Revocable vs. Irrevocable Living Trusts: Which is Best for You?

Revocable vs. Irrevocable Living Trusts: Which is Best for You?

Establishing a Florida living trust spares your heirs from the delay and expense of having to put your estate through probate court.  While a probate proceeding in Florida may take as long as a year, your assets can pass to your heirs without delay if you have a Florida living trust.

Florida has two types of living trusts:  revocable and irrevocable.  The type of trust that is best for you and your family depends on your estate planning goals.

Revocable Living Trust

While you are still living, a Florida revocable living trust enables you to maintain control of your assets, allowing you to modify the terms of the trust, change beneficiaries or revoke the trust altogether.

The first and perhaps most important reason to set up a living trust is to take care of minor children. If you and your spouse should die suddenly, a living trust will hold your life insurance benefits and other assets that will be administered for the benefit of your minor children by a trustee you have designated. Without this protection, a guardianship will be created for your estate – and this can be extremely expensive.

The living trust allows you to choose your own “successor trustee” who will manage the trust, as well as real estate holdings, or any other assets that may be a part of your overall estate for your children. When you set up the living trust, you will have the opportunity to decide what your children will have access to and when they will get it.

The next most important reason to consider a living trust is your own health and well-being. A living trust will allow you to avoid having a guardian appointed to you as an adult. Your living trust will need to name a power of attorney – this will give your family the right to make decisions regarding your health, which is especially important if you become completely incapacitated. In addition to allowing family to make health decisions for you in the event of incapacitation, it also gives them the right to manage your liquid assets and work with the power of attorney and executor without the intervention of the court.

Another benefit of a living trust is to avoid probate. This can save your loved ones from months of tedious court proceedings and from spending a great deal of money in court fees and other costs associated with the probate.

Irrevocable Living Trust

An irrevocable living trust is one you do not control, and it cannot be changed or revoked. However, there are tax benefits to an irrevocable trust that are not available with a revocable trust. Generally, an irrevocable trust is not subject to estate taxes and provides asset protection for heirs.

The types of irrevocable trusts to help reduce or avoid taxes include:

• Bypass trust
• Qualified Terminable Interest Property (QTIP) trust
• Qualifying Domestic Trust (QDOT)
• Charitable trusts
• Generation-Skipping trusts
• Life insurance trusts
• Grantor-Retained Annuity Trust (GRAT)
• Qualified Personal Residence Trust (QPRT)

The types of irrevocable trusts that help protect assets for heirs include:

• Special Needs Trust
• Spendthrift Trust

An estate planning attorney can be an invaluable asset to those wishing to protect and plan for a safe financial future. Contact one of the experienced Florida estate planning attorneys at Jurado & Farshchian, P.L., at (305) 921-0440, or email us at info@jflawfirm.com.

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