One of the most common questions I encounter in my practice. That question goes something like this, “I’m not a millionaire and my estate is not taxable, so I don’t need a trust do I?”
Whether you would benefit from a revocable living trust does not really have any relation to whether your estate might be subject to tax. A revocable living trust helps you if you should become disabled, for example. In the event of your disability, or if you are simply unable to manage your investments or pay your bills because of age or infirmity, the successor trustee of your revocable living trust can step in and do these things for you.
Revocable living trusts are also private documents. In contrast to wills, which are filed with the probate court after your demise, and are available for anyone to review, trusts are not filed with any public court in the event of your disability or in the event of your death.
Further, Florida statutes enhance the privacy of your revocable trust when transferring assets into your trust. Brokerage firms have, in the past, requested a copy of your trust when you transferred your brokerage account into the trust. The new Florida statutes provide that the brokerage firm may rely upon a brief “certificate of trust” and a “trustee’s affidavit” to verify the trust and trustee.
Many of you already know that trusts help avoid the probate process for the assets that have been transferred into the trust. If you own real property in more than one state, trusts help avoid not only the domiciliary proceeding here in Florida, but also avoid the necessity for an ancillary proceeding in the states that you own real property. If you own a home in Indiana, commercial real estate in Ohio, and your primary residence is here in Florida, a revocable living trust could help your family avoid a probate process in three states.
The types of assets that you own also speak to whether a trust may assist you and your family. If most of what you own is in an IRA account, for example, then you have a beneficiary designation and a trust may not be as useful.
Trusts and Family
The ages and relative condition of your beneficiaries speaks to whether a revocable living trust would benefit you or your family. If you have minor children or grandchildren, for example, it is easy to create provisions inside of a trust that take care of them until they become old enough to handle their inheritance. If you want to provide asset protection features for your surviving spouse, children or grandchildren, trusts are often easier than wills.
If you are concerned about someone challenging your will, then a trust could benefit your family. Trusts are harder to challenge than wills are because you operate under the trust during your life, as opposed to a will that doesn’t have legal significance until your death. Since you have been operating under the provisions of your trust for your lifetime, the theory goes that you had a greater understanding of the trust contents and that it was likely consistent with your intent.
So all of the above reasons speak to the benefits of a revocable living trust without consideration to whether you are a millionaire or have a taxable estate.
©2021 Craig R. Hersch .Learn more at floridaesateplanning.com