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Revocable Living Trust in Florida- Tampa Estate Planning Attorney

A Florida Revocable Trust is an estate planning document that allows you to place your assets into a trust ensuring their smooth transfer to your beneficiaries without probate.

What is a Revocable Living Trust in Florida?

A Florida Revocable Trust, also called a Living Trust, lets you transfer ownership of your assets to a trust, with you or someone you choose as trustee to manage your trust. Revocable trusts typically appoint the grantor (the person who creates the trust) as the trustee, allowing the grantor to remain in control over the trust assets while they are alive. The effect of a revocable trust is that you can specify how your assets should be managed in the event of incapacitation or how your assets should be distributed among trust beneficiaries upon your death. You can appoint a successor trustee to distribute the trust assets to your beneficiaries after settling any debts and handling the expenses of your estate. Unlike last wills, a Florida revocable trust avoids the long, expensive, and public probate process, ensuring a quicker and more private distribution to beneficiaries.

 Revocable and irrevocable trusts in Florida

Florida trust laws are primarily governed by the Florida Trust Code. A trust is “revocable” when the grantor can modify or revoke the trust at any time, without the consent of the trustee or a person holding an adverse interest (Florida Statutes Section 736.0103). The grantor of a revocable trust may amend the trust document to add assets to the trust, or remove assets in the trust, change the designated beneficiaries, or even revoke the trust entirely, as long as they are competent. Unlike revocable trusts, in an irrevocable trust, the grantor cannot change the terms of the trust without beneficiary approval. However, a living trust becomes irrevocable trust upon the death of the settlor. This means any modifications to the trust document after the settlor’s death require court approval.

To learn more about revocable living trusts and irrevocable trusts in Florida, read our Trust Planning article where we explore the basic types of trusts and break down the key differences between revocable and irrevocable trusts.

Advantages of a revocable living trust in Florida? 

One of the primary advantages is that a revocable living trust allows you to bypass Florida probate. Probate is the court-supervised legal process where your estate is distributed based on your last will. Probate can be time-consuming and costly depending on the size of your estate.

A living trust is also a valuable tool for incapacity planning. If you become unable to manage your financial and legal affairs, the person you’ve chosen as your successor trustee can step in to manage the trust without needing court approval.

Living trust can help keep your affairs organized, simplifying the management and eventual distribution of your assets. This organization can be especially helpful for your loved ones during a difficult time.

Finally, by clearly documenting your wishes in the trust, you can minimize the potential for disputes among your heirs. A well-drafted living trust can clarify your intentions and help ensure that your assets are distributed according to your wishes, reducing the likelihood of misunderstandings and conflicts among family members.

Contrary to popular belief, a revocable trust doesn’t help you save on taxes, but placing assets in a trust doesn’t automatically lead to higher taxes either. Revocable trusts are tax-neutral, which means if you move assets like your house or stocks into a living trust, it won’t count as a taxable transfer. In simple terms, setting up this type of trust won’t affect your estate taxes because, as the grantor of the trust, you maintain ownership and control over the assets placed within it. 

The same way, assets held in a revocable trust are not protected from Medicaid claims. Since you retain control over the assets in a revocable trust, Medicaid considers them still belonging to you. In contrast, irrevocable trusts, like Medicaid Asset Protection Trusts (MAPTs) transfer ownership of assets to remove them from the grantor’s control, allowing you to meet Medicaid’s eligibility criteria.

Want to learn more about how Medicaid Asset Protection Trusts work in Florida? Check out our article “5 Things You Need to Know About Florida Medicaid Planning.”

Who are the parties involved in a Revocable Living Trust?

There are three parties in a revocable living trust: the trustor, the trustee, and the beneficiaries of the trust. The trustor is the person who creates the trust and places their assets into it. The trustor is commonly referred to as the grantor or the settlor. In a revocable trust, the grantor owns the trust property. The trustee is responsible for managing the trust’s assets according to the trustor’s instructions. The beneficiaries are the individuals or entities who will eventually receive the trust’s assets. A Florida living trust may have any number of beneficiaries and the trust agreement must clearly identify each beneficiary and what each beneficiary is set to inherit.

Requirements of a Florida Revocable Living Trust

Florida statutes prescribe specific rules for setting up a revocable trust. To create a living trust, you must be at least 18 years old and mentally capable, often referred to as being “of sound mind” to create a trust. This means you should understand your property, know your relatives and friends, and be clear about what you want to do with the trust.

To set up your trust, you need to sign the trust document in the presence of two witnesses. These witnesses must also sign the document while everyone is together. If the trust agreement is not properly signed as required by the law, the trust won’t be considered valid.

As the grantor, you need to designate a successor trustee who will manage the trust’s assets if you become incapacitated or pass away. While you can be your own beneficiary during your lifetime, you also need to name beneficiaries who will receive the assets after your passing.

You can place any assets into the trust, as long as they don’t already have a designated beneficiary. The act of transferring assets into the trust is known as funding your trust. 

Living trusts are revocable. Therefore, the trust agreement should include a provision that allows for its revocation or amendment, giving the flexibility to make changes as needed.

How to put a house in a revocable trust in Florida?

In Florida, it’s completely legal to place your homestead and other real property into a trust. To transfer your house into a revocable trust, you need to use a deed to convey the house to the trust. A quitclaim deed is typically preferred for this purpose, though a warranty deed can also be used effectively. A quitclaim deed is a document where the grantor relinquishes all their rights and interests in the property in favor of the grantees.

However, placing your house into a trust doesn’t mean you’ll lose your homestead exemption. To ensure this, the trust document should include a specific paragraph stating that the home, and any replacement home, will be used by the beneficiaries as their principal residence.

There are significant estate planning advantages to placing your Florida homestead in a revocable living trust. One of the main benefits is avoiding probate for the home when you pass away. Another advantage is related to incapacity; if a homeowner becomes ill and unable to manage their affairs, having the home in a trust allows them to resign as trustee. This lets a more capable successor trustee take over the management of the home.

The main disadvantage of placing your house in a trust is the cost of establishing the trust. If your primary residence makes up most of your trust assets, a Lady Bird deed can be a more cost-effective alternative to transfer ownership to beneficiaries. This is because Lady Bird deeds generally involve lower legal fees compared to establishing a revocable trust which typically costs between $1,500 and $2,500.

Avoid Probate and Save Time for Your Loved Ones by Creating a Florida Revocable Trust.

Our Experienced Florida estate planning attorneys in Tampa & Orlando can help you create a Revocable Trust in Florida. Smith & Kim Law is practicing in Trust Planning, FL estate planning, Probate and Trust Administration, and Trust litigation and is dedicated to simplifying estate planning and elder law for Central Florida families. Schedule a consultation to discuss your needs. Contact us online or call (727) 424-1464 today!