At some point in your life you may become ill or incapacitated and need someone to act in your behalf. A power of attorney or a trust agreement may be the solution to your problem.

A power of attorney is a legal document authorizing someone of your choice to act for you. The power may be general and broad or limited to specific functions.

A trust can also serve a management function for your financial affairs. A trust is a legal arrangement through which a third party, a trustee for either your benefit or that of your beneficiaries holds your assets.

A number of methods can be used to transfer property including gifting the property to the desired beneficiary before death to leaving property in trust for the beneficiary to receive at some point after your death. Whatever methods you choose to distribute your property after death, carefully planning will enhance the likelihood of an orderly transfer with minimum taxes.

At death, the individual settling the estate for the deceased must locate and list all property. This listing is made so that the court can decide whether any death taxes are due to the state and federal governments, and so that all the property can be distributed to the heirs.

A total of the property owned is called the gross estate, and consists of everything that belongs to a person, either individually or jointly with others. This property may be in the form of land, buildings, equipment, money, or other financial assets and personal possessions.

Florida permits property to be held four different ways. The implications for transferring the property are different for each type:

1. “Sole ownership” (fee simple) of property exists when the title of property is in one name only. It means that you have the right to sell, mortgage or give away the property during your lifetime and to name the recipient of the property after your death.
   
   
2. One type of co-ownership is called “joint tenancy with rights of survivorship”. Individuals who hold property this way have an interest, which is undivided and fractional. That is they all own it together, not in equal shares. When an owner dies, the total property held in this manner becomes the sole property of the other owner(s); so it is said to provide the “right of survivorship”.
   
   This property does not need to be listed in a will, since the owner is already designated. Most joint bank accounts are held this way. At the death of any of the co-owners, the property is divided equally among the surviving co-owners, and does not have to be listed in the will. This doesn’t mean that the transfer will occur immediately or that taxes won’t have to be paid.
   
   
3. The third type of ownership is called “joint tenants in common”. When this term is used on ownership papers, the heirs will receive the portion of the property that belonged to the co-owner who died. Other co-owners will not receive a share unless they are designated heirs.
   
   
4. Tenancy in the entirety. This type of joint ownership is limited to married couples only. Under this type of ownership, both spouses own the property; when one spouse dies, the property automatically goes to the other spouse. Neither spouse can sell the property without the signature of the other spouse.

Prepared by: Dr. Josephine Turner, CFP
Professor, Family, Youth and Consumer Economics
University of Florida

money, financial, Florida, retirement, power of attorney, trusts, wills, co-ownership, joint tenancy