Luxury Real Estate Ponte Vedra - Revocable Trusts for Luxury Home Owners with Two-Homes

Revocable Trust Planning for the Two-Home Family

By: Christopher J. Bondani

As a Ponte Vedra Beach, Florida estate planning attorney, one of the most common scenarios I encounter is that of the family with two homes in two different states.  The usual situation is one in which the family splits time between a residence in a region of the country that tends to be cold and unpleasant in the winter, and Florida, where it tends to be warmer.  The appeal of such a situation is obvious; however the legal problems which can arise may not be as evident.

It probably comes as no surprise to anyone that the law tells us that real property is subject to the statutes and procedures of the state in which it is located.  The surprising part is when people discover that, because of this fact, upon the death of an individual with two residences, two probates may have to be opened.  Ancillary administration is a form of probate which is required if a decedent who resided in one jurisdiction died while owning land in another.  The main probate estate is opened in the state which was the decedent’s domicile, while the ancillary probate must be opened in the other state for the sole purpose of accounting for and distributing the land and improvements.  I can promise you that the look on a client’s face when their attorney informs them that there must be two probates done in order to close a loved ones estate is rarely a happy one.

One effective answer to this problem is through the utilization of a revocable living trust.  The use of a revocable trust in an estate plan is commonly associated with a number of advantages, perhaps the most recognized of which is probate avoidance.  When a person dies, if their property passes under their will, then the will must be probated.  Probate often requires the hiring a lawyer, the filing of a number of documents with the court, attendance at one or more hearings, and the providing of a written inventory to the court valuing the properties which pass under the will.  Many people find that the high amount of time, cost, and court involvement required by a single probate process is undesirable, and two or more proceedings is simply too much to bear.  By transferring all properties which would otherwise pass under their will to their revocable trust during their lifetimes, they can ensure that their families avoid all or the bulk of these stressful costly proceedings.

The standard revocable trust format is fairly uniform.  A person (or persons) known as a “settlor” under Florida law, establishes the revocable living trust as part of their estate plan.  During the settlor’s lifetime they may freely make changes to the provisions of the trust, as well as transfer assets into and out of the trust.  Upon the death of the settlor, the revocable trust becomes irrevocable and any trust assets are distributed according to the terms of the trust document.  The settlor serves as the trustee of their revocable living trust during their lifetime, with a successor trustee taking over upon death and serving a function that is akin to that of a Florida personal representative (a/k/a “executor”).  Since the trust owns the assets, and not the decedent individually, the death of the decedent causes no legal change in ownership, i.e. from the decedent to the decedent’s estate, as the trust remains the owner and a new trustee simply takes over.  The successor trustee has a fiduciary duty under the law to honor the terms of the trust, and is entitled to be compensated for their services.  Besides governing distribution of assets, the terms of the trust may otherwise be crafted to fit the needs of the settlor and from this basic format numerous variations may arise.

In many circumstances, this valuable bit of planning can completely eliminate the need to openmultiple probates across state lines. Furthermore, there is no reason that probate avoidanceshould not be equally applicable to all other assets of the decedent and this is what generallyoccurs. Put simply, a well-drafted and fully funded revocable trust may completely eliminate theneed for any probate proceeding at all.The concept of revocable living trusts in the State of Florida is not a new or a novel one. These instruments are being drafted every day and the law is well-settled. If you own multiple properties across multiple states, it may be in your best interest to contact your legal adviser andinvestigate such planning further. As with many things, a little careful consideration at the outsetcan significantly serve to avoid the potential for problems down the road.

Christopher J. Bondani is a Ponte Vedra Beach attorney who offers legal advice and assistance in connection with a wide variety of complex legal matters. Christopher obtained his Bachelor of Science in Criminal Justice from theUniversity of Tennessee at Chattanooga; his Juris Doctor, magna cum laude, from Florida Coastal School of Law;and his Masters of Tax Law (LL.M.) from the University of Florida, Levin College of Law. Christopher is a memberof The Florida Bar and is also admitted to practice before the U.S. Tax Court. Mr. Bondani is a contributing author to the The Floryan Post on the Luxury Real Estate Ponte Vedra website.

Christopher J. Bondani, Esquire

Law Offices of William Hill

2106 Sawgrass Village

Ponte Vedra Beach, Florida 32082

PH: (904) 285-5576

FAX: (904) 285-5577

 Aproved for publication, all rights reserved. Kathleen Floryan, 2014