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Revocable trusts not just for tax purposes in Florida

When people think of trusts, if they think of them at all, it is often in the context of large sums of money. While it is true that trusts are useful for those with high valued assets, in the estate planning area, they can be a boon to just about any size estate.

Because the federal government's estate tax exemption is $5.34 million per person (over $10 million for a married couple), revocable trusts are useful for very wealthy people to avoid that federal tax. However, most Florida residents do not have estates of that size, and the State of Florida does not levy an estate tax. Nonetheless, many people do not realize that there are other benefits that come with using a living revocable trust.

One major benefit is simply avoiding the probate process. Having a trust gathers all one's assets in one place, and allows beneficiaries to take their share of the inheritance by operation of law, avoiding the expense and time of dealing with a probate court. In Palm Beach County, for example, probate costs can be up to 3% of the estates value on the first million dollars of the estate. Another benefit is that is the grantor of the trust is incapacitated a party, the trustee, has already been designated to make decisions about the assets contained in the trust. Revocable trusts also help guard the privacy of ones assets and bequests. The probate process occurs in a court of public record. However, trust documents and their contents are generally private.

Finally, there is the aforementioned estate tax issue. While Floridians will not run afoul of the federal tax, those who have residence in other states may have taxes levied by those states. In New York, for example, 10% of an estate may be taxed, if the estate is worth more than $1 million. A revocable living trust, along with other properly executed estate planning documents may be able to help a grantor or his or her heirs avoid those taxes.

Source: Palm Beach Daily News, "Need a revocable living trust?," Gail Liberman, April 27, 2014

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