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What are the benefits of a revocable trust?

As discussed last week in this blog, estate planning is not a one-size-fits-all process for Florida residents. Each person has different circumstances and goals, which requires the use of different estate planning strategies to accomplish these goals.

For some, one means of accomplishing their goals is through a revocable trust. A revocable trust allows a person to manage his or her assets during their lifetime, while distributing the assets to others upon death. The person who creates the trust, the grantor, can appoint themselves to serve as trustee, or they can appoint another person or entity to serve in that capacity. Because the trust is revocable, it can be modified or terminated during the person's lifetime.

There are numerous advantages to creating a revocable trust. One advantage is that it allows the person to avoid probate by effecting the transfer of assets during the person's lifetime. This can save a great deal of time and money, as well as avoid disputes that might otherwise arise during probate.

There may also be tax implications to creating a revocable trust. Through advanced estate planning, the revocable trust can be drafted in such a way as to minimize the effect of estate taxes that would otherwise have to be paid upon death. This can result in huge savings, as well as an increased value of the estate to pass along to loved ones that might not have otherwise been possible.

There might be ways to accomplish these goals through use of a will or other measures as well. The key is that the person's estate plan be carefully crafted to obtain the objectives they set.

Source: The Florida Bar, "The revocable trust in Florida," March 2014

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