Many people in Florida have been told that setting up a revocable trust is the best way to manage their assets. While in some cases that is undoubtedly true, revocable trusts are not the panaceas they are often made out to be.
What is a revocable living trust? How do you know if a trust is right for you? How does a revocable trust work? These are all questions asked by our clients in the more than 25 years our firm has served South Florida, because the topic can seem complex and overwhelming.
Revocable trusts are the most widely known trusts when it comes to Florida estate planning. Read on to learn about them from our experienced attorney. If you have questions about trusts, wills, or other basic estate planning, give us a call at (954) 979-6566 to schedule a free in-person or phone consultation.
What Is a Revocable Trust in Florida?
A revocable trust, also known as a revocable living trust or just living trust, is a document some people create to manage assets during their lifetime and to distribute them to beneficiaries after their death.
The person who creates the trust is known as the grantor or settlor. Since they are also the person who typically manages the assets in the trust, the same individual generally also serve as the trustee.
Crucially, during the creation of the trust, a successor trustee is named. That person steps into the role of trustee when the original trustee passes away or becomes unable to serve due to incapacity of some type.
All of the person’s assets are then put into the trust, a process known as funding it. Once that is done, the trustee has access to and can manage all of the assets in the trust as if they were in the person’s name–buying or selling property, withdrawing money from bank and brokerage accounts in the name of the trust, and the like.
Because it is a “revocable” trust, this trust can be amended or revoked at any point during the person’s lifetime. By contrast, many other types of trusts, known as irrevocable trusts, cannot be altered.
Working with a Florida estate planning attorney is the best way to learn about and possibly create a revocable trust.
Pros of Revocable Trusts
There can be several benefits for some people in creating a Florida revocable trust.
They include:
Flexibility
A revocable trust can be altered at any time. This means if you decide you want someone else to inherit your assets as your successor trustee, you can easily amend it to state that.
Direct Inheritance
When it is properly set up and funded, a revocable trust can speed up the timeline and reduce costs for a beneficiary to receive your assets. This is especially the case when there are only one or two beneficiaries because they can be named as the solo or co- successor trustees.
Because the successor trustee(s) steps into the role of trustee immediately upon the trustee’s death, there is no delay or court approval required to access all assets immediately.
Ongoing Asset Management
The trustee has full access to everything in the trust. Anytime they want to buy or sell assets, change brokerage accounts, and the like, they are fully able to do so.
Privacy
A will becomes public record when it goes through probate. If you own large, specific assets–such as a vacation home, for example–that you leave to a named beneficiary in your will, an outsider who looks up your will in the court records would see that.
This is less of an issue for most people, however. Most wills simply leave a percentage of their estate to each beneficiary–perhaps a third to each of their three adult children, for example–which isn’t particularly revealing to outside parties.
Potentially Avoid Probate
One of the main reasons people set up revocable trusts is to potentially allow their beneficiaries to avoid probate.
If your assets are in your name, after you pass away, they must go through the court process of probate. Assets in a revocable trust, by contrast, immediately pass to a successor trustee.
The problem is that most people create a trust and fund it with their current assets. But as they continue acquiring assets through life they may do so in their name rather than in the name of the trust, so these assets often remain outside the trust. Upon death, these assets must be probated. Our firm is regularly called to probate estates from people who had created a revocable trust at some point in their lifetime.
Cons of Revocable Trusts
Revocable trusts have several disadvantages compared to other estate planning tools. They include:
It’s Easy to Lose the Document
The document creating a living trust is not recorded in any court. This means the original document must be carefully guarded during the person’s lifetime, and it must be easily accessible to the successor trustee after the original trustee’s death.
We hear from many people that they are certain their parent, friend or relative had a living trust, but they are unable to locate the document. This all-too-common scenario creates problems for those who are named as successor trustees.
Many Trusts Aren’t Fully Funded
As mentioned above, a trust without assets funding it is just a piece of paper.
Unless the trust contains every asset the person owns, probate will still be required to distribute assets after the trustee’s death.
This is the reason when experienced attorneys create a revocable trust they also draft what is known as a pour-over will. This is a regular will dealing with all properties and other assets that fall outside the trust upon the person’s death. (Typically the will “pours over” assets not in the trust into the trust, and probate is required for this to happen.)
Costs
Revocable trusts cost money to create. Not just for an attorney’s fee; there are often fees involved with getting a new title in the trust’s name for cars, boats, stocks, and other assets the person owned in their name before creating the trust.
Get Help from an Experienced Florida Estate Planning Attorney
If you’re looking for an experienced estate planning attorney in Florida to answer further questions about trusts and wills, the Law Office of Gary M. Landau, P.A. can help. With more than 25 years of experience and countless satisfied clients, Gary M. Landau and his team are uniquely positioned to help you with your probate and real estate needs in South Florida. Whether you’re ready to probate a loved one’s estate or to write your own will, or if you are purchasing a home, have inherited a home, or want a closing agent to handle title insurance and all documents for your closing or refinancing, the Law Office of Gary M. Landau is ready to work with you.
Call our office at (954) 979-6566 or complete our online form today to schedule a free consultation. We work with our clients in person, over the phone, or on Zoom.
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The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction.
LAW OFFICE OF GARY M. LANDAU, P.A.
7401 Wiles Road, Suite 204
Coral Springs, FL 33067
(954) 979-6566
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