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Understanding the Limits of a Revocable Trust in Florida


Revocable trusts are commonly used in Florida estate planning to help streamline the probate process. Assets you put into such a trust are not considered part of your probate estate. This means that after you die, your trust can distribute these assets to your beneficiaries without going through the formalities of a court-supervised probate.

But it is important to understand the limits of what a revocable trust can–and cannot–do. Here are a few things you need to know:

Revocable Trusts Will Not Shield Your Assets from Creditor Claims

A “revocable” trust means you are free to amend or abolish the trust at any time. In other words, you can freely move assets in and out of your trust without restriction. You may also continue using and enjoying the assets while they remain in trust.

This makes the trust a highly flexible vehicle for estate planning. It also makes it susceptible to creditor claims. If you owe someone money, and they obtain a civil judgment against you, a revocable trust will not “shield” your assets from the creditor’s efforts to enforce its judgment. Likewise, if you die owing people money, they can seek to collect against your trust if there are insufficient assets in your probate estate.

Revocable Trusts Do Not Affect Your Spouse’s Right to an Elective Share of Your Estate

Under Florida law, you cannot completely disinherit a spouse without their consent. Florida allows a surviving spouse to claim a 30 percent “elective share” of a deceased spouse’s estate. As a general rule, this includes any assets placed by the deceased spouse into a revocable trust prior to their death.

Revocable Trusts Do Not Make Assets “Tax Free”

There are several types of trusts that confer tax benefits for the settlor (i.e., the person making the trust). But a simple revocable trust is not a tax shelter. During your lifetime, the IRS will simply ignore your revocable trust, meaning you will still need to file and pay taxes on any income earned by trust assets individually. And after you die–when the trust becomes irrevocable–the successor trustee will need to file and pay taxes on behalf of the trust as a separate legal entity.

And if you have a very large estate, placing assets into a revocable trust will not shield them against a potential federal estate tax bill. Again, the IRS will simply treat such assets as part of your taxable estate.

Speak with a Florida Trust Attorney Today About Your Options

As mentioned above, there are other types of estate planning trusts that can provide you with greater legal protections than a revocable living trust. A qualified Fort Myers estate and probate administration attorney can review your options and help you decide on the best course of action. Contact the Kuhn Law Firm, P.A., at 239-333-4529 to schedule a free consultation with a member of our trust and estate planning team today.

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