Florida’s irrevocable trust often proves to be an invaluable tool in estate planning. In fact, it is used by many of the state’s best asset protection attorneys. Irrevocable trusts allow the one who made the trust, known as the settlor, to manage and control their assets without the need to go through probate.
What’s more, irrevocable trusts serve to protect their assets from potential creditors. Florida irrevocable trusts can also aid in lowering estate taxes in the event that someone is subject to paying federal estate taxes.
What Is an Irrevocable Trust?
An irrevocable trust is a trust that is designed with terms that can’t be terminated, changed, or modified without either a beneficiary or one designated by the grantor. At the time when the grantor transfers the entirety of the asset ownership to the trust, they legally cancel their ownership of the assets and the trust. Furthermore, irrevocable trusts are contrary to revocable trusts, and the grantor can modify the trust. But in doing so, the grantor effectively gives up certain benefits, such as creditor protection.
The main reason for creating an irrevocable trust is for property and taxation considerations. One of the biggest benefits of this kind of document is that it serves to eliminate all property incidents by removing assets from those that are taxable. This effectively protects the provider or taxpayer of property income.
While the tax regulations in each state are different, in most cases, if the grantor is the fiduciary of the trust, they will not receive these benefits. Trust assets might include things like property, cash, and real estate.
When Do You Need an Irrevocable Trust?
An irrevocable trust is quite useful to professionals like attorneys and physicians who are in a position where they can encounter lawsuits and litigation. After the transfer of the assets to the designated trust is complete, ownership is then transferred to the selected beneficiary. And because an irrevocable trust isn’t part of the legal process, it is not affected by creditors and judgments.
Irrevocable vs Revocable
Irrevocable and revocable trusts differ in several ways. One of the biggest differences between these two trusts is how to revoke or modify each trust. For example, a revocable trust can be freely revoked or changed at any given time prior to the death of the settlor. The same is true for an irrevocable trust as long as it is written in a certain way.
If it isn’t, an irrevocable trust can be difficult, if not impossible, to amend in any way. Both the settlor and beneficiary may only modify or terminate the trust in accordance with the terms written within the trust. A large number of today’s irrevocable trusts are created that appoint powers allowing for these changes.
If all qualified beneficiaries agree, a Florida court will allow changes to the irrevocable trust. If the purpose of the trust is illegal or frustrated, the court may also modify the irrevocable trust itself. So while changes can be made to irrevocable trusts, the required procedure is usually contingent on the trust’s terms. If such terms are not deemed flexible enough, it may not be as easy as a revocable trust under the full control of the settlor.
Why Choose an Irrevocable Trust?
Irrevocable trusts give you many benefits in Florida’s estate planning laws. Similar to revocable trusts, irrevocable trusts can help you avoid probate. When the owner of a will passes away in Florida, the court will initiate the probate procedure. This is a formal process and usually takes as long as 12 months to complete. The estate of the deceased becomes managed by a representative who is appointed by the court appoints. That representative must adhere to strict guidelines. If any trust is properly created and used, probate can be avoided. This would allow the trustee managing the trust to manage the trust’s assets efficiently and faster than usual.
When it comes down to it, an irrevocable trust is primarily about protecting the assets of the settlor. In doing so, creditors can’t attempt to take the assets down the road at a later date for any reason. Moreover, they are eventually excluded from being a part of Medicaid.
It’s important that you have an experienced attorney in Florida who understands irrevocable trust law. There are many intricacies of trust law that only a qualified lawyer can assist you with. If you’re ready to speak with an attorney, please call Doane & Doane today.
Contact Doane & Doane Today for Assistance
Doane & Doane was founded in 2003 and continues to serve Southeast Florida residents and businesses through qualified legal and probate counsel. In fact, Doane & Doane is one of the area’s most trusted and respected tax and estate planning firms. If you need assistance with trusts of any kind, we encourage you to contact us at 561-656-0200. Alternatively, you can always fill out our online contact form, and we will promptly respond to your inquiry.
The information in this blog post is provided for informational purposes only and is not intended to be legal advice. You should not make a decision whether or not to contact an attorney based upon the information in this blog post. No attorney-client relationship is formed nor should any such relationship be implied. If you require legal advice, please consult with an attorney licensed to practice in your jurisdiction.