Florida residents know that people with a considerable amount of disposable income come to their state to have fun. Many believe that these extremely wealthy individuals are the only ones that should create an estate plan, but this is not the case. With wills and trusts as a start, everyone should be ready when their time comes for their family's sake, if not for their own.

A trust may sound like something that only the rich have, but creating one can be quite beneficial to an estate and its beneficiaries. When someone dies, the assets belonging to that person have to go through probate court and be administered to his or her loved ones. This process can be costly and take away from the estate's value as it is finally bequeathed to its recipients. By placing assets into a trust, the probate process can be avoided, allowing for a rapid transition between the original owner and the new one.

Creators of a trust can also control whether or not the beneficiary can receive their allotted distributions. For instance, if someone wants to award a trust to a relative who has a known drug problem, they may request that beneficiary pass a drug test before the trustee doles out any money.

Another upside to trusts is their ability to avoid taxes on the principle investment, but this does not mean that distributions are untaxed.

As Dec. 31, 2012 edges closer, many are wondering if Congress will extend the $5 million estate tax exemption rate. If they do not, it may drop to as low as $1 million, and many planners will begin scrambling to find ways to avoid the taxation of their estate. Taking advantage of trusts is just one way that this can be done, and consulting with an experienced estate planning attorney could be a good first step in creating one.

Source: CNBC, "Should You Have Confidence in Trusts?," Jessica Rao, Dec. 5, 2011