If you are discussing your estate plan with an attorney, you may already be familiar with the benefits of using a living trust to protect assets. However, do you know the difference between a revocable and irrevocable trust? Not only can a knowledgeable Florida estate planning attorney explain these legal entities in detail, they can review your estate and goals and determine which trust type will ultimately suit your needs.
A revocable trust is a trust that you maintain control over and can make changes to at any time. If you suddenly decide you want to add or subtract beneficiaries, or add a new provision, you are free to make alterations to the trust as you see fit. In fact, you can even dissolve the trust altogether if you decide it no longer serves your purposes.
The catch is that assets held within a revocable trust are still considered part of your estate. This means that your trust property and assets are still subject to estate taxes and creditor actions. That said, a revocable living trust can be useful for the following reasons:
- Avoid probate – Any assets or properties in your revocable living trust will pass directly to your beneficiaries, thus avoiding the long, costly process of probate.
- Maintain privacy – Your trust agreement will remain a private document because you avoided the probate process. Your estate and how it was divided will be guarded from the public eye.
Every estate is different and requires its own unique approach. Only an experienced lawyer can assess your estate and determine the best plan for preserving your legacy.
Unlike a revocable trust, under an irrevocable trust, the terms of the agreement cannot be altered. Some of the benefits of irrevocable trusts include:
- Asset protection – Assets transferred to an irrevocable trust belong to the trust, not you. As a result, trust assets are protected from creditor actions. An independent trustee is in charge of making decisions.
- Charitable giving – If you transfer assets into a charitable trust while still alive, then you will receive a charitable income tax deduction. If the transfer occurs after your death, your estate will receive the tax deduction.
- Estate tax reduction – If your total estate value is close to the federal estate tax limit, you can place assets in an irrevocable trust to avoid breaching the threshold.
Trusts are powerful estate planning tools. When used correctly, then can safeguard your assets as well as your legacy. For information, consult with a competent Florida estate planning attorney as soon as possible.
Contact Knowledgeable Estate Planning Lawyers in Florida
At the Law Offices of Hoyt & Bryan, we are determined to help you protect your assets as well as your legacy. For more information about trusts in Central Florida, call (407) 977-8080, or contact us online to speak with an experienced estate planning attorney.