Creating an efficient estate plan means avoiding probate upon your death. One of the best ways to avoid probate in Florida is with a revocable living trust. Living trusts can be helpful in avoiding probate, making things easy for your family, and can be helpful for blended families as well. But the truth of the matter is that not everyone needs a living trust.
The Revocable Living Trust
For most people, a revocable living trust provides an excellent alternative to a last will and testament based estate plan. Generally speaking, you can either have a "will-based" estate plan or a "living trust-based" estate plan as the primary conduit of your assets. While it gets complex, the concept of a will-based estate plan means having your assets go through probate while a trust based estate plan means having your assets in your trust, avoiding the burden of probate for your heirs, which generally saves the family time and money.
A revocable living trust is a legal document created by an individual or a couple, called the Settlor (also known as the Grantor), to hold and own the Settlor’s assets during their lifetime. The living trust is managed by the Trustee. In most cases, the Settlor will also be the Trustee during their death or upon incapacity, which means that you establish the trust, manage the trust assets and remain the trust beneficiary during your lifetime.
A revocable living trust covers three phases of the Settlor's life:
1. While the Settlor is alive and well;
2. If the Settlor becomes mentally or physically incapacitated; and
3. Upon the Settlor’s death.
The living trust’s main goal is to prevent your assets from going through probate upon your death. After the living trust is established, assets that would normally be subject to probate are transferred to and held in the trust. This critical step involves contacting the financial institutions where the assets are held and changing the name on the account from your own name to the name of the trust. Failure to do this is one of the biggest and most common mistakes Settlor(s) make and the result is that those assets, are not protected from the probate process. In our office, we go above and beyond most attorneys to make sure your assets are correctly placed into your trust.
The Settlor (you) maintains complete control over what is in the trust during your lifetime and you can amend, revoke, or terminate the trust at any time. As Trustee of the Trust, you can spend the money of the trust in any way you want. Upon the Settlor’s (i.e., your) death, the successor Trustee continues to administer the Trust without the burden of probate. Avoiding probate generally saves time, money, and hassle for the family because the family will not have to follow the court’s formal procedure for wrapping up the estate.
In our initial consultation, our estate planning process will discuss probate, how it would affect your estate plan, and if a revocable living trust would be best for you. We will sit down with you, review your assets, your situation and your goals before helping you make the best decision that is right for your family.
Should you use a Living Trust to Avoid Probate?
Probate is generally seen as something most of us want to avoid, and we generally agree that good estate planning tries to avoid probate. It is also our opinion that some people should plan to avoid probate while others may or may not want to. Mostly, each situation is based upon your desire and if you want to make things easier and save your family money upon your death. If you want to save your family time and money upon your death, then avoiding probate and setting up a Living Trust may be your best option.
Many Different Types of Living Trusts
While the revocable living trust is the start for many estate plans, there are other trusts that may be beneficial to you and your heirs. These other types of trusts include:
While not for everyone, these trusts can help preserve your inheritance for your children and protect your assets from the high cost of nursing home care.
Charitable trusts are a great way to support worthwhile charities and provide some great tax benefits. If you create a gift or charitable trust in most cases you retain the income from the assets within the trust as long as you live. There are several tax advantages in creating a gift or charitable trust.
Special (Supplemental) Needs Trusts
A special need trust, sometimes called a supplemental needs trust, allows a disabled person (as defined under the Social Security rules) to have an unlimited amount of assets held in trust for his or her benefit. The key is that assets held in a special needs trusts are not counted for asset limits for qualification for some government benefits. This will allow the person to have full access to government benefits (mostly SSI and Medicaid) while still being able to use the trust funds for other, supplemental, needs.
Pet Care Trusts
A pet care trust allows you to arrange for the care of your pets should something happen to you. Without a plan, your pet could be one of the thousands that enter animal shelters each year when their owner dies or becomes incapacitated.
Download our Guide to Estate Planning in Florida
We want our estate planning clients to make the best decisions based upon their own situation and wishes. To assist you, we are pleased to offer you a free copy of attorney D. “Rep” DeLoach III’s books:
The Top 20 Ways to Protect Your Florida Estate.
Don’t Lose Your Nest Egg to a Florida Nursing Home: Your Florida Survival Guide