When people talk about including a trust as part of their estate plan, they usually mean a revocable or “living” trust. Under the right circumstances, creating a trust can help your loved ones avoid the probate process and save taxes. However, many factors affect whether creating a trust is in your best interest. Therefore, getting legal advice about your estate plan is the best way to know whether a trust is right for you. You can consult an Aventura estate planning attorney at Kramer Green for more information about the benefits of trusts and whether incorporating them into your estate plan is in your best interest.
What is a Revocable or Living Trust?
A revocable trust is an estate planning tool that allows you to manage your assets during your lifetime and distribute them to your loved ones after your death. You can customize a trust to your needs and desires but trusts generally share certain characteristics. One of the advantages of a revocable trust is that you change or revoke it at any time.
Trusts usually involve three types of people. First, you – or the person who creates the trust – are the “grantor” or “settler.” Next, you designate someone to act as the “trustee” of your trust, who oversees your assets during your lifetime. You can be the trustee of your trust, designate another person to be trustee, or appoint a trust company to serve as trustee. Finally, the people you want to inherit your assets following your death are the “beneficiaries” of the trust.
You or your designated trustee manages and invests your assets during your lifetime. However, you or the grantor of a trust can withdraw money or assets from the trust as needed, which is why the trust is revocable. You also can change whom you designate to act as trustee at any time.
If you become incapacitated, the person you have chosen to serve as trustee (aside from yourself) will have the legal right to continue investing your assets and paying your bills. In this regard, a trust may help you avoid needing a court-appointed legal guardian to handle your assets.
Once you pass away, the trustee distributes your assets to the beneficiaries you have named according to the terms of your trust.
Many trusts under Florida law are subject to the Florida Trust Code in Chapters 736 – 739 of the Florida Statutes. Revocable Trusts become subject to Chapter 736 when they become irrevocable, i.e., when the grantor dies.
How Does a Revocable Trust Avoid Probate?
Probate is the legal process of administering a deceased person’s estate under the supervision of a court. Through the probate process, the deceased person’s assets are legally transferred to the person’s heirs as determined by their will or state law if there is no will. The court appoints a personal representative to manage the estate, including paying creditors, taxes, and expenses as needed. The personal representative settles the estate by distributing the assets to the deceased’s heirs.
However, if you pass away and your assets are in a trust, your loved ones may not need to go through the often lengthy and expensive probate process. Instead, the trustee can go ahead and distribute your assets according to the terms of the trust. In this situation, there is no need for oversight or involvement from a probate court.
Do I Put All My Assets in a Revocable Trust?
Generally, to fund your trust, you transfer some of your assets to the trust. Assets you may wish to transfer to the trust include anything of value, including bank accounts, — real estate, and more.
Nonetheless, ownership of some assets passes to your heirs without going through either probate or a trust. For example, if you jointly own your home with your spouse as “tenants by the entirety,” your home automatically passes to your spouse when you pass away.
Other common examples of these assets are life insurance policies and retirement accounts. When you purchase life insurance or set up a retirement account, you name one or more beneficiaries to receive the funds upon your death. As a result, when you pass away, the proceeds of a life insurance policy or retirement account automatically pay out to your designated beneficiary or beneficiaries.
Look to Kramer Green for Advice about Your Estate Plan
A Boca Raton estate planning lawyer at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can assist you with all aspects of your estate plan, including trusts. We know how to structure your estate plan best to preserve assets and protect your family’s future.
We are here to guide you through the complex legal estate planning process. Contact our office today at (954) 966-2112 or online to schedule a time to discuss your estate planning issues with our Hallandale Beach estate planning attorney.