Frequently asked questions about Living Trusts in Florida
Living trusts are one of the most popular estate planning tools for families and individuals in Florida. Consequently, lawyers tend to get asked certain questions repeatedly. The following is a list of some of the most received questions about living trusts in Florida.
What is a Living Trust and how is it different from a Last Will and Testimony?
A Living Trust, which is also referred to as an Inter Vivos Trust, is a legal agreement that allows a grantor (the person creating the trust) to transfer ownership of their assets to the trust during their lifetime.
The trust is generally managed by a trustee, which is usually the same as the grantor during that person’s life with alternatives named in the event of death or incapacity.
The terms of the trust state how the grantor’s assets are to be managed or distributed to the beneficiaries named in the trust.
The biggest difference between a Will and a Living Trust is that a trust is used to avoid having to go through the probate court after the grantor has passed away.
This benefit allows for a more streamlined estate administration process that usually results in the beneficiaries receiving assets faster and easier.
Another benefit over using a Will is that a Living Trust provides a lot more privacy since the document itself never becomes public record, unlike the Will which is registered with the probate court when being administered.
How can you create a Living Trust in Florida?
Almost all assets may be transferred into one’s trust.
These may include real estate, bank accounts, personal items, vehicle etc.
After deciding which assets are to be transferred into a trust, one should consult with an attorney about drafting the trust agreement.
In Florida, there are several requirements for creating a living trust agreement. This includes naming the trustee, identifying the trust property, as well as, indicating how that trust property will be managed and distributed during and after the lifetime of the grantor.
After the living trust document is created, then the intended property will have to be transferred into the name of the trust. An attorney is best suited to assist with these transfers.
What are the disadvantages of a living trust in Florida?
The most referenced disadvantage of a living trust in Florida is that is far more expensive than a Will to create.
This is usually because there is far more legal work at the beginning stages of creating a living trust than a will.
However, this perspective does not take into consideration the cost of having to administer a will through the probate court, which can start at $3,000 plus costs.
Many folks believe that placing their property into their living trust provides protections from creditors or lawsuits.
However, this is rarely the case as assets transferred to a living trust in Florida remains vulnerable to the same legal challenges that the asset may face if owned by an individual.
Living trusts in Florida are more complex than wills and the more beneficiaries, asserts or conditions contained in the trust the more complicated the document becomes. As such, they may be more complicated for an individual to create and to manage on their own without the assistance of professionals throughout their lifetime.
They also require ongoing management to ensure that the terms are always up-to-date and applicable.
For example, any new assets must always be transferred to the trust, which may require the trust to be completely redrafted to reflect the objectives of the grantor. This may require regularly retaining an attorney’s assistance.
Finally, many clients also cite a sense of loss of control of their assets after having transferred them into a living trust.
This is because they are relinquishing direct control over the assets and are bound by the terms of the trust despite technically continuing to manage all the assets directly.
For this reason, attorneys tend to precaution their clients about the use of a living trust in Florida and guide them to make sure that adopting a trust will best help them attain their goals and objectives.
Should I put my house in a trust in Florida?
While placing one’s primary residence into a living trust in Florida my be appropriate for certain clients, it is not for others.
This is particularly the case for married individuals with minor children.
As Florida homestead laws protect spouses and minor children, transferring one’s primary residence into their living trust in Florida may cause the trust to fail and the asset to be administered through the probate court nevertheless.
However, if a client is not affected by the Florida homestead laws, then they stand to benefit from the usual protections of probate avoidance and privacy, as well as, various tax benefits.
Under Florida law, a person may still benefit from the homestead tax exemptions even after the property has been transferred to their trust.
How much does it cost to create living trusts in Florida?
Just as living trusts in Florida vary in complexity, they can vary in price.
On average, a basic living trust in Florida starts at about $2,000 to $3,000.
However, the costs increase as the terms and number of assets increase.
These documents are also not created in a vacuum and as additional legal work is needed, the costs may increase.
Clients may also have to consider ongoing costs of managing trust property and fees for professionals such as trustees, bookkeepers, or accountants.
Can I make my own living trust in Florida?
Current laws do not mandate that an attorney be retained to draft a living trust in Florida.
However, many estate planning and probate attorneys will confirm that a great deal of their business comes from fixing DIY documents or having to administer intestate (estates without a Will or Trust) estates due to deficient living trust documents.
Creating a living trust in Florida is innately a complicated process and the risk of oversight and errors by an untrained drafters may lead to very serious legal consequences.
So, if one chooses to create their own living trust without the assistance of an attorney, they must ensure that they do all the legal research applicable to their situation, as well as, ensure their documents contain all necessary statutory requirements.
While clients have been known to utilize online drafting software to create their documents, the inability to confer with an attorney about the specificity of their situations have led to the need for redrafting and increased expenses. To avoid these risks, clients are encouraged to consult with an attorney.
While this is by no means an exhaustive list of the questions received about living trusts in Florida, it presents some of the most received questions from those seeking to create their living trusts in Florida.
As even the smallest of estates can result in a complicated document, it is best to work with an attorney when creating your living trust in Florida.
To learn more about how ASR Law Firm may be able to help you create your living trust in Florida, contact us here.