One of the most effective ways to gain control of your assets and legacy is through a living trust. A living trust in Florida is a legal document that a person creates during their lifetime for their own benefit and for the benefit of their spouse, children and other designated persons/entities after the creator's death.
A Florida living trust is an agreement between three parties. The party creating the living trust is called the "grantor"; the party controlling and administering the trust is called the "trustee"; and the party benefitting from the trust assets and income is called the "beneficiary."
Types of Living Trusts
There are two main types of living trusts - revocable and irrevocable - both of which generally avoid having to go through the Florida probate process and remain private. An irrevocable living trust is not controlled by the grantor, and cannot easily be modified, amended or terminated. After transferring assets into the irrevocable trust, the grantor cannot change the written terms after it has been executed. As such, the grantor loses all rights of ownership over those assets.
You may ask, "Why would anyone want to give up control of their assets through an irrevocable trust?" Some of the benefits of a Florida irrevocable living trust include minimizing federal estate taxes, becoming eligible for government assistance programs, and creditor and judgment protection. If none of these apply, then an irrevocable living trust is not the best estate planning option for you.
A revocable living trust is the exact opposite of an irrevocable trust. While alive, the same person typically serves as the grantor, trustee and beneficiary. In addition, with a revocable living trust, the grantor, while alive, can modify amend, or terminate the trust. After a revocable living trust is created, the most important first step is to "fund the trust", which means that the grantor's assets are transferred out of the name of the grantor, personally, and into the name of the trust.
Benefits of Trusts
One of the main benefits of a revocable living trust is that it remains private and out of the Florida court's probate process. Another attractive benefit of a revocable living trust is that it allows the grantor to provide specific instructions for the management of the trust's assets in the event the grantor becomes incapacitated, and to specifically designate who will be trusted to administrate the trust during the grantor's incapacity.
During the life of the trust, income earned by the trust assets is distributed to the grantor, and then to the beneficiaries after the grantor's death. Furthermore, depending on the grantor's wishes and the desired complexity of the estate plan, a revocable living trust can provide a tax shelter for the grantor, as well as creditor, judgment, and marital protection to surviving spouses and minor beneficiaries.
There are other benefits and drawbacks to both revocable and irrevocable living trusts, and you should always consult with an experienced estate planning attorney to find out what is the best option for you, your family, and loved ones.
If you have any questions about creating a living trust in Florida, or about any other estate planning tools, please contact me today!