Do I Need A “Revocable Trust”?
As attorneys who focus on estate planning here in Florida, we receive a number of questions from clients as to whether there is a difference between a revocable living trust in a regular trust and whether couples should create a will or a trust or something else, etc. Note that revocable trusts – also known as living trusts – provide a number of really important benefits.
Trusts Versus Wills
Revocable trusts – in a nutshell – are essentially replacements for wills. While a will is kind of like a map which directs assets for the court when it comes to probate administration, with a trust, those assets are, instead, directed to a private entity, which can be amended it any time (unlike irrevocable trusts, which are primarily used to remove assets from an estate).
Some have likened a revocable trust to a Ziploc bag: that bag remains open and you can add various things to it over time, such as property. You can also remove things from it by selling those things. You dictate who receive the contents of that bag upon your death, but you reserve the right to change your mind at any time. Upon your passing, that bag is sealed shut and whatever is inside is distributed to your beneficiaries based on what you dictated.
Advantages To A Revocable Trust
There are a number of advantages associated with a revocable trust. First and foremost, you avoid the probate process, whereby the court oversees the distribution of your assets and any payment of debts. Probate can not only be expensive and time-consuming, but quite public and frustrating to your beneficiaries. When you place something in a revocable trust, that asset is distributed directly according to your wishes and not under court supervision.
Another great benefit to revocable trusts is that even if you become mentally incapacitated, whatever you have dictated and whoever you have designated is the controlling final word. Your trustee steps in and manages trust property in this case as opposed to family members fighting in court.
Revocable trusts are also kept private and allows your estate to be distributed in private. They also allow both finances and assets to be available immediately upon your death. Your trustee can also use these finances to cover administrative expenses, debts and estate taxes.
Now for the disadvantages; revocable trust do not provide tax benefits and not every asset qualifies to go into a trust; for example, an IRA as a retirement asset does not. You need to engage in planning for your retirement assets as a separate process.
In addition, in order to set up a revocable trust, you not only need to retitle all of your assets in the name of that trust, but you have to fund the trust. If you fail to do this for one of your assets, it falls outside the trust and is handled separately.
Heirs also have a longer time to contest a revocable trust than they do a will (although this is subject to a statute of limitations established by the state).
Find Out More
The best way to figure out which estate planning tools are best for you is to meet with an estate planning attorney. Contact our Orlando estate planning attorneys at the office of Gierach and Gierach, P.A. today to find out more.