Living trusts are a type of trust which you can create in order to allow for assets to transfer outside of probate. Living trusts have many different benefits, but they also have some very important limitations. There are misconceptions about exactly what living trusts do to protect assets and you need to make certain you understand the types of trusts which will serve the estate planning purposes that you intend.
Barbara M. Pizzolato, P.A. can provide comprehensive assistance with living trusts. Our legal team understands what is involved in trust creation and we know the types of trusts that provide desired benefits to people who are making an estate plan.
If you need help with living trusts in Fort Myers or with any aspect of making a comprehensive estate plan, we are here to help you. Give us a call now or contact us online to find out more important details about living trusts as well as alternatives to this type of trust creation.
What Do Living Trusts Do?
Living trusts are also called revocable trusts. The Florida Bar Association explains that: “A revocable trust is a document (the “trust agreement”) created by you to manage your assets during your lifetime and to distribute the remaining assets after your death.” Living trusts or revocable trusts are governed by Chapter 736 of the Florida Statutes, called the Florida Trust Code.
Under the relevant code section, you can create a living trust and can name both a trustee and a backup trustee. Often, the trust creator– or settlor– will be the primary trustee and some trusted third party will be the backup trustee. Beneficiaries are also named. The trust is funded with property and assets, and this process must involve formally changing the titles and deeds of property and/or changing the ownership of the accounts which will be held by the trust.
Revocable trusts can be changed or altered at any time, as needed by the settlor. The trust assets remain largely under the control of the trust creator, although the trust is the technical owner of the assets. The flexibility of living trusts makes this type of trust a good option for certain estate planning purposes. Living or revocable trusts are an alternative to irrevocable trusts, which cannot typically be altered or changed and which are much more restrictive in terms of what the trust creator can do with the assets.
Living trusts are usually created for a few primary asset protection purposes. Living trusts make it possible for the assets held within the trust to transfer outside of probate, which means that those who stand to inherit the property will not have as long of a delay in getting access to the assets held by the trust. The probate process can be long and can be complicated, which raises costs. Living trusts can thus save money. Living trusts are also a part of incapacity planning, as the person who is named as the backup trustee can take control over the assets held in the living trust in the event that something happens to the settlor.
Limitations of Living Trusts
While living trusts can provide protection for assets held within the trust, there are big limitations. For example, assets which the living trust owns are still under the control of the trust settlor. The assets will count as a resource for purposes of determining if the trust creator can qualify for Medicaid coverage or not. This can be a problem if someone wants Medicaid to pay for a nursing home, which most private insurers and Medicare won’t pay for.
Assets held in the living trust are also still considered when determining the value of an estate, which means estate taxes may be owed on the trust assets. Because of these and other limitations, it is important to consider whether living trusts are actually the best option for your situation.
Getting Help from a Fort Myers Living Trust Lawyer
If you want to find out what kind of trust will work to provide you with desired protections and benefits, a Fort Myers living trust lawyer can provide the help you need. An attorney can also assist with trust creation and with funding a trust so you receive all of the different benefits that you expect.
Barbara M. Pizzolato, P.A. has extensive experience with the creation of both revocable and irrevocable trusts. To get started on trust creation and on making a comprehensive estate plan, give us a call today at (239)-225-7911 or contact us online. You can also join us for a free seminar to learn more of the basics of trust creation and to learn more about what should be included in your comprehensive estate plan.