The offices of Life Law Planning can help you and your family with all of your estate planning needs, including the creation of a revocable trust, more commonly known as a living trust.
Some people may have preconceived notions about trusts and believe that they are only for multi-millionaires who wish to leave large trust funds to their children. However, trusts can be invaluable tools in the estate plans of millions of individuals.
Trusts are simply an arrangement where one party holds property on behalf of another party. In an estate planning context, trusts are created by the person doing the estate planning (the settlor), who authorizes another person (the trustee) to manage the assets for the benefit of a third party (the beneficiaries). There are many reasons for establishing trusts including tax minimization or providing for the needs of underage beneficiaries.
A Living trust is an important estate planning tool for individuals, married couples and domestic partners. A living trust is a legal document that is created to hold and manage your assets during life and then distribute your assets to your named beneficiaries upon your death.
A great deal of flexibility is afforded in planning your desired distribution provisions with a living trust, especially when dealing with beneficiaries who are minor children or individuals with special needs.
Because a minor child does not have the legal capacity to manage property, an outright gift to a minor child is rarely advisable. Instead, with a living trust, you are able to manage the property in trust for the benefit of the minor child until an age specified by you. This date could be when the child reaches the age of 21 or upon the happening of a certain event, such as graduation from college, or a combination of these.
Joint living trusts are a popular planning tool for married couples and domestic partners. A joint living trust enables both spouses or domestic partners to hold property in one trust instrument. Joint living trusts are ideal when both spouses or domestic partners have a similar ideas of how they each would like to distribute their respective interests in their property upon each of their deaths.
Living trusts also enable individuals to participate in estate tax planning. Currently in 2018, individuals have a $5.6 million exemption from estate taxes. In other words, every person is entitled to transfer up to $5.6 million in assets upon their death without paying any estate tax. Amounts over $5.6 million are subject to steep taxation rates. Married couples whose joint estates are over $11.2 million would be well-advised to create credit trusts to ensure that their $11.2 million exemption amount is not wasted and subject to taxation in the surviving spouse’s estate.
With a living trust there is also the added protection of naming a successor trustee to manage your property for your benefit in the event you become incapacitated.
A comprehensive estate plan package should include a living trust, pour-over will, financial durable power of attorney, and an advance health care directive.
Some types of trusts, in addition to living trusts, that may also be useful in an estate planning context are:
There are many different types of trusts, each of which can be customized to serve a valuable purpose in accomplishing the wishes of those making gifts or planning an estate.
To speak to an attorney about Florida estate planning laws and how a living trust may benefit you and your family, please call today for a consultation.