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Differences between revocable and irrevocable trusts in Vero Beach Florida.

FLORIDA – December 30, 2020

Trusts are financial tools that can allow for a higher level of privacy when a person dies and their assets are to be distributed among beneficiaries, in contrast to probate actions which are public records.  When an individual has assets that they want to make certain are utilized in a particular fashion, during their lifetime and/or after their death they can set up a trust agreement in their estate planning. An experienced estate planning attorney can set up trusts to act as a financial tool to make certain a person’s assets are held, managed, and distributed properly in accordance with their intended mission.

Trust as legal entity.

A trust is a legal arrangement that is set up where a third-party holds property to benefit other parties named in the agreement, called beneficiaries.  The creator of the trust is called a settlor and they are responsible to transfer property to a trust that will be handled by an administrator, or trustee.  An estate planning attorney in Vero Beach provides guidance in setting up trust agreements.  A trust fund usually requires a taxpayer identification number (TIN) from the Internal Revenue Service for business and tax purposes.

Revocable trusts.

Revocable trusts hold assets in the name of the trust and can be managed by a successor trustee if the grantor becomes mentally incapacitated. Assets are still subject to the same legal provisions as personal property, meaning they can be taxed or attached by others, such as creditors, when necessary. Revocable trusts can be changed during the lifetime of the grantor through updates and addendums as the grantor chooses to account for aging of beneficiaries and changing needs. A pour over will is often used with a revocable trust because it allows a grantor to retain use of their property and assets during their life, but the property is then able to fund the trust and pass to beneficiaries upon their death, without the need for probate. An estate planning attorney can explain other benefits to a revocable trust, including transfer of proceeds from a life insurance policy upon the grantor’s death.

Irrevocable trusts.

Irrevocable trusts are commonly used to remove the value of property from a person’s estate so that property cannot be taxed when the person dies. The individual who transfers assets into an irrevocable trust permanently gives those assets to the trustee and to the beneficiaries of the trust.  Unlike a revocable trust, once the property is transferred into the Irrevocable Trust, the grantor no longer has possession of that property.  This is a legal scenario used when a grantor may need to receive government aid to health care such as in the application of benefits of Medicaid for long term assisted living. A elder law attorney can explain the benefits of an irrevocable trust situation to individuals weighing their legal options.

Hire a lawyer.

Seek legal counsel to make sure a trust will be set up and administered according to the specific requests of the person initiating a trust, in concert with Florida Estate laws. Contact an experienced attorney at The Estate, Trust & Elder Law Firm, P.L. in Vero Beach Florida to answer your questions regarding trust documents.

 

The Estate, Trust & Elder Law Firm, P.L.

IRC Chamber of Commerce

1216 21st Street
Vero Beach, FL 32960
Phone: 772-410-5156

Sources.

https://www.flsenate.gov/Laws/Statutes/2018/Chapter736

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