Many people, even in their 20s and 30s, are thinking about how to manage their wealth when they are gone. There are numerous options from wills, to gifts, to trusts. A popular tool is the “revocable trust.” A revocable trust is a separate legal entity that you create and manage during your life. When you pass away, it inherits some or all of your assets and continues to manage them according to instructions you leave behind. This post will go over the basics of revocable trusts.
A revocable trust is a popular tool to avoid taxes (particularly estate taxes) and to exert some control over your wealth once you pass away. Revocable trusts are governed by Chapter 736 of the Florida Statutes. There are several advantages over wills, but there are many factors to consider.
A trust is formed by the grantor, who gives the trust property. In a revocable trust, you can manage it yourself, or you can hire someone (usually a bank). The hallmark of a revocable trust is that you can change or revoke it at will, so long as you are alive and in sound mental capacity. The person that manages the trust is called the trustee.
The trustee is responsible for managing the assets of the trust, making sound investments to grow the size of the trust, and for managing the trust under the trust agreement. The trust agreement is a list of instructions regarding disbursement and investment. For example, a common term is that the trust will not full divest (distribute all of its assets) until the heirs all turn 21 or graduate from college, etc.
If you believe that you are entitled to an inheritance but was denied because of an imperfect trust instrument, then you may want to contact an attorney. Trusts are a popular tool, but you may want to create one without the assistance of an attorney. They are relatively straightforward but creating them can get complicated if the trust document is imperfect (i.e. there are errors present). A lawyer can review the trust document to ensure that your loved one created it without undue influence and that it truly reflected their wishes.