When deciding how to protect your assets and pass them to loved ones, you may consider various estate planning tools. When correctly set up and maintained, a revocable living trust can help manage your property, avoid probate, and maintain privacy. However, these trusts have drawbacks. Understanding the advantages and disadvantages of revocable living trusts, along with advice from an experienced lawyer, can help you decide whether one fits your situation.
At Beller Law, PL in Jacksonville, we help Florida families choose estate planning strategies that match their needs. At Beller Law, PL, our lead attorney Rebeccah Beller has over 25 years of legal and trial experience guiding families through estate planning. As a trusted trust attorney in Jacksonville FL, she helps clients establish, modify, and challenge trusts while protecting their financial interests and family legacy. She also handles estate planning, probate, guardianships, will contests, and family law matters, always aiming for timely results and peace of mind for our clients.
What Is a Revocable Living Trust in Florida?
To understand whether to pursue a revocable living trust in Florida, you should understand how trusts work, particularly the difference between a revocable versus an irrevocable trust. A trust is a legal arrangement in which one party, called the trustee, manages property for another person, called the beneficiary. However, the trustee and beneficiary can also be the same person or people, such as a married couple.
As a separate legal entity, the trust owns the property, much like a business would own a property. The person who creates the trust is called the “grantor” or “settlor.” The grantor must transfer property into the trust, a process known as funding the trust, for the trust to become active.
Trust Structures
Trusts are generally classified by when they take effect (during your lifetime or after your death) and whether they can be changed or revoked. Although there are many kinds of trusts, they usually fall into four main categories:
- Revocable trusts—let the grantor modify, revoke, or dissolve the trust during the grantor’s lifetime;
- Irrevocable trusts—do not allow changes or dissolution after creation;
- Living trusts—take effect during the grantor’s lifetime; and
- Testamentary trusts—created after death, generally in a will.
A “revocable living trust” combines two of these structures: you establish it during your lifetime and can change its terms or revoke it at any time. This flexibility offers advantages, but it also brings downsides.
Advantages of Revocable Living Trusts
Revocable living trusts offer many benefits, including:
- Probate avoidance. When you fund the trust, assets can pass to beneficiaries without the delays and costs of probate.
- Preserving property for beneficiaries. The trust can preserve property for individuals who are too young, irresponsible, or unable to manage money.
- Continuity of asset management. If you become incapacitated, a successor trustee can step in to manage the trust property without going to court.
- Privacy. A trust keeps the terms of your estate plan private.
- Flexibility. You can change beneficiaries, trustees, and terms as your circumstances evolve.
- Control during your lifetime. You keep ownership and decision-making authority over trust assets.
These benefits can be significant, but you must balance them against the trust’s limitations.
Disadvantages of Revocable Living Trusts
Common disadvantages of revocable living trusts include:
- No protection from creditors. Because you can change and revoke a revocable living trust, the law treats assets within it as your property. Creditors may access funds to satisfy debts, and assets may be vulnerable to lawsuits.
- No income or estate tax benefits. Revocable living trusts generally do not remove assets from your taxable estate or shield income from taxation.
- Ongoing administrative work. You must retitle assets and update the trust when your circumstances change. If you fail to transfer property properly, those assets may still go through probate.
- Initial setup costs. Creating a revocable living trust usually costs more than making a will because it requires detailed documentation and the transfer of assets.
These disadvantages do not apply to every situation but demonstrate the trade-offs between revocable vs. irrevocable trust options.
Advantages of Irrevocable Trusts
Irrevocable trusts’ inflexibility comes with certain advantages, including:
- Asset protection. Because you no longer own the assets in the trust, creditors typically cannot reach them to satisfy personal debts.
- Potential estate tax benefits. Transferring assets into an irrevocable trust may remove them from your taxable estate, which may reduce or eliminate estate taxes for larger estates.
- Eligibility for certain benefits. Properly structured irrevocable trusts can help individuals qualify for programs such as Medicaid without losing access to essential care.
While irrevocable trusts offer these benefits, they also require you to give up direct control over the assets you place in them. The best estate planning tool depends on your financial situation, family needs, and estate planning goals.
Choosing the Right Estate Plan in Jacksonville
The best estate plan addresses your current needs while protecting your interests in the future. You might choose a revocable living trust, an irrevocable trust, a will, or a combination of tools.
Our attorney at Beller Law, PL, can help you review your options. With decades of experience, a focus on open communication, and a commitment to timely results, we guide clients through every step of the estate planning process.
If you are considering a revocable or irrevocable trust, consult an experienced estate planning attorney in Jacksonville FL at Beller Law, PL. Our team will walk you through every step of the process and create a plan tailored to your family’s future. We serve clients throughout Duval, Clay, St. Johns, Nassau, and Putnam counties. Contact us today.