While the issue of an estate plan may seem like a decision for a later time in one’s life, Florida residents of all ages may benefit from considering the importance of having a will or living trust in place. One of the primary interests in forming a living trust is the ability to limit or eliminate the potential for a probate process. During probate, a will becomes a matter of public information, an issue that could allow sensitive information about one’s last wishes to be aired in public. With a living trust, however, these matters can be handled privately.
A revocable living trust can be adapted whereas an irrevocable trust is not changeable without significant effort and agreement. There may be some tax advantages involved with an irrevocable trust, making it an interest for those who are concerned that medical bills or other debts acquired later in life could significantly reduce any assets. In some cases, adult children caring for aging parents my use this as a reason to suggest developing an irrevocable trust. However, some experts note that giving up control of one’s estate in order to preserve it may not be the preferred choice for a parent.
Additional concerns with irrevocable trusts include the potential for trustees and benefactors to become difficult to locate, affecting management and use of assets by a benefactor who is still living. In other cases, a trustee might be tempted to borrow from an estate, later encountering difficulties in repaying the borrowed sum. A benefactor may want to discuss the implications with an attorney and financial adviser prior to agreeing to an irrevocable trust.
Working with professionals who understand the implications of both types of living trusts may enable an individual or couple to make a more informed decision. In some cases, an irrevocable trust may be an appropriate choice, but experts indicate that those with limited assets may not require this approach.
Source: NBR, “A matter of trusts: Benefactors, heirs and their advisors“, Maureen Niven, August 04, 2014