HELPING CLIENTS PROTECT ASSET TRANSFERS
There are two main types of Estate Plans: those built around a Last Will & Testament and those built around Revocable Trusts. A Florida Revocable Trust is a document that allows you to transfer ownership of most of your assets from yourself to the Trust, with you (or someone you choose) as the Trustee. You may hear Revocable Trusts also referred to as “Living Trusts” or “Revocable Living Trusts” in Florida.
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Revocable Trust FAQ
What does a Revocable Trust do?
Like a Will, the Revocable Trust contains instructions about the distribution of your assets when you pass. Unlike a Will, the Trust is not part of the public record. Upon your death, your assets are distributed privately and without the need for probate. The Trust is “revocable” because you may change it at any time while you are alive and competent.
What are the benefits of a Revocable Trust?
The main benefits of a Florida Revocable Trust are:
- Your Estate is kept out of probate, allowing your affairs to be settled more quickly, privately, and at less expense
- If your Estate is taxable, there may be tax advantages
- Allows a successor Trustee to manage your assets if you become incapacitated or die
- Offers protection against court-appointed Guardianship should you become disabled
Who are the parties in a Revocable Trust?
A Revocable Trust includes the following parties:
- Grantor or Settlor: The person who creates the Trust
- Trustee: The person responsible for managing the Trust assets. This can be you or a person or corporation that you appoint. With yourself appointed as the initial Trustee, you hold the title to the Trust assets as the Trustee and manage them just as you did before the Trust was created. You would also name one or more successor Trustees in the event of death or disability.
- Trust Protector: An independent third party or institution given the authority to perform certain duties with regard to a Trust. A Trust Protector’s role is to ensure that the wishes of the Trustmaker—the individual who made the trust—are fulfilled, and that the Trust continues to serve the purpose for which it was intended.
- Beneficiaries of the Trust
Once a Florida Revocable Trust is set up, does anything else need to be done?
Yes. Simply setting up the Trust isn’t enough. To be effective, you must align your assets with the Trust. This means that the title to your assets (i.e. bank accounts, stocks, real estate) must be formally transferred to the Trustee of your Trust before the time of your death so that those assets avoid probate. You may also designate the Revocable Trust to be the primary or contingent beneficiary of assets such as IRAs and life insurance.
It’s important to know that many attorneys do not assist with the critical step of aligning your assets or funding a Trust. When you work with the Flammia Elder Law Firm, we are available to assist you in making certain that all assets are legally transferred and aligned with the Trust.
How does a Florida Revocable Trust avoid probate?
After your death, the named Trustee distributes your Estate to the named beneficiaries with little involvement from the courts. Probate is avoided because there is no “probate property” titled in your name when you pass.
For example, Mary Brown creates the “Mary Brown Revocable Trust,” where all property owned by her (such as real estate, bank accounts, and stocks) is transferred to the Trustee of the “Mary Brown Revocable Trust.” Upon Mary’s passing, she doesn’t own any property—her Trustee of her Trust owns it—and therefore probate is avoided. The Trustee of the Trust would take care of Mary’s property distribution upon her death in accordance with the terms of the Trust.
Can a Revocable Trust be used as a planning tool for nursing home expenses?
It’s important to know that in Florida, a Revocable Living Trust does not protect your assets so that you can qualify for Medicaid to pay for nursing home costs. Why? Because your assets are still available to you. In other words, as a Medicaid applicant, you would likely not meet the Medicaid asset limitations.
However, an Irrevocable Trust is an Asset Protection vehicle. If you or a loved one needs Medicaid Planning, please contact the Flammia Elder Law Firm for detailed answers to your specific questions.
How can I be sure that a Revocable Trust is right for me?
Your best action is to consult with an Elder Law attorney who can advise you on your entire situation. Trusts are considered on a case-by-case basis. During your Estate Planning consultation, attorney Kathleen Flammia will review what assets are involved, how they are titled, who the beneficiaries are, and how you want those assets to pass to your beneficiaries.