A revocable living trust is a type of trust that can be modified or even dissolved if your circumstances change. It gives you the flexibility to add or remove assets from the trust while you're still alive, allowing you to keep control of your money and assets. Upon death, assets held in the revocable trust evade succession, meaning that assets can pass to heirs without court involvement. As an expert in estate planning, I can tell you that there are many benefits to having a revocable living trust.
One of the main benefits is its flexibility. You can adjust how it works and the assets it contains over time, which is ideal if you become mentally or physically unable to manage them. In addition, it can protect trust beneficiaries with disabilities from losing Supplemental Security Income (SSI) benefits. Under current federal rules, SSI beneficiaries can be disqualified from receiving benefits if they inherit. Even if they give up the inheritance, a significant penalty may be imposed on them, depending on the value of their share.
A carefully crafted document can avoid this problem by including a special needs trust, which allows the person with special needs to receive the inheritance in a separate account intended for “use not related to Medicaid”. Then, they will continue to collect SSI benefits in support of their disability. A revocable living trust can also minimize the effects of wealth tax (or “estate tax”) on assets of a certain level. However, certain types of assets can still prevent probate legalization, such as retirement plans, insurance policies, annuities, and jointly owned assets. This means that a revocable trust is a more expensive estate planning option, although in many cases, paying more in advance will save your family much more in fees and costs when you die. After creating a revocable trust, the assets must be re-titled in the name of the trust because assets that are not formally held in the trust still have to go through a probate process and will not be under the management of a successor trustee in the event of incapacity. When you're weighing your estate planning options, you'll likely find a revocable trust or an active trust among the options.
Generally, a revocable trust will allow you to receive all the benefits of the trust assets (the trust's income and the right to use the trust's assets) however you choose during your life. Medicaid law in Florida can be a complicated entity, but a revocable living trust, along with a Florida Medicaid will, can play a useful role in effectively managing benefits. When a revocable trust replaces your will as the centerpiece of your estate plan (with provisions on how to distribute your assets after your death), the trust still doesn't fully replace your will. Generally, a revocable living trust is a type of trust that can be canceled at any time and the grantor of the trust is both the trustee and the beneficiary (allowing control of the trust's assets). A revocable living trust can specify the limits within which the surviving spouse must act, limit their control of the trust, prevent them from disinheriting the children of entities they were married to for the first time, and transfer certain assets to a separate trust controlled only by the biological father. Regardless of whether you use a will or a revocable living trust as your main estate planning document, you should also ensure that you coordinate the designation of beneficiary of your retirement plan assets with these documents.