Revocable Living Trust
A revocable living trust is another way of transferring and controlling assets not only while alive, but after death as well. A revocable trust should be accompanied by a ‘pour-over’ last will and testament.
A revocable living trust is a legal document created by a person (called a ‘Grantor’ or ‘Settlor’). The revocable living trust becomes a receptacle into which assets are transferred along with instructions on who will benefit from/receive them upon the death of the Grantor and who controls those assets while in the name of the trust (called the ‘trustee’). During the Grantor(s)’ lifetime(s), the Grantor and/or Co-Grantor (i.e.-spouse) usually will also occupy the position of trustee/co-trustee unless and until he/she/they become incapacitated or die. At that time, a successor trustee(s) would then become a trustee(s) gaining control of the assets held by the trust.
If done properly, a revocable living trust can be altered or revoked at any point during the Grantor’s life. Once the Grantor dies, a revocable trust becomes irrevocable. If your main goal is to avoid probate court, so long as you have assets that will not pass via probate then you may not need a trust (with proper planning while alive). However, if you have assets that will pass through probate, a Florida revocable living trust may be a good idea. Speak with your attorney regarding your options.
To make a living trust in Florida, you:
- Choose whether to make an individual or joint trust.
- Decide what property to include in the trust.
- Choose a successor trustee(s).
- Decide who will be the trust’s beneficiaries – who will get the trust property and when they will get it…for example, at a particular age or ages.
- Create the trust document.
- Sign the document in front of subscribing witnesses and a Florida Notary.
A trust can be a complex instrument and we would caution against purchasing a ‘one size fits all’ form as such may not really benefit your situation. An attorney can be an asset in the drafting of an individual or joint trust.
Drawbacks of a Living Trust
- Paperwork. Setting up a living trust is not difficult, but it requires some paperwork and is thus more expensive than a simple will with associated documents.
- Record Keeping. After a revocable living trust is created, day-to-day record keeping is required, often involving the legal transferring of property to the trust or removal of property from the trust. It is administratively tedious.
- Transfer Taxes (speak to a tax professional for details)
- Difficulty Refinancing Trust Property.
- No Cutoff of Creditors’ Claims…Homestead may provide greater protection in Florida.
- The proper administration of a trust may require the expertise of both financial and tax advisors.
When people accumulate and amass assets over their lifetime, proper planning via revocable living trust or other estate document preparation should be discussed with your legal counsel in addition to your financial and tax advisors.