At the Gulf Harbour Clubhouse (once it’s finished), karaoke night might mean taking a tequila shot before singing an awful version of “Sweet Caroline.” At the doctor’s office, it’s a flu shot. On the golf course, it’s the shot you brag about for months—even though you’ll never hit another one like it. Same word, three different meanings. Context is everything.

 

The same principle applies in estate planning, especially when people attempt to do it themselves using online software. Many think, “How hard can it be? I know English.” Yet in trust and tax law, everyday words don’t always mean what you think they do. Take the word “income.” It sounds simple—money you earn—but that’s not how various legal and tax systems define it.

 

Under Florida law (and most states’ laws), which govern the interpretation of wills and trusts, “income” does not mean “taxable income.” In trust terminology, income refers to what the trust earns from its principal—its assets. But under the federal tax code, taxable income includes interest, dividends, and even capital gains. Here’s the conflict: under Florida statutes, capital gains are not income. They are principal, meaning they are proceeds from selling trust assets and converting one form of principal—such as stocks or real estate—into another, like cash. Same word, different meanings.

 

This gap in definitions is where do-it-yourself estate planning often collapses. Online platforms ask you to “fill in the blanks” like you’re creating a Netflix password, without explaining that “income” can mean one thing in your trust, another on your tax return, and something completely different to your spouse.

 

Consider how this confusion can cause real harm. John and Jane, a blended family, want to balance financial security for Jane with leaving an inheritance to John’s children. John drafts his own trust and directs his large IRA into a marital trust. He assumes Jane will receive the “income” and his children will inherit the remainder. But inherited IRA distributions paid into a trust are legally principal, not income. Jane ends up with far less than John intended, and any taxable income trapped in the trust faces the highest federal marginal rate once it surpasses about $16,000 (as of 2026). Had the IRA gone directly to Jane, it would have been taxed at her lower individual rate, potentially preserving more for the children.

 

This is the danger of DIY planning: one undefined word can send your family into costly litigation. As the old Fram Oil Filter commercial says, “You can pay me a little bit now, or pay me a lot later.” Before you take that tequila shot on karaoke night, consider the shot you don’t want to take—the one that backfires because your “simple” online trust didn’t follow the rules.