Do I Need A “Living” Trust?
In estate planning, a trust is a contract of sorts, in which assets are held ‘in trust’ for a beneficiary by a trustee. The trustee holds legal title to all the assets (real or personal property) in the trust’s name, but the beneficiary can access the trust’s proceeds at the appropriate time. There are two types of commonly seen trusts – testamentary trusts go into effect upon the death of the trust’s creator, and living trusts go into effect while the creator is still alive. Generally, living trusts are preferred, and can be extremely helpful for those planning their estate before it becomes a critical issue.
Why Choose A Living Trust?
There are several different reasons that one might prefer a living trust over a testamentary trust, but perhaps the most common is that with a living trust, the majority of a person’s assets can avoid Florida probate, which can be a time-consuming and complex process. When a person creates a trust, their assets are placed ‘in trust’ under the aegis of a trustee, meaning they no longer have legal title to them – and if one does not have legal title to their assets, the probate court has no jurisdiction over how those assets are deeded or otherwise given away.
While the settlor (trust creator) does give up legal title to their assets by placing them in trust, it is quite common for them to serve as the first trustee of their trust and thus still be able to access their property. It is also relevant to keep in mind that unless a trust is expressly designed to be irrevocable (not able to be modified), a living trust can be revoked or amended. The settlor has considerable power to make changes to their trust if something occurs to make them necessary.
In addition to potentially avoiding probate, there are several other advantages to having a revocable living trust. In some situations, for example, it may reduce your surviving spouse’s estate tax burden. Also, property in a living trust is not commingled with marital property, so if you placed previously owned assets (that is, things you owned before your marriage) into your trust, they will stay separate property, which can be helpful for tax planning or in the event of a divorce. Another attractive characteristic of a living trust is that it is a private document, as opposed to a will, which becomes public as part of a probate court record.
If you, as the settlor, do decide to act as your own trustee, keep in mind that it is crucial to name a successor trustee, who can act for you in the event that you become incapacitated, and will take over administration of your trust upon your passing. If you do not name a successor trustee (who can be an individual, or a corporation like a bank), the probate court will generally have to name one, which will take time and delay any bequests to heirs.
Call A Naples Estate Planning Attorney
If you have questions, concerns or just want to set up a complimentary consultation to discuss your personal legal issues in a confidential setting, contact James R. Nici, the Managing Partner of Nici Law Firm, a Naples estate planning attorney with almost 30 years of legal experience. This may be the first step toward ensuring all is how you want it to be going forward. Contact our offices today via our website, or on the telephone at 239-449-6150, to schedule your complimentary consultation.