Revocable trusts can be extremely useful estate planning tools for many individuals and families. They can provide significantly more control over the administration of assets than some instruments, and they can help to ensure family members will be taken care of long after the trust creator has passed away. However, no option is right for everyone, and revocable trusts can have some drawbacks. An experienced estate planning attorney with Loughlin Law, P.A., may be able to help you determine whether a revocable trust is right for your situation, and review your options for integrating a trust into a comprehensive estate plan. Contact our team for more information by calling (561) 677-8384.
What Is a Revocable Trust?
A revocable trust is sometimes called a living trust. A trust of this type is created while the grantor is alive, and is used as a “long-term” estate planning tool. The Consumer Financial Protection Bureau notes that there are three main roles for individuals or entities within a revocable trust, including:
- Grantor: The person who makes the trust, who might also be called a trustor or settlor
- Trustee: The person who manages the trust assets and makes decisions about the trust
- Beneficiaries: The people or person who receives the benefit of the trust
In general, a grantor names a trustee to care for and distribute assets to beneficiaries based on a specific set of rules found in the trust documents.
A revocable trust is in contrast to an irrevocable trust because a revocable trust can be changed or even canceled altogether after its formation. The grantor must still have the capacity to make changes, however. A revocable trust becomes irrevocable once the grantor can no longer make decisions on their own or passes away.
The Role of the Trustee in a Revocable Trust
In a revocable trust, the grantor might also be the trustee. Then, when the grantor passes away, a successor trustee takes on the role of the trustee to distribute assets to beneficiaries. In that type of situation, the grantor, trustee, and beneficiary might all be the same person while the grantor is living. When the grantor passes away, the new beneficiaries are called residuary beneficiaries.
A trustee has the authority to take virtually any action regarding the property within the trust as long as the trust documents permit that action. Trustees might physically maintain property, such as upkeeping real estate, or they might invest funds or distribute money from time to time. The trustee’s role is defined by the trust documents, so it can vary a great deal.
Co-Trustee or Successor Trustee
The trustee must manage any assets in the trust. That means that the grantor must also actually transfer assets to the trust for the trust to be effective. In a revocable trust, a third-party trustee may not need to take any action to manage the trust until after the grantor passes away because they are a co-trustee or successor trustee. They might also be required to fulfill their role if the grantor loses the capacity to manage their own affairs.
The Benefits of a Revocable Trust
Every grantor’s situation is different, so the benefits that matter most to them will vary based on their unique financial and family situations. Below are just some of the reasons that an individual might use a revocable living trust. Loughlin Law, P.A., may be able to help you determine whether a revocable trust can help meet your estate planning goals, many of which may be based on the following benefits.
Privacy Concerns
When someone passes away, their will must be probated through the Florida Probate Court. The probate process is a public court proceeding. That means that virtually anyone who cared to look could see the assets included in an estate and the amounts beneficiaries receive. Many people do not want this information to be public.
Having a trust allows a grantor to pass assets and funds to loved ones without making the distribution of assets public knowledge. Trusts are usually not administered through the court; the transfer of a revocable trust’s assets after the grantor’s death is a more informal process that is often faster and easier compared to probate.
Avoiding Probate Altogether
In some situations, individuals can completely avoid probate by using a combination of estate planning tools. Many of these combinations involve trusts.
Probate can be an expensive and time-consuming process that is often difficult for the family. Sometimes avoiding the whole process altogether can be a significant advantage for loved ones, allowing them to skip paying court fees and having the estate administered through the court. Avoiding probate can therefore help a family find time to grieve and move forward with their lives, supported by the legacy you have provided to them.
Tax Savings Advantages
Assets contained in a trust are not involved or calculated in an estate. That means that the estate will not have to address estate taxes on those assets. Although Florida does not have an estate tax, the Internal Revenue Service (IRS) explains that some estate taxes may be assessed under federal law. For those who are concerned about estate taxes, these tax savings can be thousands of dollars—and worth the effort to create a trust.
Controlling Assets and Funds
If a grantor becomes incapacitated or passes away, they still may need to provide for others who count on their financial support. However, a grantor might not want the person they are providing for to have free reign over funds or specific assets. A revocable trust allows the grantor to create restrictions on how funds or assets are used, even when the grantor cannot take that action themselves.
Get Revocable Trust Questions Answered by a Florida Estate Planning Attorney
A trust cannot hold every type of asset, nor can it do everything that a will can do. However, it can accomplish a lot of estate planning goals for individuals and families in Florida. If you are considering a revocable trust as an estate planning tool for your family, you may want to discuss the option further with a Florida estate planning attorney. The team at Loughlin Law, P.A. has extensive experience assisting Florida residents with estate planning for estates of all sizes and degrees of complexity. Call (561) 677-8384 for more information or to schedule an appointment.
