Information on Trusts, Powers of Attorney, and Health Care Surrogates by Martin Zevin, PA

Protecting Yourself if You Are Incapacitated
Information on Trusts, Powers of Attorney, and Health Care Surrogates

Many clients mistakenly believe that a Revocable Living Trust is only for the wealthy.

The current Federal Estate Tax exclusion is $5,000,000.00.

However, your decision as to whether to have a Simple Will or a Revocable Living Trust really has nothing to do with the Federal Estate Tax exemptions. The main purpose of a Revocable Living Trust is to avoid probate in Florida. If the only real estate you own is your home, your heirs would still greatly benefit from a Revocable Living Trust.

Let us assume that you are married and you own your home jointly. You have two children and you want them to have your home when you both pass away. Your other assets include CD’s, a brokerage account and an IRA.

Without a Revocable Living Trust, you could still avoid probate on all of your assets except your home. You would simply name your children as the contingent beneficiaries for your other assets. When you both pass away, your children would get those assets immediately by showing the death certificate and identification. However, the same is not true for your home. Without a Revocable Living Trust, your home would have to go into probate. Probate involves hiring a lawyer, approximately nine months in the court system, publication in the newspaper, costs and attorney’s fees amounting to several thousand dollars or more, depending on the value of your home. Your home would also be tied up in the probate process which would mean that your children would not be able to quickly sell it.

If you want your children to have the least aggravation and eliminate fees, costs and time, a Revocable Living Trust makes the most sense. At the time you sign the Trust, you would also sign a Quitclaim Deed whereby you transfer the property from your names individually to you as Trustees of your Trust. This does not change your ability to sell your home, get a mortgage or refinance. You continue to claim your homestead exemption. In fact, owning your home as Trustees of your Trust does not change anything except that when you both pass away, there will be no probate of your home.

You should also consider having a Durable Power of Attorney to take care of your legal and financial affairs outside of your Trust. In addition, there is a document called a Designation of Health Care Surrogate which provides for making all medical decisions in the event of incapacity. The final document which most people already have is a Living Will. These documents are separate from a Revocable Living Trust.

The Trust document is called revocable because you can change it or terminate it at any time during your life. If you wish to make changes, an amendment to the Trust is prepared. The original Trust document remains in effect except as to any amendments. This article summarizes the basic concepts involved in a Revocable Living Trust, Durable Power of Attorney and Health Care Surrogate. It is always important to speak to an attorney regarding your specific needs.

Please feel free to call me for a free personal or phone consultation regarding any issues pertaining to Wills, Trusts and Estates.