What is the difference between a revocable trust and a will? Should I create a revocable trust? These are among the most frequently asked estate planning questions at our office. Here are some advantages of a revocable trust:
- Avoidance of probate. A revocable trust can help avoid the necessity of probate if property is appropriately titled or funded to the trust. This is particularly desirable for those who own real property in many states because assets such as real property are likely to require a separate probate in the state where it is located. Instead, you may be able to have one trust administration instead of probate proceedings in multiple states.
- Avoidance of guardianship. It is an unfortunate fact that many people in their older age develop dementia or Alzheimer’s disease. Creating a revocable trust when you are able can give you the opportunity to specify who you would like to manage your financial assets and how you would like them to be utilized. While a power of attorney is similar, a revocable trust permits those you name to be able to more easily protect your assets, even from yourself in the future, and you can be very specific with your directions.
- Protect your beneficiaries. You may have loved ones who you fear may too quickly spend an inheritance, or who have gambling, alcohol or drug abuse issues. You can still provide for them but have protections for their benefit with special trust provisions.
- Provide for management of assets to minor children. Minor children are not legally able to own assets in their own name. With a revocable trust, you may choose who will manage the assets you give to any minor beneficiaries.
- Leave a legacy. You may have accumulated real estate and want income from rentals to be given to your children, and later the property be given to your grandchildren. Or, you may have brokerage accounts or business investments that you want your children to profit from over their lifetimes but ultimately go to your grandchildren. A revocable trust allows for flexibility in crafting your legacy to your descendants under the terms you choose.
- Marital planning clarity. If you and your spouse both have previous marriages and children with prior spouses, the division of the marital assets can be a complex issue upon death. With a separate revocable trust for each spouse, you can specify that your property interests titled in the name of the trust will pass to your beneficiaries. While a revocable trust means that generally you may change the terms while you are alive, it will become irrevocable upon your death. Therefore, this type of plan can provide more certainty that your share of assets will go to your intended beneficiaries and not be subject to the whims of your spouse after your death.
Of course, this is not an exhaustive list of the advantages of revocable trusts. Ultimately, the decision on whether you choose a revocable trust or a just a will is a personal one. We recommend you consult with a qualified Florida attorney to assist you.