Florida’s Chapter 736, known as the Florida Trust Code, governs the state’s revocable trusts, or “living” trusts. The code outlines the legal requirements for creating, administering, and terminating trusts. However, the purpose of a trust should be mentioned in the Act. Then, what are the proper benefits of a trust?
Avoid Probate Process
–Why should you avoid probate?
It is a common belief that revocable trust avoid probate. The first question you should ask is why we need to avoid probate. Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts, and distributing the decedent’s assets to their beneficiaries. There are two types of probate administration under Florida law: formal administration and summary administration. Probate can become rather expensive, and the main cost in a Florida probate is usually the lawyers’ fees. And since, for most probate cases, Florida rules require a probate attorney, attorney fees are generally an inescapable part of the probate process.
According to Florida law, when the estate’s compensable value exceeds $40,000 and is not eligible for summary administration, a formal administration of an estate must occur.
- How Does a Revocable Trust Avoid Probate?
A revocable trust avoids probate by effecting the transfer of assets during your lifetime to the trustee. This avoids needing the probate process to transfer after your death. The trustee has immediate authority to manage the trust assets at your death; an appointment by the court is unnecessary.
The “funding” of a revocable trust is critical to avoid probate successfully. Those who do not fully fund their trusts often need a probate administration for the non-trust assets and a trust administration to distribute them thoroughly. Because the revocable trust may not altogether avoid probate, a simple “pour over” will is needed to transfer any probate assets to the trust after death.
Currently, there is no estate tax in Florida. The state abolished its estate tax in 2004
Avoid Estate Planning Tax?
Many think of trust as a vehicle to avoid estate planning tax. Well, does a Revocable Trust Save Estate Taxes? Even though revocable trusts are often credited for saving estate taxes, it is only partially accurate. Although the trust can be drafted to minimize the effect of estate taxes, the effect is not that of a trust itself. What trust can do, will do.
Avoid Elective Shares?
Trust can protect the Elective Share. Again, it needs to be more accurate. Florida law provides that a surviving spouse is entitled to a minimum portion of the decedent’s estate, called elective share. This elective share equals 30% of the estate, including certain assets passing outside of probate. Generally, assets in a revocable trust will be subject to the elective share. There are some exceptions to the elective share; the spouse can waive the right to receive an elective share.
Avoid Probate Process
It is a common belief that revocable trust avoid probate. The first question you should ask is why we need to avoid probate. Probate is a court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts, and distributing the decedent’s assets to their beneficiaries. There are two types of probate administration under Florida law: formal administration and summary administration. Probate can become rather expensive, and the main cost in a Florida probate is usually the lawyers’ fees. And since, for most probate cases, Florida rules require a probate attorney, attorney fees are generally an inescapable part of the probate process.
According to Florida law, when the estate’s compensable value exceeds $40,000 and is not eligible for summary administration, a formal administration of an estate must occur.
In comparison with the compensable value of an estate, the following examples are considered probably reasonable fees:
- For estates of $40,000 or less: $1,500
- For estates between $40,000 and $70,000: $2,250
- For estates between $70,000 and $100,000: $3,000
- For estates between $100,000 and $900,000: 3% of the estate’s value
- For estates between $1 million and $3 million: 2.5%
- For estates between $3 million and $5 million: 2%
- For estates between $5 million and $10 million: 1.5%
- For estates of $10 million and above: 1%
Although trust usually contains a pour-over Will, which states that any assets or property owned by the trustor at their death will transfer (or pour over) into the trust, a pour-over will, like all wills, must go through probate. The good news is the process is much simpler and cheaper.
How Does a Revocable Trust Avoid Probate?
A revocable trust avoids probate by effecting the transfer of assets during your lifetime to the trustee. This avoids needing the probate process to transfer after your death. The trustee has immediate authority to manage the trust assets at your death; an appointment by the court is unnecessary.
The “funding” of a revocable trust is critical to avoid probate successfully. Those who do not fully fund their trusts often need a probate administration for the non-trust assets and a trust administration to distribute them thoroughly. Because the revocable trust may not altogether avoid probate, a simple “pour over” will is needed to transfer any probate assets to the trust after death.