After Death Does Us Part: Surviving Spouse as Fiduciary and Beneficiary

When spouses name each other as the person in charge of their will and estate, it can create conflicts of interest, especially in blended families. In these situations, it might be better to appoint an outside person, like a bank or trust company, to help. This can be more expensive, but it can help prevent arguments between the surviving spouse and the deceased person’s children. It can also avoid legal problems later on. A personal representative (PR) is the legal representative of a person who has passed away. The PR is responsible for gathering and valuing the assets of the person who passed away, paying their debts, filing any necessary tax returns, and distributing the remaining assets to the beneficiaries. A trustee has similar duties and is responsible for managing and distributing assets held in a trust. Both the PR and trustee must act in the best interests of the beneficiaries and be fair in their decisions. If the surviving spouse is also the PR or trustee, there can be tension because they have to balance their own interests with the interests of the other beneficiaries. When planning your estate, it’s important to consider how to make sure your assets go to the right people. One way to do this is by giving your surviving spouse the power to decide who gets what when they pass away. If they don’t use this power, your assets will go to your children. It’s also important to take advantage of tax laws that allow your surviving spouse to use any unused tax benefits from your estate. This can be especially helpful in blended families, but it’s important to consider the costs and potential tension this may cause. Preparing an estate tax return can be complicated and expensive. In Florida, there are set fees for attorneys to do this work. If a surviving spouse wants to use the deceased spouse’s unused tax exemption, it can cost a lot of money. This decision can also affect the estate for a long time. It’s best to address these issues in a marriage agreement, or include instructions in a will. Disclaimers are a way for someone who receives inherited property to say they don’t want it, so it goes to someone else. If the disclaimer meets certain rules, there are no tax consequences. A surviving spouse can also use a disclaimer to pass property to a trust. This can be helpful for making sure the decedent’s children benefit from the property. A disclaimer trust may not be as appealing to a surviving spouse because they lose control over the assets they would have received, unlike with a credit shelter trust. A QTIP trust can help avoid estate tax on the first spouse’s death by including property in the surviving spouse’s estate, but it can also create tension between beneficiaries and limit the surviving spouse’s access to trust principal. It’s important to consider the interests of all beneficiaries when setting up these trusts. If someone dies and their spouse is still alive, the person in charge of handling their money should think about asking for more time to file their estate taxes. This is especially important if some of the money is going into a special trust for the surviving spouse. If the surviving spouse dies before the taxes are filed, it could lower the total amount of taxes owed. The surviving spouse might also want to think about whether their estate could use a tax credit for money that was already taxed before. They should also think about which expenses should be deducted to save the most money on taxes. These decisions can cause disagreements, because they can affect how much money goes to other people. The Florida Trust Code allows the trustee of a trust to change how they distribute income to the beneficiaries, so that the beneficiaries receive a fixed percentage of the trust’s value instead of a set amount of money. The trustee must notify the grantor of the trust, if they are alive, as well as all the beneficiaries and any advisors or protectors of the trust before making this change. The trustee must also write down how they will calculate the new distribution amount and how they will value the trust’s assets. The trustee has to be someone who doesn’t have a personal interest in the trust, to make sure they make fair decisions. If the client wants the beneficiaries to receive a steady distribution amount, they can include this in their estate planning. In Florida, spouses have certain rights to claim a share of their deceased spouse’s property, called the elective share. This share is 30% of the estate and includes all property that goes through probate, as well as some other types of property. Homestead property, which is the family home, has special rules for how it can be passed on. If the owner of the home has a spouse or minor children when they die, the home cannot be given away in a will, except to the surviving spouse if there are no minor children. If the home is not passed on correctly, it will be divided according to the law. The surviving spouse can also choose to have a life interest in the home, or to own half of it with the deceased spouse’s children owning the other half. These rules are designed to make sure that surviving spouses and children are provided for after someone dies. When a spouse dies, the surviving spouse may be entitled to certain property and financial support from the deceased person’s estate. This includes things like furniture and cars. The surviving spouse and their children may receive a family allowance if the deceased person was supporting them. These entitlements can affect how much other beneficiaries receive from the estate. If the surviving spouse is also in charge of handling the estate, it can create a tricky situation, but it’s not necessarily a conflict of interest. However, some people involved in the estate may question whether the surviving spouse can continue to handle things effectively. When making an estate plan, it’s important to choose someone you trust to make decisions about your assets after you pass away. In blended family situations, it’s best to think carefully about whether to choose your spouse as this person, especially if your spouse is also a beneficiary of your estate. It might be better to choose someone else to avoid conflicts of interest. You can always change your mind about this after your spouse has passed away. This is a legal article about estate planning in Florida. It talks about different sections of the law and gives some examples of court cases. The author is a lawyer who specializes in tax law. The article is from a section of the Florida Bar that focuses on tax law.

Source: https://www.floridabar.org/the-florida-bar-journal/after-death-does-us-part-surviving-spouse-as-fiduciary-and-beneficiary/