A revocable living trust is a popular estate planning tool in Florida that helps individuals manage their assets during their lifetime and allows for easier distribution of those assets after death, avoiding the probate process. Here’s a simplified explanation of how a revocable living trust works, including the creation, deed transfer, and funding:
Creating a Revocable Living Trust
- Drafting the Trust Document:
- The trust document, or trust agreement, outlines the terms of the trust. The person creating the trust (the grantor or settlor) names themselves as the trustee, retaining control over the trust assets. They also name a successor trustee to take over after their death or if they become incapacitated.
2. Trust Provisions:
- The document will specify how the trust assets should be managed and distributed during the grantor’s lifetime and after their death. It can be amended or revoked at any time by the grantor as long as they are mentally competent.
Transferring Property to the Trust
- Deed Transfer:
- To transfer real estate into the trust, a new deed must be prepared. This deed transfers ownership from the grantor to the grantor as trustee of the revocable living trust. The deed must be signed, notarized, and recorded with the county clerk where the property is located.
2. Funding the Trust:
- Funding the trust involves transferring ownership of various assets into the trust. This process includes:
- Real Estate: As mentioned, transfer via a new deed.
- Bank Accounts: Change the account ownership to the trust’s name.
- Investment Accounts: Transfer ownership or designate the trust as the beneficiary.
- Personal Property: Use a bill of sale or assignment to transfer items like jewelry, art, and vehicles.
- Insurance Policies and Retirement Accounts: Update beneficiary designations to the trust, if appropriate.
Benefits of a Revocable Living Trust
- Avoiding Probate:
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- Assets in the trust do not go through probate, which can be a lengthy and expensive process. This allows for a quicker distribution of assets to beneficiaries.
2. Privacy:
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- Unlike a will, which becomes a public document during probate, a trust remains private.
3. Incapacity Planning:
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- If the grantor becomes incapacitated, the successor trustee can manage the trust assets without court intervention.
4. Flexibility:
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- The grantor can amend or revoke the trust at any time.
Managing and Distributing Trust Assets
- During the Grantor’s Lifetime:
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- The grantor manages the assets as the trustee. They can buy, sell, or transfer assets in and out of the trust as needed.
2. After the Grantor’s Death:
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- The successor trustee takes over, paying any debts and taxes before distributing the remaining assets to the beneficiaries as specified in the trust document.
Key Considerations
Consult an Attorney: Setting up and properly funding a revocable living trust can be complex, so it’s advisable to consult with an estate planning attorney to ensure everything is done correctly. Call 434-ASK-MATT to set up an appointment.
Regular Reviews: It’s important to review and update the trust periodically, especially after significant life events, to ensure it still reflects your wishes.
By following these steps, a revocable living trust can provide a flexible and effective way to manage and distribute your assets in Florida.
Matthew Rubner