A will cannot always handle the wide range of issues that arise when planning your estate. A revocable living trust, commonly called a living trust (or “inter vivos trust”), is created during your lifetime and allows you to create a plan to manage your assets and protect you when you fall ill or even as you age. Because the Living Trust, governed under Chapter 736 of the Florida Statutes (the “Florida Trust Code”) is revocable, you also have the power to revoke or amend it throughout your life.
So what makes a living trust different from a will? First of all, a will is effectuated only after you pass away, while a living trust can benefit you while you are still alive. With a living trust, you can dictate how your assets in the trust should be disbursed during your life and at the time of your death. Additionally, creating a living trust allows the assets in the trust to avoid probate. Probate is the legal process (which can be a long drawn-out process) of transferring your property upon death under supervision of the court. Assets named in a living trust, however, can skip the potentially costly and time-intensive process of going through the court system to disperse your assets. Living trusts also have the benefit of allowing your loved ones to save on taxes that may have otherwise been imposed during probate.
A living trust can also serve as a method for eliminating challenges to your estate (which may occur during the probate proceedings). As we saw recently in the case of Robin Williams, even the most well-prepared estate can be subject to dispute when emotions come into play. However, a living trust can include a specific provision disinheriting anyone who chooses to challenge your estate. Even without including such a provision, living trusts create significant restrictions on how and when the trust can be challenged.
“An action to contest the validity of a trust that was revocable at the settlor’s death is barred, if not commenced within the earlier of:
(1) The time as provided in chapter 95; or
(2) Six months after the trustee sent the person a copy of the trust instrument and a notice informing the person of the trust’s existence, of the trustee’s name and address, and of the time allowed for commencing a proceeding.”
Fla. Stat. Ann. § 736.0604 (2007). Additionally, a living trust can allow for the private transfer of your assets, while the probate process runs the risk of exposing your estate (and financial worth) to the public.
It is important to understand that there are some downsides to creating a living trust. For instance, the initial set-up costs for a living trust are often higher than those costs for drafting a will. Typically, a living trust requires the creation of a more complex document(s). Furthermore, if you intend to put real property into the trust, you must re-title the property in the name of the trust. Finally, there are additional expenses associated with the administration of the trust, especially if you appoint an outside individual or entity to serve as the trustee.
It is also important to understand that wills and living trusts are not mutually exclusive, and can be used in tandem with one another.
There is no universally perfect estate planning solution, which is why it is important to sit down with a knowledgeable estate planning attorney to discuss your financial goals and the objectives of your estate. If you are interested in determining if a living trust is a good fit for your estate planning needs, please do not hesitate to contact the experienced attorneys at Chepenik Trushin, who are ready, willing, and able to assist you with all of your estate planning needs.