It’s fairly common for newer clients talk to us about the worries they have about living trusts. Specifically, people are worried that, should they create a living trust, they will lose control over their property and will not be able to use it as they do now. Other people are worried that living trusts are unnecessary expenses, and that they don’t’ need them because they don’t need to worry about taxes anyway.
Both of these concerns reflect some common misunderstandings people have about the role revocable living trust plan your estate plan, and how these important tools work. To help clarify why you don’t need to worry about living trust, let’s take a look at some important issues.
You shouldn’t worry about living trusts taking control over your property.
Understanding how trusts get created, and how they operate, is essential if you want to understand why a living trust is such a useful tool. When you decide to create a living trust you become known as a grantor. As the grantor, it’s up to you to determine the terms under which the living trust will operate. Once you create the trust document, you will then begin transferring your individually owned property into the trust’s name. Once transferred, the trust will then become the effective legal owner.
Since the revocable living trust is the new owner of your property, it will fall to the trust, through the trustee, to manage the property it owns. The trustee is the person who is legally responsible for managing the trust property on behalf of the beneficiary. The beneficiary is the person who gets to use or profit from the property the trust owns.
The key idea to realize about revocable living trust is that you, the grantor, will also serve as both the trustee and the beneficiary. In other words, you will control every aspect of the living trust, and will therefore control how the trust uses its property. This will allow you to maintain complete control over all the property you transfer into the trust’s name.
Living trusts have nothing to do with taxes.
Some people express reluctance to create a revocable living trust because they believe that they don’t need to worry about estate or inheritance taxes. While it is true that most people don’t have to create estate plans that address the estate tax issue, living trusts have almost nothing to do with tax mitigation benefits.
Your living trust will be designed to reduce, or eliminate, the time and expense involved with managing an estate through Florida probate process. Even though living trusts require a higher initial investment, they usually, in the long run, end up saving your estate significant time and money.