|
Advantages
of a Florida Revocable Living Trust
After
you have spent the majority of your lifetime carefully
and painstakingly accumulating wealth, you should take
at least few hours to sit down and design a plan for
the disposition of this wealth. Your plan should consider
transfers both during your lifetime (inter vivos) and
upon your death (testamentary). The process of developing
this plan is called estate planning. The primary goal
in most estate plans is to pass wealth to the next generation
(or to a charity) with as little cost or difficulty
as possible. The most common and popular vehicle for
this goal is the revocable inter vivos trust, or "Living
Trust."
The Living Trust replaces the will as the primary vehicle
for disposing of accumulated wealth. A simple will without
a trust is inadequate to ensure the full utilization
of the estate and gift tax benefits permitted by the
federal government. A trust within a will (i.e., a testamentary
trust) may be used; however, a Living Trust is less
complex and it has additional advantages, including
but not limited to, the following:
Avoiding
Probate
Assets held or titled in the name of your Living Trust
do not pass through the judicial process of probate.
These assets are nominally owned by the trustee of your
trust (during your lifetime, you may choose to be the
sole trustee). If you fully fund your Living Trust during
your lifetime by placing all of the assets subject to
probate into your trust, then your assets avoid the
probate process. You will save your beneficiaries considerable
time, cost and potential difficulties that are associated
with the probate process.
Avoiding
Guardianship
More importantly, a properly drafted Living Trust will
provide that if you become incapacitated (i.e., unable
to handle financial affairs), your trustee or successor
trustee shall have control of your assets and take care
of your costs of living and medical care. If you become
incapacitated and have not executed a Living Trust,
a guardian may need to be appointed to take care of
your financial needs. The guardianship law in Florida
was recently overhauled and as a result it is now very
complex, costly, time consuming and emotionally draining
to have a guardian appointed.
Continuity
of Management
Once your Living Trust is funded, the terms of the trust
control how and when the assets of the trust are disposed.
Your subsequent incapacity or death does not necessarily
affect the management of your trust assets. The trustee
or successor trustee of your Living Trust will continue
to manage your trust in accordance with your original
plan. On the contrary, if you have a will but no Living
Trust, all assets subject to probate will have to be
transferred to the new owner pursuant to your will,
after the probate court judge approves of the proposed
plan of distribution.
Liquidity
The trustee or successor trustee may make immediate
distributions from your trust upon your death or incapacity
without any delay. Without a Living Trust, your assets
may only disposed of pursuant to your will after going
through a lengthy probate process. (Early distributions
may be made by your Personal Representative under your
will if he or she is sure that sufficient assets are
available to pay administrative expenses and claims
against the estate.)
Privacy
A will must be recorded with the probate court and,
therefore, its contents are of public record. However,
unlike a will, a Living Trust does not need to be filed
with the court. As a result, the use of a Living Trust
affords you a greater degree of privacy. Your personal
affairs will never be a matter of public knowledge.
Note:
As the title indicates, a Living Trust is fully revocable
at any time prior to your incapacity or death.
|
