What Is a Living Trust in the State of Florida?
A living trust in Florida is a legal way to benefit from the ownership of property without personally owning that property. At the election of the trust creator, called the "trustor," a living trust in Florida can take the form of either revocable or irrevocable. Both forms of living trusts provide a legal mechanism for avoiding probate, and in some instances protecting property from creditors and taxes.
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Features
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A living trust in Florida is, technically, a three-party relationship involving a trustor, a trustee and one or more beneficiaries. The trustor creates a trust document that defines the terms and conditions of the trust. Then the trustor transfer property to the trustee. The trustee manages and invests the trust property for the benefit of the beneficiaries. Generally, the trustee distributes income earned on the trust property to each of the beneficiaries according to the terms written in the trust document.
Types
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Living trusts in Florida can be revocable or irrevocable. A revocable living trust is a trust that the trustor can terminate, or revoke, at any time and without anybody's consent. On the other hand, a trustor must obtain consent from the trustee and the beneficiaries before terminating an irrevocable living trust. The advantage of an irrevocable trust in Florida, though, is that it can protect property from personal creditors. An irrevocable trust also provides tax savings in many instances.
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Benefits
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The reason living trusts are so common in Florida is that any property held in the living trust avoids probate. Probate is the formal legal process that occurs after you die. In probate, your personal representative and executor will gather all of your property, pay off all of your debts, and then a probate court will distribute your property to your heirs according your will, or if you don't have a will, according to Florida state law. Probate can be time-consuming, expensive and a hassle for your loved ones. However, any property owned by your living trust is not your personal property and therefore, under Florida law, does not have to go through the probate process. The living trust simply continues to exist after you die.
Trust Document
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Florida law is very general regarding the form that a trust document must take. And Florida law is even more general regarding the terms and conditions that the living trust can or must contain. Generally, then, trustors in Florida are relatively free to include whatever terms and conditions they want in their trust document. The most important provision relate to how the trustee should manage the property, and even more importantly, how the trustee should distribute trust property and income to the beneficiaries. Finally, the trust document can include instructions for what happens to the trust when the trustor dies. For example, the trust could stay in operation and nothing changes when the trustor dies, or the trust could terminate and one or more of the beneficiaries receive all of the trust property.
Expert Insight
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The vast majority of Americans do not have enough money and property to worry about federal estate taxes or state inheritance or death taxes. However, if your net worth exceeds $3.5 million, then you should consult an estate-planning expert in Florida to determine how you can avoid the federal estate tax and Florida inheritance taxes. The cost of a good estate planner now could result in significant tax savings later.
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References
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