A Florida revocable living trust is created with a written agreement or declaration that names a trustee to manage and administer the property of the grantor. If you're a competent adult, you can establish a Florida RLT. As the grantor, or creator of the Florida trust, you can name any competent adult as your trustee, or you can use a bank or a trust company for this role. The grantor can also act as trustee throughout his lifetime.
Investopedia’s article from last fall entitled “Should You Set up a Revocable Living Trust?” explains that after it’s created, you must retitle assets—like investments, bank accounts, and, sometimes, real estate—into the trust. You no longer “own” those assets directly. Instead, they belong to the Florida trust and don’t have to go through probate at your death. However, with a Florida revocable living trust, you retain control of the assets while you're alive, even though they no longer belong to you directly. A Florida revocable living trust can be changed, and any income earned by the trust's assets passes to you and is taxable. However, the assets themselves don’t transfer from the Florida trust to your beneficiaries until your death.
Avoiding probate is the big benefit of a Florida trust, but other benefits like privacy protection and flexibility make it a good choice. A revocable living trust can be used to help control a guardian's spending habits for the benefit of minor children. It can also instruct another individual to act on your behalf, if you become incapacitated and need someone to make decisions for you. Should you become impaired or disabled, the Florida trust can automatically appoint your trustee to oversee it and your financial affairs without a durable power of attorney.
Although there are several advantages to establishing a Florida revocable living trust, there also some drawbacks:
Expense. Establishing a Florida trust requires legal assistance, which is an expense. At Welch Law, we offer an affordable flat rate for the preparation of a simple Florida trust.
Maintaining Records. Most of the time, you need to monitor it on an annual basis and make adjustments as needed (they don’t automatically adapt to changed circumstances, like a divorce or a new grandchild). There’s the trouble of ensuring that future assets are continuously registered to the Florida trust.
Re-titling Property. When your Florida revocable living trust is established, property must be re-titled in the name of the trust, requiring additional time. Fees can apply to processing title changes.
Minimal Asset Protection. Despite the myth, a Florida revocable living trust offers little asset protection beyond avoiding probate if you retain an ownership interest, such as naming yourself as trustee.
Administrative Expenses. There can also be additional professional fees, such as investment advisory and trustee fees, if you appoint a bank or trust company as the trustee.
There’s No Tax Break. Your assets in the Florida revocable living trust will continue to incur taxes on their gains or income and be subject to creditors and legal action.
Compared to wills, a revocable living trust has more privacy, more control and flexibility over asset distribution. With a Florida revocable living trust, you do most of the work up front, making the disposition of your estate easier and faster. However, a Florida revocable living trust requires more effort, and there is an expense in creating and maintaining it.
Work with an experienced Jupiter, Florida, estate planning attorney, if you are considering a revocable living trust.
Reference: Investopedia (Oct. 31, 2019) “Should You Set up a Revocable Living Trust?”