With the so-called "baby-boomer" generation now steadily entering the ranks of the retired or semi-retired, the number of them that live at least part-time in the state of Florida is on the rise. Many people of this generation are beginning to realize that with the wisdom of age comes the responsibility to provide for loved ones once the inevitable happens.
One of the basic estate planning tools, is of course, the will. While having a will is a good idea, there are other options that may be of more use to a boomer trying to accomplish specific goals. One of these choices is the use of a trust in devising one's wealth to one's heirs. There are a number of different types of trusts that are useful for different reasons. Possibly the two most important are "testamentary trusts" and "living trusts." A testamentary trust is usually included right in the testator's will. This type of trust does not take effect until the death of the testator. The main advantage of this type of trust is that is allows one more control over assets for a longer period of time. For example, wealth left to a spouse can be placed in a trust with the provision that the remainder go to the couple's children in the event the spouse should die. This way, assets a couple intended to go to their offspring are protected if the originally surviving spouse remarries and then predeceases the new spouse.
A living trust, usually of the "revocable" variety is another tool that boomers might wish to consider. While it can be used in a similar fashion to the testamentary trust, that is, to have more control over the assets within it, it has other advantages as well. For example, assets within a revocable living trust will generally avoid the lengthy and expensive process of probate. By using one, a testator could, for example, avoid the necessity of probating pieces of real property located in different states with just one document. Further, since revocable trusts are generally "portable," they will be valid wherever the boomer who created them happens to move.
Of course, like all other legal documents, it is important that trust documents be drawn up correctly so as to be legally valid and to ensure that they are worded to accomplish precisely those goals for which they were created. It should also be remembered that trusts, while important, are only a part of a good estate plan.
Source: marketwatch.com, "5 estate-plan strategies for boomers," Andrea Coombes, Nov. 29, 2013