Are you considering your options for estate planning in Florida? You may have looked into trusts, specifically revocable living trusts.
What is a revocable living trust?
A revocable living trust is a legal document that allows you to transfer ownership of your property and assets to a trustee. The trustee will manage and distribute the assets to your beneficiaries according to the instructions in the trust agreement. The trust agreement can be amended or revoked at any time, which makes it a very flexible estate planning tool.
How does it work?
When you set up a revocable living trust, you are essentially transferring ownership of your property and assets to the trust. This includes everything from your home and car to your bank accounts and investments. While you’re alive, you will be the trust owner, but you must also name the successor trustee. When you become incapacitated or die, the successor trustee will manage and distribute your assets according to the instructions in the trust agreement.
You can do anything to the assets in the trust, i.e., invest, sell or change beneficiaries. However, upon your death, the revocable living trust becomes irrevocable. That means no one can change or do anything to it; your successor trustee must follow your instructions just as you stated them.
What are the benefits of a revocable living trust?
- Flexibility: You can amend the trust agreement at any time, which can be helpful if your circumstances change or if you want to make changes to your estate plan.
- Privacy: Unlike a will, with revocable living trusts, creditors and the general public will not have access to the grantor’s personal information.
- Asset protection: If you own property or assets in another state, setting up a revocable living trust can help protect them from being seized by creditors or other parties in the event of a lawsuit.
A revocable living trust is a great estate planning tool. However, contrary to popular belief, it doesn’t reduce estate taxes. You will still pay the necessary federal estate and gift taxes.