A Living Trust is a legal document, that just like a Last Will & Testament, outlines how your assets are to be distributed after your die. The Trust is created now, while you are alive, hence the name Living Trust. In addition, since it is a revocable Trust, the terms of the Trust can be changed at any time throughout your lifetime, as situations in your life may dictate.
As Trustee of your Living Trust, you retain the full control of your assets and can do anything with them that you did before – buy, sell, trade or give away. Your income tax returns are filed in the same way you always filed. Nothing changes but the names on the titles to the assets.
The Living Trust also names a Successor Trustee, someone who will administer the Trust in the event of your incapacity or death. The Successor Trustee can be an individual, several individuals working together or a bank or Trust company.
Most informed people consider the Living Trust, also known as a Revocable Living Trust, the estate planning tool of choice for the following reasons:
- Probate Avoidance: All assets held by your Living Trust at the time of your death avoid the cost and delay of probate. A Living Trust can hold both assets, including real property, located in Florida and outside of Florida, therefore avoiding probate administrations in multiple states.
- Guardianship Avoidance: Unlike a Last Will & Testament, the Living Trust makes provisions in the event of your incapacity or disability due to an illness or accident. The person you name, your Successor Trustee, will have access to the assets in the Trust for one purpose only, your health, maintenance and support. A Living Trust can also direct that you be kept in your own home, for as long as feasibly possible, with a nurse or companion brought in. It is our experience that clients who stay in their own homes do better for a longer period of time than those who are transferred to a health care facility.
- Privacy: Unlike a Last Will & Testament, the only people who see your Living Trust are those you show it to. When a Last Will is probated, it becomes a matter public record, exposing your heirs to unscrupulous solicitors and disgruntled family members.
- Tax Avoidance: For married couples with a taxable estate, the Living Trust may offer additional advantages. By utilizing a Credit Shelter Trust (sometimes called A-B Trusts or Bypass Trusts), couples can pass both of their estate tax exemptions, tax free to the beneficiaries. Since the rate for Federal Estate Taxes begins at 45%, the use of Credit Shelter Trusts can significantly increase the amount of hard earned assets being passed to your beneficiaries.
A Living Trust should be drafted by a qualified, elder law attorney as part of a complete estate plan. Since the Trust will dictate what will happen if your pass or become ill, it is not advisable to use any do-it yourself forms. All estate plans drafted by this office are customized to fit each client's individual goals and objectives.