REVOCABLE LIVING TRUST

Revocable Living Trusts

Many people are surprised to learn that they have an estate plan in place even if they have never actually created one. How? The State of Florida has a plan for anyone who passes away without a Will or a Trust in place. It is called the law of intestacy.

Probate can not only be a long and drawn out process, but it can also be expensive. Often, a trust is a useful way of bypassing the probate process by transferring assets in their trust. A Revocable Living Trust is a trust that is set up during your lifetime, as opposed to one created upon your death via your will.

There are three parties to a trust; the trustor, the trustee and the beneficiary. Initially, you are all three. As the trustor, you have full power to amend or revoke the trust during your lifetime. As the trustee, you have complete control over the assets in the trust.   As trustee, you will hold the legal title to the assets in your estate for your benefit during your life.  Upon your passing or incapacity, you appoint a Successor Trustee. If you are alive and incapacitated, your Successor Trustee manages the assets of the Trust for you benefit. Upon your passing, then your Successor Trustee distributes the balance of your Trust to your Successor Beneficiaries according to the terms of your Trust.

A revocable trust is a type of living trust that you can dissolve (revoke) at any time during the course of your life, and it gives you control of your assets during its existence. Once you pass, or become incapacitated, your revocable living trust automatically turns into an irrevocable trust. Once the trust becomes irrevocable, the management of the trust will be handled by the successor trustee you appointed when setting up your trust.

A revocable trust will help to avoid probate; however, in most cases, it remains subject to federal estate taxes if your estate exceeds the inheritance tax threshold. During your lifetime, taxation is no different from any other asset you own. By contacting the Tampa law firm of MMJ Law, you will receive all the help you need to manage all the legalities of a revocable trust.

Advantages of a Revocable Living Trust

Because probate can often be expensive and time consuming, a living trust can provide you with a means to promptly transfer your assets to your beneficiaries after your passing. If your estate is less than $75,000, however, Florida’s Probate Code provides for a streamlined probate process, called Summary Probate Administration. Unless your estate is in excess of $75,000, a revocable living trust may not be your best option. For larger estates, a trust is often a good idea to avoid tying up assets in a lengthy probate process when continuity is important. To learn more about the benefits of a revocable living trust, contact us to schedule an appointment with one of our attorneys.

A Pour-Over Will to Back up a Living Trust

Even with a trust, you still need to have a Last Will and Testament. A Last Will and Testament is the legal instrument used to determine how you want the transfer of any assets you’ve accumulated since the creation of the trust to be handled. If you have acquired additional assets and have not added them to your trust, they will not automatically transfer to your heirs. A will can be set up to “pour over” any new assets into your trust, or you can use your will to leave property to someone who may not be listed as beneficiary in your trust.

If you were to die without a will, any property that was not transferred to your living trust will be distributed according to Florida’s intestacy laws.

Tax Ramifications of a Revocable Living Trust

In most cases a revocable living trust will help you avoid probate, but it does not mean you will avoid federal  estate  taxes  depending upon the  kind  of  trust  you’ve set  up.  There are specific types  of sophisticated trusts that can be used in high value estates to lower the federal tax obligation, however. One of our attorneys will be happy to discuss these trusts designed for people with an estate valued at over your Unified Tax Credit (your exemption from estate taxes) which is currently $11.2M.

Deciding on a Living Trust in Florida

Determining if a trust is right for you, and what type of trust is right for you can be daunting. At the Florida law firm of MMJ Law, we can expertly advise you on whether a trust will be advantageous to you in your particular situation, and what trust type will  work best for  you.  Depending on your circumstances, we can draft trust documents that will meet your specific needs help you accomplish your goals. Contrary to what we have seen other law firms do, we will not push you into anything in order to generate needless legal fees, so you can be sure we will provide honest guidance.

Some goals that can be legitimately achieved through creating a living trust include:

•         Protecting your assets;

•         Protecting your heirs from those who might be unscrupulous;

•         Providing for someone who has a disability;

•         Giving to a charitable cause.

Our experienced estate planning lawyers will draft all the required documents you need in order to ensure that your estate and family goals are met. Trusts can often be useful in helping our high-asset clients avoid the probate process while reducing federal estate taxes when transferring assets to heirs, but even non- high-asset clients may be able to benefit from a properly structured trust.

Contact the law offices of MMJ Law, in Tampa for honest answers to all your questions about whether a revocable living trust is right for you and your heirs.