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Why You Should Consider Creating a Revocable Trust


Deciding which type of estate plan will best address one’s concerns and goals, as well as the needs of his/her family, is the hardest aspect of planning for the future. Numerous options are available to address a wide variety of needs – so many, in fact, that it is very easy to become overwhelmed and do nothing. Further, many people assume that no action is truly necessary because they are not worth enough to trigger federal estate tax liability. However, doing nothing will leave a host of problems for loved ones to deal with once an individual dies that can do irreparable damage to one’s estate and relations between family members. Wills are an essential aspect of this planning and serve to catch any property not devised through other means, but are often inadequate to provide the financial benefits and flexibility many people look for and expect from estate and financial planning options. Importantly, the greater the amount of property, and an estate does not need to be particularly large to run into complications, the more time and expense will be needed to complete probate. Revocable trusts, or living wills, are a viable and attractive alternative and do not limit what a person can do, while living, with his/her property. A discussion of how revocable trusts operate, and the benefits they can provide to the creator and heirs, will follow below.

How Revocable Trusts Work

A revocable trust, and a trust generally, is a document for managing assets and transferring ownership of trust property and interests once the creator dies. People tend to automatically assume that any trust requires relinquishing complete control over assets to a third-party and that changes cannot be made once in place, which is understandably difficult for many individuals to concede. Revocable trusts, on the contrary, give the creator the option of keeping control of trust property during his/her lifetime, and the ability to modify or terminate the trust at will, as long as the person is not incapacitated. This includes the power to withdraw money or assets at any time, which could be especially important in the event of a major illness or other financial emergency.  The creator also retains the right to modify or change provisions in the trust.  Once the creator dies or becomes incapacitated, a trustee takes over to manage and invest trust assets, and the trust becomes irrevocable, and cannot be modified. Additionally, following the death of the creator, the trustee can start the process of distributing trust assets, as directed in the trust documents, after first paying outstanding claims and taxes.

Benefits to the Creator and to Heirs

One of the primary benefits offered by revocable trusts is the ability to keep sensitive details about one’s financial holdings out of the public record. Since trusts are meant to allow assets to pass to heirs outside probate, electing this option avoids placing the details of one’s estate in the public record that is created for every proceeding handled by a court. In addition, as mentioned above, the creator of a revocable trust can appoint a third-party to take over when he/she becomes incapacitated, and likely sidesteps the need to appoint a guardian. Further, the creator can define the extent and parameters of the trustee’s ability to control assets, constraints guardians do not generally have. Finally, while revocable trusts do not protect against creditor claims for debts titled in the creator’s name, they can protect against claims on the interests of beneficiaries if a spendthrift provision is included (restricts beneficiary access to trust assets and allows trustee to exercise discretion on paying interest or proceeds). This feature is particularly important for heirs with money management issues, or a tendency to squander financial opportunities.

Discuss Your Needs with a Florida Estate Planning Attorney

Determining what would be an appropriate and effective estate plan is precisely the role of an estate planning attorney. Attorney William Rambaum has decades of experience handling the estate planning and other elder law needs for seniors in the Oldsmar area. Contact the office today to schedule a consultation.



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