In this article, you can discover:
- Revocable Living Trusts’ role in minimizing probate and controlling estate assets.
- How to effectively manage real estate in trusts to avoid additional probate costs.
- The importance of choosing the right assets for trusts to manage taxation.
What Is A Revocable Living Trust And How Does It Work?
A Revocable Living Trust is a legal instrument primarily designed to minimize probate and maximize legal control for a family over a deceased member’s estate. Contrary to common misconceptions, its primary purpose is not for tax protection or shielding from creditors. Its fundamental role is to avoid the costly and time-consuming probate process, which involves inventorying and dividing the deceased’s assets among heirs.
In a Revocable Living Trust, the creator retains complete control over their assets during their lifetime. Upon their passing, the appointed successor trustee gains legal authority to manage and distribute the estate in line with the deceased’s final wishes. This trust offers more power than a will and provides privacy benefits, as the estate details are not made public.
What Are The Benefits Of Creating A Revocable Living Trust?
The primary benefit of a Revocable Living Trust is the avoidance of a comprehensive estate inventory submission to court during probate. This aspect is particularly onerous in the probate process.
Its significant advantage lies in managing real estate, especially in Florida. This trust includes homestead properties without forfeiting homestead tax deductions or protections. The Florida Attorney General and legal precedents have clarified these aspects.
A key advantage is the facility to manage and transfer real estate owned in different states without incurring the high costs of opening ancillary probate proceedings in those states. Essentially, it empowers families to control assets and bypass the expenses and complications of probate.
What Types Of Assets Can Be Included In A Revocable Living Trust?
Real estate is the primary asset to be included in a Revocable Living Trust. Besides real estate, various titled properties can also be incorporated. However, it is crucial to avoid including income-generating assets like IRAs, due to the high taxation rates on trust income.
For instance, income exceeding $15,000 within a trust can be taxed at 39%, the highest rate in the U.S. Therefore, understanding which assets should not be included is as important as knowing which can be.
The versatility of a Revocable Living Trust allows pairing with a pour-over will, enabling the inclusion of household goods and other miscellaneous properties. This arrangement permits these assets to be managed and distributed by the trustee, following specific instructions left by the trust creator. Essentially, a Revocable Living Trust can encompass all asset types except for those yielding income, such as retirement plans and 401-Ks.
For more information on Revocable Living Trust In A Florida Estate Plan, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (904) 650-4262 today.