Trusts are often a critical component of estate planning, as they provide numerous benefits that go above and beyond what is available through a will. Among other things, a trust allows you to: 1) pass assets both during your lifetime and after; 2) avoid having your assets stuck in a probate court, litigated over by family members and others; 3) provide clear, enforceable management of those assets and directions regarding their use; and 4) protect those assets from creditors, at least in some cases. Trusts are also revocable in some cases, which means that the person creating the trust (the "settlor") can dissolve the trust altogether and/or transfer assets out of the trust. Here is an overview of when a trust can be revoked in Florida.
The Difference Between a Revocable and Irrevocable Trust
When you create your trust with an estate planning attorney, your attorney will walk you through a range of options for the trust you would like to create, with one key question to ask being whether the trust should be revocable or irrevocable. Unless the trust expressly indicates it is irrevocable, Florida law will consider it to be revocable.
As the name suggests, a revocable trust can be revoked by the settlor (again, the creator of the trust) at any time, although the specific terms of the trust document may provide procedures, conditions, or limits on how that revocation should occur. An irrevocable trust on the other hand is one that cannot simply be revoked unilaterally by the settlor, and requires additional steps to be taken (more on that below).
Which might raise the question of why anyone would create an irrevocable trust, if it inhibits the settlor's abilities. Because an irrevocable trust is considered a true transfer of the assets into the trust, it can provide various benefits to the settlor, including protection of those assets from creditors, tax benefits, and even assistance in Medicaid planning.
"Revoking" an Irrevocable Trust
Despite the name, there are situations in which an irrevocable trust can indeed be "revoked" in a sense, although the law specifically refers to this process as "terminating" the trust. The key takeaway is that the decision to terminate or modify the trust is out of the hands of the creator of the trust.
The trustee of the trust (the person designated to oversee the distribution of the trust) may seek a court order to modify or terminate the trust, but this will be granted only when a court determines that doing so would be in the best interests of the beneficiaries.
The beneficiaries themselves can also seek termination or modification of the trust, and can do so without court approval, if the settlor has passed away and they are in agreement that the trust no longer serves a valid purpose.
Speak to a Florida estate planning attorney for further guidance on incorporating trusts into your estate planning.
Contact Ryan Mynard Today About Your Estate Planning Needs in Florida
If you have any questions about trusts or any other aspect of protecting your assets and building wealth through the estate planning process, contact Florida estate planning attorney Ryan Mynard at 850-683-3940 today to get started.