When it comes to estate planning tools in the state of Florida, the revocable living trust is a wonderful option. Revocable living trusts are a solid foundation for most estate plans. Not only do they provide privacy for the beneficiaries, but they can help to avoid probate as well as fighting among your family. Overall, a revocable living trust ensures that your money and assets go to the people or organizations you wish for them to go to.
How Does a Florida Revocable Living Trust Work?
Revocable living trusts are entities created to hold your or your family’s assets. Although you may create a revocable living trust without assets, it does not truly exist until you transfer the ownership of your assets into the name of the trust, and trustee. This is known as the “funding” of the trust.
There is both a revocable and irrevocable trust option, but the main difference is that you are legally able to be your own trustee with a revocable trust. This will allow you to continue to own the assets and manage them. With an irrevocable trust, you will be required to have someone else serve as trustee. Additionally, a revocable trust allows you to take your property and assets back whenever you choose.
Revocable living trusts do not have their own taxpayer identification number. Instead, the social security number of the trustmaker will act as the taxpayer identification number. All income and deductions will be reported on the trustmaker's personal Form 1040 tax return as if they have continued to hold personal ownership.
What Assets Can be Put into a Revocable Living Trust
- Cash accounts
- Stock and bonds
- Personal property
- Business interests
- Life insurance
- Real estate
- Small business interests
- Bank accounts
Benefits of Revocable Living Trusts in Florida
Although you cannot avoid real estate investments with a revocable living trust, you can avoid the probate process. Probate is the process that occurs after your death. If you do not have a trust in place, then your beneficiaries may need to go through a long and expensive process of separating your assets.
Your will and other requisite transactions become public knowledge after your death, which means anyone can see what is in your will, and who your beneficiaries are. This can feel like your privacy is compromised, and it essentially is. By putting your estate in a living trust you can distribute it in private. No one can search your records and your beneficiaries will be afforded full privacy regarding your estate.
Flexibility is always a benefit when it comes to your assets, and revocable living trusts allow you to make amendments at your own discretion. Whether your situation changes or you are not sure who you want to name as your beneficiaries, this is a great option. Especially if you are young and starting your estate planning, having that flexibility can prove invaluable.
The FDIC (Federal Deposit Insurance Corporation) protects money in a standard bank account up to $250,000. This may not feel like enough protection when it comes to your entire estate. With a revocable trust account, you will receive insurance of up to $250,000 for each beneficiary. This means you may have up to four beneficiaries accounting for insurance of up to $1,250,000.
Save Your Family Stress Down the Line
Although drafting a living trust can be expensive and require a lot of effort, it will save time down the line. Your family will be fully set up and be able to avoid probate after your death. Not only can this save costs, but it can also prevent your family from fighting over your estate once you are gone.
Should You Set Up a Revocable Living Trust in Florida?
Setting up a revocable living trust is not the right choice for everyone, but If your main goal is to avoid probate court then it may be a good option. If you do not have the assets to go through a probate process, then you most likely will not need to form a Florida revocable living trust.
Something else to consider is if you do have assets that you want to protect from your business liabilities. In that case, you may want to set up an irrevocable living trust instead. However, if you have assets to protect, you are either young or not quite sure who to name as your beneficiaries, and not worried about judgments seizing your personal property, then it is a good choice for you.
Setting up a Revocable Living Trust
If you think that a revocable living trust is right for you then get ready to put a good amount of work into setting it up. You will need to begin by taking account of your assets, decide who you want to name as your beneficiaries, and who to assign as trustee.
After the document is drawn up, transfer any property you want to be covered into the trust. This part of the process is the most time consuming, so you may consider hiring professional help to prepare it for you.