of the trust; or
- Any other method manifesting clear and convincing evidence of the settlor’s (the trust's creator's) intent.
Here, the appellate court ruled that the last will and testament could have been a "clear and convincing" way to establish that the previously created trust was revoked, but that the trial court needed to make that specific finding.
The moral of the story here is that before you create a living trust, make sure you understand how it works and why you want to avoid probate for your heirs in the first place. Living trusts can have their own complications so not everyone should have one. Another moral of the story is to have a great estate planning attorney in the first place as the costs of litigation could likely have been avoided in the first place.
People who read this article may also be interested in:
- A Quick Guide to Revocable Living Trusts in Florida
- Can my living trust protect my children from their ex-spouse?
