Trusts are among the most common legal tools used to structure and optimize different estate plans in Florida. Flexible by nature, trusts may be designed in several forms to fulfill distinct purposes.
It is crucial to work with an expert trust attorney to identify which type of trust offers the most in terms of cost-effectiveness. Keep reading to find out the types of trusts available in Florida.
Type of Trusts in Florida – Revocable Trusts vs. Irrevocable Trusts
A trust is a fiduciary relationship established between a trust maker, a trustee, and the beneficiaries designated by the trust maker. The trust maker (referred to as trustor or settlor) transfers the ownership of property to the trustee, which holds the property for the benefit of the individuals named as beneficiaries of the trust.
There are two main types of trusts in Florida – revocable trusts and irrevocable trusts. These two categories encompass the distinct types of trusts, such as land trusts, credit shelter trusts, and qualified personal residence trusts.
Florida Revocable Trusts
A revocable trust is a trust that permits modifications, amendments, or even the termination of the trust (either in whole or part) during the trustor’s lifetime. This type of trust allows the trustor to name him or herself as the trust’s trustee.
This way, the trustor can keep the assets held in the trust under his or her control while naming a successor trustee to handle the trust administration in the event of death or incapacitation.
Generally, the uses for revocable (living) trusts include avoiding probate upon death and guaranteeing continued management and preservation of the trustor’s assets held in trust.
Once the trustor passes away, a revocable trust automatically becomes irrevocable. Therefore, the trustee (or successor trustee) must distribute the trust assets to their rightful beneficiaries under the trust agreement.
Still, nothing is perfect in life – neither are revocable trusts. Individuals looking to create a revocable (living) trust must be aware that this type of arrangement will provide no immediate tax benefits or asset protection against creditors.
Florida Irrevocable Trusts
An irrevocable trust is a trust that cannot be modified, changed, or terminated both during the trustor’s lifetime and upon his or her death. Except under court order, irrevocable trusts are immutable legal arrangements.
In any case, the best approach is to consult with an expert trust attorney to assess whether an irrevocable trust is a suitable legal tool for your situation. The most common use cases for irrevocable trusts include:
- Minimizing estate taxes
- Preserving a beneficiary’s eligibility to Medicaid benefits
- Preserving a beneficiary’s eligibility to Supplemental Security Income (SSI)
Please note that Florida Statutes §736.04113(1) provide that “a court at any time may modify the terms of a trust that is not then revocable (…), if:
- The purposes of the trust have been fulfilled or have become illegal, impossible, wasteful, or impracticable to fulfill
- Because of circumstances not anticipated by the settlor, compliance with the terms of the trust would defeat or substantially impair the accomplishment of a material purpose of the trust, or
- A material purpose of the trust no longer exists”
Do You Need to Set Up a Trust? – Immediately Contact Your Florida Probate Lawyer
Waste no time with uncertainty – call Attorneys Romy B. Jurado and Diana C. Collazos at (305) 921-0976 or email [email protected] to schedule a consultation.