A living trust is one way to plan your legacy and estate, all while making things a bit easier for your family when you’re gone. If you live in Florida, this guide will show you how to set up a living trust, as well as provide relevant information to help you decide if a living trust is the right option for you. If you’re creating a living trust or thinking about estate planning in general, it might make sense to talk to a financial advisor. SmartAsset’s free financial advisor matching tool can simplify your search for an advisor.
How to Create a Living Trust in Florida
There are a number of benefits to setting up a living trust. Here’s how you can create a living trust in the Sunshine State:
- Pick the type of trust you’ll need: Single people will need a single trust. If you’re married, you have a choice between making two separate trusts or forming a joint trust with your spouse. A joint trust is probably the best choice if you and your partner have joint property, such as real estate and bank accounts.
- Take inventory of your property: Before creating a living trust, you’ll want to know exactly what you own and what you want to include in your trust. Assets you can transfer to a living trust include real estate, cars, savings accounts, family heirlooms and stocks. You can also opt to name your trust as the beneficiary of your retirement account, such as your 401(k) or IRA. This is also the time to gather all of the paperwork related to your property, including car titles, home deeds and certificates of stock ownership.
- Decide who you’ll select as trustee: You can name yourself or pick someone else. If you’re the trustee, you’ll also need to select a successor trustee who will take over management of your trust after your death. A successor trustee must ensure your assets are distributed to your beneficiaries according to your trust’s instructions.
- Create the trust document: Once you’ve taken care of the above, you’ll need to physically write up the trust document. You can do this either by using an internet program or with the help of an attorney.
- Get the trust document signed: Next you’ll have to sign the trust document in front of a notary public.
- Fund the trust: The final step is to transfer property into your trust on your own or with the help of an attorney.
What Is a Living Trust?
A living trust is a legal framework in which assets and property can be placed. The trust, which is established by a document, is placed into the ownership of a trustee. The trustee takes control of the assets in the trust and is responsible for distributing them to beneficiaries as the trust directs. You can be the trustee, or you can name someone else as the trustee.
There are irrevocable trusts and revocable trusts. Irrevocable trusts have no flexibility. A grantor cannot modify the trust without first getting permission from everyone named in the trust. The trust assumes ownership of any property placed inside of it, and thus taxes are paid on the trust’s property via the trust.
With a revocable trust, the grantor can remove property as needed and make modifications. The grantor still owns the property in the trust and pays taxes on it as per usual.
How Much Does It Cost to Create a Living Trust in Florida?
The cost of establishing a living trust in Florida depends on how you decide to create it. If you use an online program, it won’t cost more than a few hundred dollars. The other option is to enlist the help of an attorney.
Though this option will make the process easier, it’s also much more expensive. The exact cost will depend on the attorney’s fees, but you could end up paying more than $1,000. Before choosing an attorney to work with, make sure you understand the fees they’ll charge and also note whether the attorney specializes in trusts.
Why Get a Living Trust in Florida?
Arguably the premier benefit of creating a living trust in Florida is making things easier for your family when you die. Any property that’s stored inside the trust is not subject to probate, a potentially time-consuming legal process that estates without a living trust must go through.
While Florida once used the Uniform Probate Code, it no longer does, as it now has its own statewide laws for managing probate cases. However, Florida offers a simplified probate process for estates that have a net value of under $75,000 and that don’t include real estate.
There are other reasons to get a living trust, though. For instance, a living trust allows you to avoid conservatorship if you become incapacitated because you’ve already designated a trustee. A living trust can also be helpful if you’re leaving property or assets to a minor child. A trustee can take ownership of the assets until the child comes of legal age.
Who Should Get a Living Trust in Florida?
Living trusts are not just for the rich. However, the size of your estate and whether or not you have dependents are two key considerations when deciding whether you need a living trust. The fact that Florida no longer uses the Uniform Probate Code may also influence your decision, especially if you have a large or complex estate. If not, a will may be enough, especially because Florida offers a simplified probate process to certain estates worth less than $75,000.
There are downsides to living trusts. In general, living trusts are more complicated and costly to create than wills. Living trusts also give family members a longer period to challenge the estate in court, possibly complicating matters after you’ve died.
Living Trusts vs. Wills
A living trust can’t do everything, so you still need a will. A will can dispose of any property that is not placed inside the living trust. A will can provide direction for that remaining property. Additionally, a will can establish the following matters that a living trust can’t:
- Naming an executor
- Establishing guardianship for children
- Choosing managers for children’s property
- Leaving instructions for paying taxes and debts
The following table provides a full breakdown of the capabilities of living trusts versus wills:
|Living Trusts vs. Wills|
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in Florida
In the state of Florida, there is no estate tax or inheritance tax. However, the federal estate tax may still apply. This tax is only levied on estates that are worth more than $12.06 million, or $24.12 million for couples.
It isn’t hard to make a living trust in Florida. However, you will need to do some planning and research. There’s no longer Uniform Probate Code in effect in the state, so unless your estate is particularly small or simple, you may be better off forgoing the living trust and just writing a will.
If you do decide to create a living trust, remember that you can either do it yourself or enlist the help of an attorney. You’ll pay less if you do it yourself but you’ll also have to deal with the complexities of setting up a trust.
Estate Planning Tips
- For help with creating a living trust, estate planning or any other financial planning need, you may want to turn to a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Don’t make the mistake of thinking you’re too young to start planning your estate. You can’t predict the future so it’s always better to prepare for the worst.
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