A Living Trust (also sometimes called a Revocable Trust) is a written document which allows the person setting it up to provide for the holding and distribution of their assets. In effect, a Living Trust is much like a Last Will and Testament in that it designates to whom assets are to be distributed and who will be in charge of distributing them. However, the way the Living Trust accomplishes these objectives is significantly different and thereby offers some definite benefits to both you and to your loved ones. Here are the major benefits:
Probate Avoidance. By creating a Living Trust and transferring your assets into the Trust, your family can avoid having to probate those assets at the time of death. This can save significant time (often in excess of a year) and expense (often as much 3% of the estate) involved in probating an estate.
Controlled Distribution. A Living Trust allows you to give a gift (called a devise) but to do so in a way that controls the amount and frequency of the distributions. This way, rather than a beneficiary getting a distribution all at once, the distributions can be spread out over time and in amount. This can be especially desirable if the beneficiary is a minor or there are concerns about a beneficiary’s ability to handle an inheritance all at once.
Confidentiality. The administration of a Living Trust is not a public process. Probate, on the other hand, in Florida and many other states is a proceeding administered through the probate court. Because probate is public, beneficiaries of the probate estate can be identified and can become targets. Probate can also mean assets of the estate can be discovered by third persons. By having assets distributed through the Living Trust, no one other than the beneficiaries and the Trustee know the assets of the Trust or the details of the distribution plan.
Disability. If you become totally incapacitated or incompetent, a guardianship may have to be established. This involves a court declaring you to be incapacitated. A guardian is appointed to oversee your person and property. However, guardianships can be slow and expensive. If you have a Living Trust and become incapacitated, your successor trustee can take over and can use the trust assets for your care. This can be done without a public declaration of incapacity and without a formal court proceeding. This saves embarrassment, inconvenience and considerable expense.
A Living Trust can be a great tool to administer and distribute your estate. However, it is a document which should be prepared by an estate attorney experienced in its preparation and administration.