Revocable living trusts have become a popular estate planning tool among Floridians. What are they and do you need one?
Revocable living trusts are not standardized estate planning options that suit every person’s needs. Rather, they are complex documents individualized to address a person’s specific estate planning goals, assets, and tax liabilities. As experienced Florida trust attorneys advise, revocable trusts are living documents requiring strategic planning and ongoing maintenance.
To better understand if your situation warrants the planning and expense of a revocable living trust, consider these three things you might not know about revocable living trusts:
1. The Functionality of Revocable Living Trusts in Florida
A revocable living trust holds title to your assets during your lifetime and manages those assets after your death. For the revocable trust to be functional, you will need to transfer all assets into your trust:
- Real estate
- Personal property
- Bank accounts
- Investment accounts
Once assets are transferred into the trust, the trust “owns” the assets, but the person who establishes the trust, the grantor, may use and manage the assets normally throughout their lifetime. Changes to ownership of existing assets and newly acquired assets must be regularly updated in the trust.
2. Assets in Revocable Trusts Receive Increased FDIC Protection
Most know that the FDIC insures the money in a bank account up to $250,000. However, did you know the FDIC insures the primary owner of a trust account up to $250,000 for each primary beneficiary?
The exact amount of coverage extended to your beneficiaries will depend on the number of beneficiaries per account, the accounts aggregate balance, and the terms of your revocable trust.
The advice of a trust attorney is crucial to understanding the relationship between your financial accounts, your beneficiaries, and the distribution of assets through your trust.
3. Revocable Living Trusts Avoid Florida Probate, but Not Taxes
Many people establish a revocable trust to avoid the time, expense, and public record of probate. However, all too often, they confuse avoiding probate with avoiding estate taxes.
Probate is the legal process of reviewing and validating the will of a decedent. Revocable trusts are not subject to the probate process. However, a decedent’s assets, whether transferred through a trust or will, are subject to federal and state estate taxes.
Fortunately, Florida does not impose an estate tax, nor does it impose inheritance or gift taxes. However, the federal government does levy taxes against estates and gifts exceeding certain thresholds.
It’s wise to seek counsel from a qualified trust attorney regarding your federal tax liability and how to minimize your estate exposure.
Using a Florida Trust Attorney to Set Up a Revocable Living Trust
Revocable living trusts are a sound and flexible estate planning tool. Individual circumstances will guide the complexity of your trust, and the amount of legal counsel needed when drafting your document.
Though identifying your assets and beneficiaries may seem straightforward, making sure everything is defined in the trust can be complicated. One omission or oversight can cause problems that you won’t be around to fix after your death.
Our knowledgeable, experienced Florida trust attorneys offer a holistic approach to your estate planning goals. We assess your assets, liabilities, and family dynamics against the best strategies for managing your estate during your lifetime and after your death.
Investing your time and resources now for trustworthy legal counsel will provide peace of mind that your estate is properly managed on behalf of you and your beneficiaries.
For a comprehensive review of your estate planning needs, contact our office today.
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