What Happens to the Assets Left Outside My Trust in Palm Beach County?

If you have a trust or you’re planning to create one, you may have heard that a pour-over Will can be helpful. This estate planning tool ensures your trust offers you maximum asset protection. But is it really necessary in Florida? To answer this question, you’ll need to carefully assess your unique financial situation, perhaps alongside an experienced estate planning attorney in Palm Beach County.

Florida Has Made Summary Administration More Accessible

In Florida, summary administration is a more affordable and streamlined version of normal probate. Recent changes have made this process more accessible to a wider range of families, and the maximum threshold has increased from $75,000 to $150,000.

In theory, summary administration is supposed to benefit families with relatively low net worths. In reality, many high-net-worth families take advantage of summary administration to streamline probate while shielding the majority of their wealth in trusts.

In other words, a common goal is to push personal assets below the summary administration threshold while protecting the rest of the family fortune in a trust. With recent changes to summary administration laws in Florida, this goal has become easier to achieve.

Does a Pour-Over Will Make Sense? 

If you have more than $150,000 worth of personal assets (outside of your trust) when you pass away, your family will not benefit from summary administration. Instead, the probate process may be relatively expensive and time-consuming. A pour-over Will addresses this issue by automatically transferring these assets into your trust when you pass away.

The problem is that certain types of assets are difficult to appraise, such as collectibles or fine art. These assets may also be worth more than $150,000, especially in high-net-worth households. The cost of getting these assets appraised during summary administration may cancel out the benefits of this streamlined probate process. A pour-over Will transfers these assets into your Will, but you could technically move them into a trust beforehand by using a strategy called an “assignment of tangible personal property.”

A Basic Payable-on-Death Beneficiary Designation Could Make More Sense Than a Pour-Over Will

Suppose you are a relatively high-net-worth individual with the majority of your wealth shielded in a trust. A valid goal might be to ensure that you never have more than $150,000 in non-cash assets at any given time. With this approach, you will preserve access to summary administration, making probate less of a headache for your beneficiaries. $150,000 should also be more than enough of an emergency/spending fund for even high-net-worth individuals.

That being said, you can eliminate probate altogether with a relatively straightforward payable-on-death (POD) beneficiary designation, making the above strategy fairly pointless.  A POD account automatically transfers your cash to a designated beneficiary, such as a spouse or adult child. This makes the $150,000 threshold irrelevant, as you skip probate entirely regardless of how much money is in the account.

Can a Palm Beach County Estate Planning Attorney Help Me?

A Palm Beach County estate planning attorney may be able to help you determine whether a pour-over Will is truly the most appropriate choice for your unique needs. Recent changes to Florida’s probate system may make pour-over Wills less useful in certain situations. Contact Kitroser Lewis & Mighdoll today to learn more about the next potential steps.

Source: 

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0735/0735.html