Revocable Trusts
Revocable Trusts have become synonymous with probate avoidance, cost savings, and other benefits. Trusts can definitely offer benefits depending on the types of assets you own and the number and type of family members involved in the equation. Despite, these benefits, it is necessary to understand collateral issues related to trusts, and certain steps must be followed to ensure that assets are properly titled in the name of the trust.
After death, even though the trust will ordinarily help you avoid probate, there are still creditor issues involved which must be taken into consideration, and if distributions are made prematurely, could subject the trustee to personal liability for amounts disbursed prior to taxes being paid, and creditors satisfied.
It is imperative that both the income taxes and estate tax of the decedent, if any, are paid, prior to the trustee making distributions or he or she could be personally liable for the amounts that are due the IRS. The trustee is also supposed to file a notice of trust in the county of death to alert potential creditors of the deceased grantee, that a trust may be available for to satisfy outstanding claims.the grandchildren would share unequally. The one child of A would receive 50 percent of the estate (representing his parent’s share), while b’s children would split their parent’s portion and would only receive ¼ shares of the estate.
When no relatives can be located who qualify to inherit the decedent’s property under the intestacy statute, the estate escheats to the state. In this situation, the property is sold and the proceeds of the sale are distributed to the State Treasurer.
If you would like to control the way your property is distributed when you are gone, some minimal level of estate planning is required, even if that only entails re-titling your property or naming beneficiaries on your financial accounts.
Contact our Fort Lauderdale or Boynton Beach office today to speak with an attorney regarding wills, trusts, powers of attorney or any other matter related to estate planning or probate.
Florida law provides that any trust executed on or after July 1, 2007 is revocable unless the instrument specifically provides otherwise. The power to revoke the trust usually does not pass to the contingent beneficiaries subsequent to the grantor’s demise. Otherwise, the right of revocation is usually personal to the grantor unless he or she vests the power of revocation in another person. Furthermore, pursuant to Florida Statute, 709.2201 and 709.2202(1), an agent may amend, revoke or terminate a trust, if the principal signs next to that enumerated power in the power of attorney document and the trust itself contains language “explicitly provides” for those rights to the grantor’s agent.
Manner of revocation- Under Florida Statute, 736.0602(3), a settlor may revoke or amend a revocable trust “by substantial compliance with a method provided in the terms of the trust.” If the trust does not contain language indicating the required method of revocation, the statute provides that the settlor may revoke or amend by executing a will or codicil that explicitly refers to the trust or devises property that otherwise would have passed pursuant to the terms of the trust or by “any other method that manifesting clear and convincing evidence of the settlor’s intent.”
A Florida court may permit termination of a trust when all persons with an interest in the trust consent to its termination. The court may be reluctant to do so however, if termination would defeat the intent of the settlor. Courts have differed on whether contingent beneficiaries are necessary and indispensable parties in a proceeding to terminate a trust. As a general proposition, courts are reluctant to terminate a trust merely because the beneficiaries are requesting that relief. This is a result of the general principle that a settlor has the right to dispose of his property in any way he or she pleases. Thus, courts may allow the beneficiaries of a trust to terminate a trust if the purpose for which the trust have been materially satisfied. If both the grantor and all trust beneficiaries consent to termination, the trust can be terminated even if its purposes have not been accomplished.
There are many other situations in which a trust can be modified or terminated which will be discussed in depth in further articles.