Establishing a trust can be an effective asset protection maneuver. For many people in Florida with disposable assets that need protection from tax evaluation and other exposure, trusts are indeed good financial tools. However, true protection often only comes when a trust is established as irrevocable, which means it cannot be changed after the fact. This makes it vital to diligently assess the need for a trust and then consider whether irrevocable or revocable status is warranted. Here are a few considerations when determining what is best for your particular situation.
Probate avoidance
The first advantage of revocable living trusts is that they can help in avoiding probate exposure. Probate can be a real problem for some decedents, especially those who pass unexpectedly. A truly comprehensive estate plan will bypass probate completely.
Privacy and flexibility
Another benefit of revocable trusts is that they are private. The Florida court system is generally public information, and holding assets in a private trust removes public viewing ability. They are also flexible in that they can be changed at any point in time in the future by the grantor.
Ongoing management capacity
While assets placed in trust are essentially the property of the trustee, a trust can still be managed under the direction of the grantor. Assets can be designated for specific activity or use, and additional agreements regarding ongoing management can be filed as well.
It is important to note that the flexibility of a trust is important because many estate holdings increase on an annual basis. Additions to families can mean new inheritance allocations too, and some individuals may want to contest any financial assignment when a death occurs. Trusts work best when they are tailored specifically for the primary asset holder establishing the financial protection instrument.