You are about to read a brief introduction to living trusts, why you may need one, and how a living trust benefits you. For personalized advice about living trusts, or to set up your own living trust, you should contact a Fort Lauderdale living trust attorney.
What is a living trust? How does a living trust work? Should you set one up? If you’ll keep reading, these questions will be answered, and you will also learn where to get the help you need to set up an effective living trust in south Florida.
What is a Living Trust?
A living trust is a financial document and a tool to ensure that when you pass away, your assets go where you want them to go. No one can predict tomorrow, but having an estate plan that includes a living trust ensures that your loved ones will be financially secure when you’re gone.
A living trust and a last will and testament are usually the foundation of an estate plan. However, if your assets are modest, or if you are simply leaving everything to a spouse, a last will and testament may be sufficient. Still, living trusts offer a number of benefits.
Living trusts let you decide how your assets will be managed both prior to and after your death, but do you need a living trust? The answer depends on your individual circumstances. A south Florida estate planning lawyer can provide the advice and insights that will help you decide.
How Do Living Trusts Work?
Living trusts let you shift control over certain assets and properties to a trustee that you name. You may act as your own trustee during your lifetime, or you may name someone else. You may transfer stocks, bonds, real estate, cars, boats, mutual funds – anything you own – into the trust.
Your trustee’s role is to manage the trust’s assets for you and your beneficiaries. A living trust operates throughout your lifetime and after you pass away, unless you specify that the trust terminates on a particular date.
Living trusts may be “irrevocable” or “revocable.” Irrevocable trusts are permanent. When assets are transferred into an irrevocable trust, they must remain there.
What Choices Will You Need to Make?
Revocable living trusts are more flexible and may be revised at any time. You can transfer assets in or out of a revocable trust when you choose, or you may dismantle the trust if you like. To create a revocable living trust, have a Fort Lauderdale estate planning lawyer help you:
- Choose the right type of trust to set up. If you are not married, a single trust is probably what’s right for you. Married couples usually choose to create a joint trust, which can hold both jointly-owned and personally-owned property and assets.
- Choose what assets and property to transfer into the trust. Most of your assets should be transferred there. You will need to locate titles, deeds, and any other pertinent documents.
- Choose a trustee to handle distribution of the trust’s property and assets after your death. You may name someone immediately, or you may appoint yourself as your trustee and choose a successor trustee to assume the job after you pass away.
Some assets cannot be moved into a trust, although the trust may be named as beneficiary of the assets. You may designate the trust as a beneficiary for an IRA, a 401(k), or a life insurance policy, and those benefits will be paid into your living trust automatically after your death.
When is a Living Trust Preferable to a Will Alone?
When is having a living trust preferable to having only a last will and testament? Your trust helps you avoid a conservatorship if you are incapacitated and cannot conduct your own affairs. Rather than a court naming someone to manage your estate, your trustee manages your affairs for you.
Living trusts also let your beneficiaries avoid the probate process. Probate involves inventorying and evaluating an estate’s assets and properties, paying off the estate’s debts and its federal and state taxes, and distributing what remains of the estate according to the decedent’s will.
Probate is a costly and time-consuming legal process. It requires your estate to pay court costs, executor’s fees, attorneys’ fees, appraiser’s fees, and related expenses. This reduces what your beneficiaries receive, but moving assets into a living trust exempts those assets from probate.
What Other Benefits Does a Living Trust Offer?
Privacy is another advantage of setting up a living trust. Probate is a judicial process. It becomes part of the public record. Your living trust will protect your business and financial affairs and keep them private.
Some parents also find that a living trust helps them when they leave assets for their minor children. Usually, if you leave assets to your minor child in a will, the court appoints an adult to manage the inheritance. When the child reaches age 18, he or she then gains control of the assets.
But with a living trust, the assets you leave to a minor child may be linked to specific conditions. You can require your child, for example, to finish college, to reach age 25, or you may establish any other reasonable requirement for your child before access to the trust funds is permitted.
Who Should Set Up a Living Trust?
There is no rule for who does and does not need to set up a living trust, but it’s a good idea to discuss living trusts and your estate planning needs with a Fort Lauderdale living trust lawyer.
If you are over 18 and you are married or you own a business, or if you are simply seeking effective long-term protection for your assets and security for your loved ones, establishing a trust may be exactly what you need to do.
How Will an Estate Planning Lawyer Help You?
Finally, avoid “do-it-yourself” estate planning and the pre-printed living trust forms you can download from the internet. Instead, have someone who routinely handles living trusts and estate planning help you to personalize your living trust and to avoid the many potential pitfalls.
The right Fort Lauderdale living trust attorney will be familiar with all of your estate planning options and will know how to personalize a living trust and your other estate planning documents so that they are compliant with Florida law, effective, and just right for you.