Did you know that trusts are one of the estate planning tools created for the management of assets, both during your life and after your death? In fact, there are several types of trusts to use in estate planning. However, in this blog we will divide trusts into a couple of categories to make them easier to understand.
In the simplest terms, trusts are either revocable or irrevocable. This means they can either be changed or revoked after they are created or they cannot. Keep in mind that there can be important legal implications of choosing between revocable or irrevocable.
Who creates a revocable trust? A revocable trust is created by a trustor, who also remains as the beneficiary until his or her passing, and then the trust passes on to the successor trustee and beneficiaries. Often a married couple will create a revocable trust and they will remain as both co-trustors and co-beneficiaries until their passing and then, an adult child becomes the successor trustee and their other children, and possibly grandchildren, become the successor beneficiaries. Because a revocable trust can be revoked or changed at any time prior to the original trustor’s death, there are no tax benefits. Basically, the revocable trust can function as a means of distributing assets to beneficiaries while avoiding the timely and costly probate process.
Another trust is the irrevocable trust. Once an irrevocable trust is created it cannot be changed, except under rather limited circumstances. Once the assets are transferred to the trust, they are no longer considered to be the property of the trustor, but rather, are the property of the trust. The benefits include limiting or eliminating both income and estate tax and usually the trust property cannot be reached by the trustor’s creditors. Another key draw of the irrevocable trust may be because the assets of the trust are no longer the property of the trustor, they are not considered, when determining the trustor’s eligibility for government programs, such as Medicaid, which can make them an integral tool in long-term care planning. Along the same lines, a special needs trust, which is most typically created to provide for an adult disabled child following the passing of their parents is most usually irrevocable, assuring the disabled child remains eligible for government programs.
Now that you have an understanding of the fundamentals of trusts, it is a great time to meet with a Florida estate planning attorney to discuss how best to meet your estate planning goals. We know working through legal matters can be exhausting. You may have many questions, but not know where to find the answers. At Poucher Law, we work closely with clients to help them find the answers they need.
We do telephone, computer, and face-to-face appointments. Our face-to-face appointments are held outside in the open air (frequently selected by clients for document signing) and inside our office conference room. We follow all CDC guidelines. Our office procedures adhere to COVID-19 safety protocols and are designed and enhanced by medical review and air quality engineering.