In Florida, many residents utilize revocable living trusts as a way to avoid probate (certainly a complex and demanding process).
Nonetheless, this important family document can also bring additional benefits that may be crucial for the resident’s estate and beneficiaries upon the unforeseen circumstances and necessities.
In this article, you will discover the advantages of a living trust in Florida.
What is a Florida Living Trust?
A Florida living trust, also known as a revocable living trust, is a legal fiction in which a grantor places his/her assets with instructions on who will benefit from them. Plus, the grantor appoints a trustee to manage the estate (or trust) in the event they become incapacitated.
The terms contained in a revocable living trust can be altered or revoked at any time during the grantor’s life.
However, at the time of the grantor’s death, the revocable trust automatically becomes an irrevocable trust.
In layman’s terms, while the grantor is still alive, he/she and the living trust are the same. The grantor will file income taxes for the assets titled under the trust on the same tax return as it would be done with any other assets.
Many individuals who are Florida residents and own property/assets in the state utilize living trust as a way to avoid probate or guardianship court, also giving control of the property after death and providing asset protection for the chosen beneficiaries.
Individuals who want to avoid guardianship court for minor children or protect individuals with special needs can also use a living trust as a strategy to do so.
A Living Trust Can Help to Mitigate Federal Estate Taxes
Any estate that is over a certain amount/size may be exposed to the federal estate tax (also known as death tax).
Unfortunately, many individuals are affected negatively by this factor because it averages around 45% of the gross amount owed and typically needs to be paid within 9 months of the estate owner’s death.
Sometimes having to pay a federal estate tax means putting a family-owned company out of business, which is terrible.
To avoid this unpleasant situation, a living trust can be designed to minimize estate taxes, especially in cases where a couple is married, and an A-B trust strategy is utilized.
Consequently, a Florida living trust can provide tools for the trustee to relocate the estate into various places that are tax-advantaged.
A Living Trust Can Help to Protect Beneficiaries with Special Needs
According to current social security rules, if a disabled person who is receiving need-based disability benefits (SSI) is offered an inheritance, they can be disqualified from the program.
In this sense, a well-drafted living trust could include a Florida special needs trust by adding “special needs” or “supplemental needs” language in it.
Consequently, this strategy could provide a way out for a disabled person to receive the inheritance in a separate account without necessarily losing the benefits.
If you have a person with special needs (children, adult, or aging person) living in your home and want to ensure he/she is taken care of in the future, we strongly recommend you seek guidance with an expert trust attorney to tailor a living trust to address your specific circumstance.
Protect Your Beneficiaries from Creditor Attacks Using a Living Trust
While a revocable trust asset protection does not extend to the trust maker, it can offer creditor protection for beneficiaries following the grantor’s death.
When the trust maker of a revocable living trust dies, the revocable living trust becomes irrevocable. Hence, the property/assets within the trust become protected against creditors seeking to attach judgments or liens to it.
Using a Living Trust to Protect Children Born from Previous Marriage
Undoubtedly, many second marriages become a battleground for legal disputes as second spouses tend to clash with the biological children from a previous marriage to claim the decedent’s inheritance.
Anyone who is living a second marriage and has this potential concern can utilize a revocable living trust to define (in writing) what the surviving spouse can and cannot do after the trust maker’s death.
For instance, a trust maker could protect children of first marriage by either:
- placing assets/property in a separate trust (controlled only by the biological parent) or,
- limiting a second spouse’s right to change/cancel a joint revocable trust upon the biological parent’s death.
Contact Our Estate Planning Attorneys to Handle Your Florida Living Trust Today
If are you looking for professional help to handle your estate planning in Florida, we have the answer for your case at Jurado & Farshchian, P.L.
Get in touch with Attorney Romy B. Jurado and ive us a call at (305) 921-0976 or send us an email at [email protected] and we will find the best strategy to fulfill your needs.