Revocable Living vs. Irrevocable Trusts: Differences that Matter

Trusts are flexible estate planning tools that can serve a variety of purposes. When combined with a Will and other appropriate estate planning tools, trusts can help people at all stages of life confidently achieve their estate planning goals.

Several different types of trusts are used in estate planning. Broadly speaking, these trusts fall into two categories: (i) revocable living trusts and (ii) irrevocable trusts.

Incorporating a Revocable Living Trust Into Your Estate Plan
Revocable living trusts allow you to plan for the future while still maintaining complete control over your assets during your lifetime. When you establish a revocable living trust as part of your estate plan, this trust will serve several purposes that your Last Will and Testament would otherwise serve. Most importantly, it will allow your loved ones to avoid the probate process.

Under Florida law, when a person passes away with or without a Will, all personal assets become inaccessible. Accessing these assets requires court involvement, the process of which is called “Probate.” This process involves additional time, expense, and possible complications in finalizing the decedent’s personal affairs.

When you place assets into a revocable living trust, they are not part of your probate estate. As a result, the assets are distributed privately, and there is no need to involve the courts. A carefully drafted Florida revocable living trust combined with other estate planning tools will often keep a person’s entire estate out of probate.

As the term “revocable living trust” suggests, these trusts are revocable. This means that if you decide to modify the terms of your trust or get rid of it entirely, you can do so at any time for any reason. This flexibility, combined with the ability to avoid probate, makes the revocable living trust a valuable estate planning tool for many people.

Using Irrevocable Trusts to Achieve Specific Estate Planning Goals
If revocable living trusts are so flexible and effective, why would you create an irrevocable trust instead? While revocable living trusts are useful as general estate planning tools in Florida, irrevocable trusts can help you achieve a variety of more specific estate planning goals.

There are several types of irrevocable trusts–all of which are useful in different circumstances. For example, some of the most commonly used irrevocable trusts include:

Spousal Lifetime Access Trusts
Charitable Trusts
Qualified Personal Residence Trust
Irrevocable Life Insurance Trusts
Qualified Income Trusts
Special Needs Trusts
Although the permanent nature of these trusts may seem daunting and comes with certain disadvantages, such as giving up ownership and control of assets, the irrevocability comes with certain benefits. For example, using irrevocable trusts may allow for tax advantages or help qualify an individual for Medicaid.

The use of trusts in estate planning is highly specific to each individual’s or family’s wants and needs. Thus, meeting with an Estate Planning lawyer in Florida is imperative to inform you of all your options and determine what will work best for you.

Discuss Your Options with a Florida Estate Planning Lawyer
Do you have questions about incorporating a revocable living trust or an irrevocable trust into your estate plan? If so, we invite you to get in touch. To discuss your options with an experienced Florida estate planning lawyer at Woodward, Pires & Lombardo, P.A., please call 239-394-5161 or request a confidential consultation online today.
This article was submitted by a Guest Author of the Above Board Chamber.