Some people in Florida who are creating an estate plan may want to consider an irrevocable trust. While a revocable trust is a more common choice because it allows the creator to remain in control of the assets, there are some advantages to an irrevocable trust.
The trust creator, also known as the grantor, cannot make changes to the trust, but the beneficiary can. Assets in the trust are no longer considered to be the property of the grantor but of the trust. This can protect those assets from estate tax. It may not be necessary to pay taxes on income from a home placed in a trust, and a trust may protect assets from creditors or from legal judgments. Without a trust, if a person dies in debt, assets could be sold to pay off the debt.
A person has a number of different options for a revocable trust. A life insurance trust can prevent taxes on substantial life insurance payouts while a marital or bypass trust can provide income for a surviving spouse. A charitable lead trust supports a charity and passes assets to beneficiaries when the grantor dies while a charitable remainder trust provides income for the grantor and then allows remaining assets to go to the charity.
Trusts may offer several other advantages over a will, such as greater privacy. An attorney may be able to advise regarding the advantages of a trust and whether a person’s particular goals might be better served by a revocable or irrevocable trust. An attorney may also help a person avoid common errors, such as using ambiguous language in the trust. Another common error is creating a trust but failing to fund it. Choosing the right trustee can also be important since this person is responsible for managing the assets.
