Indeed, setting up a living trust in Florida may be a useful tool to avoid probate and protect the interest of loved ones upon death. However, nothing in life is perfect – neither are living trusts.
Living trusts have certain disadvantages associated with them, which anyone interested in these estate planning tools should be aware of. In this article, you will discover the side effects of a living trust in Florida.
Disadvantages of a Living Trust in Florida – Costs and Expenses
Establishing and managing a Florida living trust is not free. First, there is the cost to set up the trust, including fees paid up-front and other additional costs (e.g., legal assistance). Plus, a prospective trust maker should consider the costs of administering the trust.
In many cases, trusts in Florida are administered by banks or financial entities, which means maintenance costs. In fact, even if a trust maker opts to name a private party as the trustee, it will probably be necessary to compensate this person somehow.
In case the trustee needs to retitle documents or add new filings to transfer ownership of property to the trust, it will also incur more costs.
Ultimately, the best approach when deciding whether the cost of a living trust is worth the investment is to compare with the expenses associated with probate, estate taxes, and the last will executor’s payment.
Disadvantages of a Living Trust in Florida – Legal and Administrative Complexities
Undoubtedly, writing a last will is much simpler than setting up a trust. When writing a will, the testator (person making the will) designates certain assets to particular individuals. On the other hand, a living trust may be much more complicated to deal with.
Plus, if an asset is not titled to the trust when the grantor dies, it will go through probate. If there is no last will in place, the asset will be distributed according to Florida intestacy law, which may not be a time-efficient process.
As it is plain to see, structuring a trust requires attention to detail, deep knowledge of trust law, and experience in handling estate planning strategies – something that only an expert trust attorney in Florida has to offer.
Disadvantages of a Living Trust in Florida – Minimal or Inexistent Tax Advantages
When a living trust is not properly structured, it may void any feasible tax advantages. In fact, it is hard to set up a living trust and enjoy tax advantages at the same time. Why? Because any income earned from a living trust is reported on the grantor’s income tax return.
Disadvantages of a Living Trust in Florida – Occasional Inconvenience
Occasionally, having part of someone’s estate transferred into a trust may cause inconvenience. Considering the grantor no longer owns the assets held in the trust, any contracts involving trust-owned property must disclose these assets as trust assets.
Typically, banks and financial entities may impose extra hurdles or require further administrative procedures when someone tries to use trust assets as collateral to borrow a loan or obtain other types of funding.
What Are the Disadvantages of a Living Trust in Florida? – Get Professional Guidance Today
Although living trusts are perfect, it is possible to use them with other legal tools within a goal-oriented estate planning strategy. However, it requires the guidance of a well-versed estate planning attorney in Florida.