Probate vs. Trust Administration in Orlando: Which Is Right for You?

Is It Better for Your Estate Go Through Probate or Trust Administration?

One of the most important estate planning decisions you will make is whether to opt for probate or trust administration. There are pros and cons for both. Probate may be a better option for a simple estate with few assets and beneficiaries, while a trust may be preferable for a complex estate with businesses, investments, or multiple properties. The right choice for you will depend on your unique circumstances, preferences, and goals. 

How Does Probate Work in Orlando?

Probate is a court-supervised process that is governed by the Florida Probate Code. The process includes:

• Gathering and identifying the assets of the decedent (deceased person)
• Publishing a notice to creditors
• Paying the debts of the decedent
• Distributing the decedent’s assets to his or her beneficiaries
• Closing the estate

If a valid will exists, the named personal representative (executor) initiates the process by filing a Petition for Administration and other documents with the court. The court will issue Letters of Administration, which allow the personal representative to act on behalf of the estate. He or she will collect and evaluate assets, pay debts and taxes, and distribute the remaining assets to the named beneficiaries as directed in the will. If the decedent died without a will (intestate), remaining assets and property are distributed according to the state’s intestate succession laws. 

What Does Trust Administration Involve?

Upon the death or incapacitation of the trustor (person who creates or contributes property to a trust), the trustee is required to administer the trust in accordance with the instructions and provisions stated in the trust document. Trusts are not subject to judicial supervision unless ordered by the court. Duties of the trustee include:

• Collecting and assessing trust assets
• Identifying trust beneficiaries
• Paying taxes and debts before transferring assets to beneficiaries
• Administering the trust according to the instructions contained in the document
• Setting aside a reserve fund for purposes of trust or estate administration
• Dealing with all financial matters
• Preparing and filing tax returns and settling any other tax issues
• Maintaining accurate and detailed records

What Are the Pros and Cons of Probate and Trust Administration?

In choosing between probate and trust administration, it may help to consider the pros and cons of each with respect to five important estate planning factors:

• Estate complexity: If your estate is simple and does not involve multiple properties, businesses, or investments, probate may be the most straightforward and cost-effective option. For a more complex estate, on the other hand, a trust may offer greater flexibility and control over the distribution of your assets. 
• Tax implications: Either trust administration or probate could have tax implications for your estate. However, trusts can be structured for tax-efficient distribution of assets and to help minimize estate taxes. Probate may allow for less flexibility and higher estate taxes. 
• Privacy: The probate process is a matter of public record. This could be a concern if privacy is important or if a need exists to protect sensitive information. Trust administration, on the other hand, is typically a private process that does not involve the court or go on the public record. 
• Control and protection of assets: Probate exposes your estate to claims from creditors, and it may also open the door to challenges from heirs. With trust administration, your trustee can maintain control over your assets and protect them from lawsuits and creditors. In the event of your incapacity, a trust can also provide for the management of your assets with no need for a court-appointed conservator or guardian. 
• Time and expense: Trust administration is generally faster than probate, as it does not involve the court. Probate can take several months or longer to complete. Trust administration may be less costly than probate, as there is no need for an attorney. However, the costs involved in setting up and maintaining a trust should be weighed against the potential savings. 

How Can a Trust Protect Assets from Creditors?

While some types of trusts can protect assets from creditors, others cannot. A revocable trust, also known as a living trust, holds the assets of the person creating the trust during his or her lifetime. That person is named as both the trustor and the trustee. When the trustor dies, the successor trustee takes over to administer the trust. Two characteristics make a revocable trust susceptible to collection by creditors:

• The trustor is legally considered the owner of the assets in the trust; and
• The trustor can cancel or change the terms of the trust at any time. 

An irrevocable trust can potentially protect assets from any creditors. This type of trust is also called an “asset protection trust.” The assets that fund the trust become the property of the trust and are no longer controlled by the trustor. The terms cannot be altered without a court order or the approval of both the trustor and the beneficiaries. Therefore, creditors cannot come after trust assets to satisfy the trustor’s debts. 

Do You Need an Estate Planning Attorney?

Even if your estate is simple, estate planning can be a complex process. To protect your assets and ensure they are distributed as you wish, it is vital to consult with an experienced Orlando estate planning lawyer. At The Law Office of Erin Morse, we can help you make strategic decisions and minimize the stress associated with creating or modifying an estate plan. Contact us at (407) 743-6059 to find out how we can help.