Estate planning is an important, but often complicated process, for Floridians who wish to protect their assets for the future. If you’re feeling overwhelmed by the estate planning process, you’re not alone. Thinking about the future, and how to provide for your family after your death can come with many heavy emotions. But when you have a thorough estate plan, which may include trusts to provide for your beneficiaries, you can feel better about your family’s future. Understanding the pros and cons of irrevocable and revocable trusts can help you craft a thorough estate plan.
Understanding revocable trusts
Revocable trusts are also living trusts. You can plan your assets in a trust and choose the beneficiary for those assets. You can also choose a trustee to look after those assets, which can help prevent your beneficiaries from spending irresponsibly. Revocable trusts allow you to change the terms easily whenever you wish to do so. This means you can add or remove beneficiaries or change their inheritance if your family changes with the addition of grandchildren or through divorce.
The downside of revocable trusts is that they don’t offer as much protection as revocable trusts. Creditors can still come after the assets included in a revocable trust. Plus, if you work in an industry where you face the possibility of someone suing you, the court could require you to liquidate the assets in a revocable trust to pay a judgment. Revocable trusts don’t protect your assets from state and federal estate taxes after your death.
How irrevocable trusts work
When you include an irrevocable trust in your estate plan, you lose the power to make changes to that trust. The only way to change the terms of an irrevocable trust is if all beneficiaries agree to the changes or if there is a court order. This prevents you from updating your assets or beneficiaries if there is a major life change for your family.
Irrevocable trusts offer more protection for your assets. When you include assets in an irrevocable trust, they are not subject to estate taxes. An irrevocable trust also protects your assets from creditors and legal judgments should someone sue you.
Help during the estate planning process
Planning for the future gives you peace of mind that the court will distribute your assets based on your wishes. By including a trust in your estate plan, you can better protect your assets and help your family spend those assets wisely. By working with someone familiar with Florida estate planning laws, you can ensure that your estate plan is thorough and legally binding.