Don’t Be Sold A Living Trust Unless You Truly Need It

Don’t get sold something you don’t need. Many people are offered a revocable trust as part of an estate planning package. However, the short and simple truth is most people do not need a trust. The only way to know is with a comprehensive consultation.

What Is A Trust?

If you make an arrangement to have someone else (called a “Trustee”) look after asset (s) upon your death as per the terms of your will this is a trust.

A “revocable” or “living trust” is created for you or someone else while you’re still alive, instead of one created at your death. A trust created or that comes into existence after death is almost always irrevocable.

Why Revocable Trusts Are Probably Not The Best Option

A revocable trust in Florida requires a two year statute of nonclaim. This means that your designated Trustee must wait two years after you die to see if there are any creditors that must be paid. If your Trustee pays out to your family, friends and loved ones before the two years are up, the Trustee is then liable for any unpaid debts that arise. When an estate goes through probate however, that “waiting time” is not two years, but three months. Three months after publication of an ad being published the case is closed, and the Trustee is no longer liable and all assets may be distributed. In this case probate actually makes more sense. This is also why a revocable trust can cost you a lot of unnecessary fees.

Why We Have Probate

Many people have heard horror stories about the probate process. Probate is nothing more the exchange of real estate, or personal property, through the probate process, while looking for claims and legitimate expenses. The probate process also ensures the last will and testament you are offering for probate is:

  • Valid
  • And that your property is distributed according to your wishes

You may only need three things: a will, a payable on death account POD (for bank accounts), and a transfer on death (TOD) for your investments. Florida recognizes “Lady Bird” deeds that allows you to transfer real estate upon death, while keeping complete control while you are alive. An attorney who focuses on estate planning can advise you as to whether this deed is an option and in your best interest. A revocable trust however is a waste of time and money for many couples and individuals.

Your Assets Go To Your Spouse

If you are married, when you die your home and other assets (in general) will go to your spouse. Accordingly, your pension, 401K, IRAs, other retirement and any life insurance policies will automatically transfer to the named beneficiary, most likely your spouse. In Florida this transfer process is streamlined and painless.

Florida, Living Trusts And The Uniform Probate Code

While there is a three month delay and there can be a small expense to the probate process, in Florida we have the Uniform Probate Code. This Code often makes a living or revocable trust more trouble than it is worth for most people.

For example, if your net worth is less than $75,000 when you die, the Florida probate process will be relatively straightforward and smooth. For an estate of this size you may want to forego a trust and simply create a payable-on-death account which will give your identified recipient immediate access to your bank account. While trusts for large estates over $5 million can be set up to have tax benefits, simple trusts generally have no effect on federal estate tax. If you are being sold a revocable trust your estate planning attorney should explain why this type of trust is beneficial to your unique situation.

Do I Still Need A Will?

  1. Yes. If you have any property, a house, a spouse, a child, a full time job or retirement then you need a will.
  2. If you don’t have a will, according to Florida law your property will most likely go to your next of kin.

Do You Need A Trust?

To discuss whether or not you and your spouse can truly benefit from a trust, schedule a free consultation. I can assess your situation and let you know how I can help. Call me, Pensacola attorney John Glassman at 850-542-0356 or send me an e-mail. John Glassman, P.A. Offering trusted guidance for over 25 years.