3 Ways a Florida Revocable Trust Will Not Protect You
Revocable trusts are commonly used in Florida estate planning as a means of shielding certain assets from the probate process. The basic idea behind a revocable trust is that you give certain assets to a trustee–who can be yourself during your lifetime–and that when you die, a successor trustee may continue to administer or distribute those assets outside of the terms of your last will and testament. In many cases, your entire estate may pass under the trust instead of your will.
But while a revocable trust can offer you a greater degree of flexibility and privacy when it comes to your estate plan, it is not a magic wand. There are certain legal events or contingencies where a revocable trust will not protect you or your assets. Here are just a few examples.
If you owe someone money, putting your assets into a revocable trust will not help you. Since a revocable trust can be amended or revoked by you during your lifetime, any assets in the trust may still be considered “fair game” for your creditors. So if a creditor obtains a civil judgment against you in a Florida circuit court, they could seek to enforce that judgment against your revocable trust. As far as the courts are concerned, those assets still belong to you.
If you are married at the time of your death, your spouse has certain rights to claim an elective share of your estate under Florida law. This share is equal to 30 percent of your “elective estate.” Your elective estate includes not just any subject to probate–i.e., passing under your will–but also assets you held through a revocable trust. Therefore, even if your spouse was not a co-grantor or co-trustee of your revocable trust, they can still claim an elective share, unless they previously waived such rights, such as by signing a prenuptial or postnuptial agreement.
A revocable trust is not a tax shelter. In fact, the trust itself is generally not considered a separate taxable entity during your lifetime. This means the trust will generally use your personal Social Security Number as its tax identification number. And all income or deductions related to trust assets must then be reported and paid on your individual income tax return each year. After you die, the trust becomes irrevocable, and the successor trustee must then file a separate fiduciary tax return. Any distributions made from the trust are considered deductions, with any income or deductions passed on to the trust’s beneficiaries.
Contact a Pompano Estate and Trust Litigation Attorney Today
If you are involved in a legal dispute involving a Florida revocable trust, whether as a settlor, trustee, or beneficiary, it is important to seek out advice and representation from a qualified expert in this area. Call the Pompano Beach estate and trust litigation lawyers at the office of Mark R. Manceri, P.A., today at 954-491-7099 or contact us online to schedule a consultation.