Module 2 — Planning Tools

The most basic estate planning tool is the will and last testament. This legal document, directing the disposition of the estateholder’s final affairs, is the foundation of most estate plans. The person creating a will is called the testator. A will is totally inoperative during the testator’s lifetime, may be changed at any time, and becomes effective only upon the testator’s death.

Since the will becomes effective only after death, each state has procedures to enforce its terms. This court-supervised process — probate — ensures that the deceased estateholder’s final wishes are honored and that creditors are protected. (Probate was covered in detail in Module 1.)

What a Will Can Direct

In a will, the testator can express wishes regarding:

• Who is to administer affairs after death (executor / personal representative)
• The powers of the executor and whether a bond is required
• Who is to provide care for minor children (guardian)
• How, when, and to whom property is to be distributed (beneficiaries)
• Creation of trusts under the will (testamentary trusts)
• Conditions imposed on heirs

If an estateholder dies without a valid will, state intestacy laws govern the disposition of the probate estate — according to a predetermined formula that may not reflect the estateholder’s actual wishes.

The Executor (Personal Representative)

The executor (or personal representative in Florida) steps into the shoes of the testator to wrap up the affairs of the estate. The testator nominates an executor in the will, but the probate court has final authority to appoint the executor and may reject the nominee if the court finds the person lacks competence or impartiality. The executor’s duties include:

• Collect, inventory, and appraise probatable assets
• Submit property for ancillary probate in other states
• Satisfy estate creditors and back taxes; pay final medical expenses
• Submit claims for life insurance, pension, Social Security, and VA benefits
• Distribute probate property to heirs
• File the decedent’s final income tax return and the estate’s income and estate tax returns
• Determine suitable tax elections (qualified marital property, alternate valuation date, special valuations, etc.)
• Prepare a final estate accounting

Each state requires an executor to post a bond — but the testator may waive this requirement in the will. The testator may also grant the executor specific authority to continue operating a family business, which state law would not otherwise allow. This is especially important when a business is the estate’s largest asset.

Corporate vs. Individual Executors

The testator may nominate an individual or a corporate executor (such as a trust company). Each has advantages and drawbacks:

A practical approach for less complicated estates: name the primary beneficiary as executor (with a trust company as contingent executor). The primary beneficiary has the most to lose from mismanagement and the strongest incentive for a speedy settlement.

Persons who die intestate relinquish input into the selection of their personal representative. The court-appointed administrator receives only those powers allowed by state law — no special powers for family business operations or other personal considerations.

The Guardian

Parents with minor children must consider who will care for their children in the event of death. If one parent dies, the surviving parent is usually the guardian of minor children unless a court finds the surviving parent unfit. Guardianship typically becomes a practical issue upon the death of the surviving parent, or in the rarer case of both parents dying simultaneously.

A testator may nominate one guardian to care for both the child’s person (living arrangements, education, daily care) and the child’s estate (property and finances) — or appoint separate guardians for each role. As with the executor, the probate court retains final authority to appoint the guardian; it will consider the testator’s wishes but may choose someone else.

Beneficiaries & Distributions

The will designates beneficiaries and specifies how and when estate property will be distributed. Without a will, intestacy laws mandate the administrator to liquidate assets and divide the proceeds in a lump sum — with no consideration for family heirlooms or special property. A will allows the testator to direct specific items to specific people. Property may be distributed in several ways:

• Specific bequest — a particular asset left to a named beneficiary (e.g., “I leave my 1957 Ford Thunderbird to my son”). If the property no longer exists in the probate estate at the time of distribution, the bequest fails — this is ademption. The beneficiary receives nothing in its place.
• General bequest — a stated dollar amount from the estate’s general assets (e.g., “I leave $15,000 to my sister”). If the estate lacks sufficient funds to satisfy all general bequests, each is reduced proportionately — this is abatement.
• Residual clause — distributes any assets remaining after specific and general bequests are satisfied. This clause is essential to prevent partial intestacy — property that a will fails to distribute passes under the intestacy laws rather than according to the testator’s wishes.

Per Stirpes vs. Per Capita Distribution

When a beneficiary predeceases the testator and has descendants of their own, the will must address how that share will be distributed. Two approaches exist:

• Per capita (“by the head”) — each surviving heir shares equally in the inheritance. A predeceased beneficiary’s descendants receive nothing.
• Per stirpes (“by the branch”) — a predeceased beneficiary’s share passes to their descendants, who divide it equally. Under Florida law, all distributions are per stirpes unless the testator specifies otherwise.

Example: Frieda leaves her estate equally to sons Tom, Dick, and Harry. Harry predeceases her, leaving two children, Ben and Jerry. Under per capita, Tom and Dick each receive one-half; Ben and Jerry receive nothing. Under per stirpes, Tom and Dick each receive one-third; Ben and Jerry each receive one-sixth (Harry’s one-third share split between them).

Contingencies

Whatever language the testator uses to direct property to beneficiaries, it is important to plan for foreseeable contingencies. What if a specific bequest item is sold before death (ademption)? What if a beneficiary predeceases the testator? What if the testator and a beneficiary die simultaneously? Wills should name contingent beneficiaries, contingent executors, and contingent guardians to address these possibilities.

Anti-lapse provision: Under Florida law, if a bequest to a close blood relative lapses (because that person predeceased the testator), the bequest passes to the intended beneficiary’s heirs per stirpes rather than falling into the residual estate. If the intended beneficiary is not a blood relative, the bequest lapses into the residual estate.

Simultaneous Death Act: If the precise order of death is not known (e.g., an automobile accident kills the testator and a beneficiary), Florida law (and most states) deems the estateholder to have outlived the beneficiary. This prevents estate assets from passing to the beneficiary’s beneficiaries. The property instead passes to the testator’s contingent beneficiaries. This law also applies to the simultaneous death of an insured and beneficiary under a life insurance policy.

Common disaster clause: A survivorship condition requiring a beneficiary to outlive the testator by a stated period — usually 30 to 60 days — before inheriting. Without this clause, a beneficiary who outlives the testator by even minutes triggers a transfer of property through two estates. The common disaster clause sends the property to a contingent beneficiary instead, avoiding unintended distribution.

Timing of distributions: A will can also direct when distributions are made, not just to whom. Without a will, intestacy laws require a lump-sum distribution as soon as possible. A will may delay distributions — for example, until a minor reaches age 25. However, keeping the probate estate open for extended periods is costly. Trust arrangements are better suited for long-term delayed distributions and are discussed later in this Module.

Limitations on a Will

A will can only transfer property in the probate estate — property held individually in the estateholder’s name, plus the estateholder’s share of property held as a tenant in common. All other property (jointly held WROS, life insurance to a named beneficiary, retirement accounts) is outside the will’s jurisdiction. Additional limitations:

• Cannot disinherit a spouse (without the spouse’s agreement)
• Cannot disinherit a child by mistake (pretermitted heir laws apply)
• Cannot create perpetual trusts (rule against perpetuities)
• Cannot contribute “excessively” to charities in states with mortmain laws
• Cannot violate law or place immoral conditions on heirs

Florida Elective Share

In Florida, a surviving spouse is entitled to a minimum of 30% of the fair market value of the net probate estate (after payment of the estate’s debts) — the elective share or forced share. The spouse may choose to accept either the property left under the will or the elective share, whichever is greater. This right is automatically granted upon marriage and can only be waived by a pre- or post-nuptial agreement.

Florida Homestead Rules

Florida’s homestead rules limit a will’s control over the family’s primary residence (up to ½ acre within a city, or up to 160 acres outside city limits) when the decedent is survived by a spouse or minor children:

• Survived by spouse and minor children — the surviving spouse receives a lifetime interest in the homestead; children inherit upon the spouse’s death
• Survived by spouse, no minor children — the homestead passes to the spouse
• Survived by minor children, no spouse — the homestead passes to the children equally
• Survived by spouse and adult children only — the testator may bequeath the homestead to the spouse
• Survived by adult children, no spouse — the testator may leave the homestead to anyone

Homestead rules apply only when the decedent owned the residence in individual name at death. They can be avoided if the residence was purchased jointly with the spouse or through a trust. Florida also exempts up to $10,000 of furniture, furnishings, and appliances (located in the decedent’s usual place of abode) and family automobiles from the will, if the decedent is survived by a spouse or minor children. Additionally, Florida law allows the probate court to provide up to $6,000 as a family allowance to offset living expenses during the probate process.

Pretermitted Spouse & Children

A pretermitted spouse — someone the testator married after drafting the will — is entitled to the intestate share of the estate under Florida law, unless: (1) the spouse signed a pre- or post-nuptial agreement waiving this right; (2) the spouse was somehow provided for in the will; or (3) the will specifically states the intent to omit the spouse.

Pretermitted children (born or adopted after the will) are entitled to their intestate share of the estate, unless the will states the intent to omit the child, or the bulk of the estate is left to the child’s other parent.

Other Limitations

Mortmain laws: Some states limit the amount that can be left to charitable organizations to ensure the family has adequate support. Florida does not have a mortmain statute, but agents working with clients in other states should be aware of this restriction.

Rule against perpetuities: Most trusts created by will must terminate no later than the lifetime of a person alive at the time of the trust’s creation, plus 21 years. This rule prevents property from being tied up in trust indefinitely across many generations.

Illegal conditions: A will may place reasonable restrictions on heirs (e.g., graduating from college before inheriting), but may not impose illegal or immoral conditions, such as requiring a beneficiary to marry or not marry a specific person. Under Florida law, a no-contest clause (disinheriting a beneficiary for contesting the will) is unenforceable. By contrast, a condition attached to a charitable bequest — such as Hugh Taylor Birch’s bequest requiring the State of Florida to maintain the property as a public park (Hugh Taylor Birch State Park in Fort Lauderdale) — remains enforceable.

Florida Legal Requirements for a Valid Will

Revoking a Will

A testator may voluntarily revoke a prior will by:

• Inserting an explicit revocation clause into a new will. Under Florida law, a new will does not automatically revoke prior wills — an explicit revocation clause is required. Without it, two wills may both be submitted to probate and the court must reconcile conflicting provisions.
• Preparing a codicil to revoke or replace specific provisions of an existing will
• Physically destroying the will with the intention of revoking it (burning, shredding, tearing, defacing, or marking it “cancelled”). Accidental destruction does not revoke a will — a new will should be drafted immediately if this occurs.

Certain events may also effectively revoke specific provisions. Under Florida law, a divorce or annulment automatically revokes any bequests to a former spouse, unless otherwise directed by the divorce decree. Since 2012, this treatment extends to beneficiary designations on life insurance, annuities, and retirement plans in Florida — unless the estateholder re-executes the designation to confirm the intent to benefit an ex-spouse.

Advantages & Disadvantages of Wills and Probate

While nothing can replace a will entirely, several alternatives can transfer property outside the probate estate. These “will substitutes” — joint tenancy, trusts, retirement plans, life estates, and life insurance — are covered in the pages that follow.