Do You Really Need a Revocable Living Trust? by Martin Zevin, PA

Wills & Trusts
Do You Really Need A Revocable Living Trust?

Many clients mistakenly believe that a Revocable Living Trust is only for the wealthy. The most recent tax law passed by Congress provides $5,000,000.00 as a Federal Estate Tax exclusion as of January, 2013. Florida has a similar exclusion.

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, attorney’s fees and costs 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 the lawyer prepares the Trust, there would also be a Quitclaim Deed prepared 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. Your children will be able to get clear title to your home within weeks, as soon as the death certificate and certain other standard documents are recorded. There is no probate, no court supervision, no notice in the newspaper and no need for an attorney. An attorney or paralegal can assist the children with the administrative process or instruct them to do it on their own.

The Trust document also has a paragraph regarding disability. If you become disabled based on two doctors’ written statements, your Successor Trustee can take over during your disability without going to court.

You may also wish to consider having a general 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 which is the so-called pulling the plug document. These documents are generally separate from any 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 as to any amendments.

This article summarizes the basic concepts involved in a Revocable Living Trust. It is always important to speak to an attorney regarding your specific needs.

For a free consultation by phone or in person, please feel free to call me.