Living Trusts and Florida Probate
In many states, the creation of a living trust is recommended by competent estate planning and probate attorneys so as to avoid the headache of a drawn-out probate court proceeding. However, what many do not realize is that there are some situations in which probate cannot be avoided. Understanding the finer mechanics of Florida probate can make a difference in how much time and effort you are forced to expend in court.
What Are Living Trusts?
A living trust, also called a revocable trust since you are able to modify it during your lifetime, is a document that manages your assets – or at least most of them – while you are alive, so that the need for a long and complex will is minimized. In Florida they are considered agreements, rather than legal contracts, between three parties – the settlor, the grantor and the trustee (though sometimes, people decide to serve as the trustee, while also being the settlor. If this is the case, they usually name a successor trustee to take over after their passing). The primary advantage of such an arrangement is that appointing someone to help manage your affairs during your lifetime can reduce the risk of court interference or problems after you have passed.
Florida’s rules for living trusts do differ from those in other states, and there are peculiarities that can sometimes exclude significant assets from being covered by the trust itself. For example, it is not uncommon for a home to be excluded from a living trust, especially if it is not fully paid off yet. It is imperative to double-check that your home or other important assets do not wind up subject to such legal issues.
The Probate Conundrum
The main reason why many elderly people choose to set up a living trust, however, is to avoid the requirements and the bureaucracy of probate court. In theory, funding a trust while the settlor is still alive eliminates the need for the oversight of the probate court. The trust controls the assets, not you individually, and so there is nothing that in theory needs probating. However, in Florida, this often does not wind up being the pattern of events that actually occurs.
The reason why, in short, is that Florida law holds a revocable trust – or its trustee – liable for the estate debts of the settlor, and there is a two year period of nonclaim. This means that for two years after the passing of the settlor, the revocable trust is liable for any debts incurred on their behalf. This means that the trustees may not receive any bequest – at least not in theory – for that entire period, lest some creditor appear and the trust lack the money to pay them. However, the statute holds that if the estate is probated and advertised, that period reduces to three months (90 days). This often will lead to an estate being probated, so as to cut off creditors’ claims, even though very often a trust is created for the express purpose of avoiding probate.
Seek An Attorney’s Guidance
Very often, the ultimate decision on which estate planning choices you make will depend upon your financial situation at the time. However, experienced advice can help significantly. The Hollywood probate attorneys at the firm of Steven A. Mason, P.A. have many years’ experience in probate and estate planning, and are happy to help guide you in the right direction for your situation. Contact the Fort Lauderdale and Hollywood Law Offices of Steven A. Mason, P.A. for legal advice at 954-963-5900 or leave a message online.