What is a Revocable Living Trust?

Jill Ginsberg and David Shulman discuss revocable living trusts in Florida.

David: Hello everyone, I’m David Shulman from the firm of Ginsburg Shulman. I’m here with my partner Jill Ginsburg. We’re an estate planning, elder law, probate, guardianship, and trust administration law firm. And this week we’re going to talk about revocable trusts. Jill, what is a revocable trust?

Jill: A revocable trust in Florida, because that’s what we’re talking about, Florida law, a revocable trust in Florida is basically an entity that holds property and assets for someone and that is used to quote unquote avoid probate in Florida, but it also is used to pass assets on to your heirs and beneficiaries.

David: And why would a person want a trust as opposed to either a will or just doing nothing at all and saying, well, whatever happens after I die?

Jill: A lot of people say that to me. I really don’t care what happens. Well, when you leave a mess like that, basically what happens is everything goes through probate.[00:01:00]

Probate in Florida, while it’s not horrible, it’s really not the best thing in the entire world because you’re basically leaving a judge to make decisions on your behalf, and you’re also spending an awful lot of time and money moving something through the courts, which is never a good thing. Why a trust is a good thing to have versus a will, a will basically does leave your items to your heirs, but unfortunately you’re still going through probate in Florida, and that will has to be interpreted by a judge, which is also never a good thing.

A trust in Florida, especially a revocable trust, allows you to do two things. One, it allows you to leave property to your heirs, it allows you to avoid the probate we just discussed, and it also allows you to revoke it in case you’re not in a good mood that day when you’re still alive.

David: Now I know that a will is filed with the court, then as soon as someone dies, the law actually says the person, whoever has the will, has 10 days to file the will at the court.

But what about a trust?

Jill: You don’t [00:02:00] file a trust, and that’s really the beauty of a trust. A trust is only filed when there’s a lawsuit, there’s obviously exceptions to every rule, but generally a trust is never filed anywhere, no court, nowhere. And so a lot of times you want to keep things separate or you don’t want people to know what’s going on.

That’s also why a revocable trust is a really good entity to use.

David: So there’s a privacy aspect there too, because the will, the whole world, you found the will, the whole will world sees what happens, what your wishes were.

Jill: As you and I both know, there are people that actually look at the obituaries and will search through wills to see if there’s property in them or what’s in them.

So yes, there is no privacy with the will whatsoever. But yes, generally, there is with a trust.

David: So when someone sets up a trust, they generally, they themselves are the trustee, the person who makes the decisions for the trust. But at some point, what happens? They either get sick or they die.

And then what [00:03:00] happens?

Jill: That’s a great question, David. So in a REV trust, basically, you know how people like control. So most people are going to put themselves as their trustee. A lot of times, sometimes you’ll put you and your spouse. But what we encourage people to do is name an alternative trustee so that God forbid you become incapacitated, that person is able to take over.

And that really avoids a lot of aggravation and a lot of problems later on.

David: And who can or should people think about appointing as trustee?

Jill: Well, you obviously want someone who kind of doesn’t have some convictions or things of that sort.

David: They don’t have criminal convictions, personal convictions-

Jill: Moral and personal convictions are okay.

Criminal convictions, not so much. But, you want someone who, you know, is familiar with, numbers, if they’re going to be someone who’s dealing with your finances, someone who can pay your bills, someone who, they don’t have to be local, but [00:04:00] someone who can hire people on your behalf. So it’s really somebody who you feel that can take over and step into your shoes and act on your behalf.

David: And what if, you know, a person, for example, has minor children? How is a revocable trust beneficial for them?

Jill: Revocable trust is a great thing to have when you have minor children, because one thing you can’t do in Florida and most states is leave property and leave anything to minor children. And in a RevTrust, you’re not doing that.

You’re leaving it to the trustee who will be able to hold it for those minor children until they turn age of majority. Or if you don’t want them to have it at all, they can even do that.

David: Or delay it for until they’re 25 to 30, pay for their tuition, and avoids guardianship otherwise.

Jill: That’s correct.

That’s one thing that a RevTrust will do is it will avoid a guardianship for minor children. When minor children inherit property, they’re not allowed to inherit property or money. If [00:05:00] you don’t have a trust or something that holds this for those children, you will need a guardianship. And yes, that’s what a RevTrust will avoid.

David: And if a person’s still alive, but becomes incapacitated, how does a rev trust work in conjunction with, say, a power of attorney?

Jill: The power of attorney, and again, you know this too, depending on what’s initialed in the power of attorney, the power of attorney allows you to take care of assets outside of the trust.

But also sometimes in the trust, depending on what the power of attorney says, and the trust will allow that trustee who is now the trustee when the person is no longer able to be to act in conjunction with the power of attorney so that they’re able to pay bills, sell property, move property around, invest, and do things that the, and pay bills again, like I said, do things that that person would need to get done without a guardianship, which is always what you want to do.

David: And although it’s not a legal requirement, we generally [00:06:00] advise people to have the same person serve as the power of attorney and trustee.

Jill: It’s not a legal requirement. And sometimes as you and I know, you want them to check each other. So sometimes you might want them separately, but generally it’s easier to have them as the same person because they’re basically going to be looking at the same assets and they’re basically going to be managing the same money and you don’t want problems.

When one person has to get the permission of another. So a lot of times it is easier to have them both be the same person.

David: So it’s a good idea to have, for most people, to have a revocable trust or a rev trust to avoid probate, for privacy, and to hold assets for your children.

Jill: Absolutely. You know, you and I, David, both are huge proponents of rev trusts and, you know, a lot of people, do I really need it?

And we’ll get into paid on death later on, but paid on death accounts are not necessarily a great alternative to RevTrust. RevTrust really have a lot more [00:07:00] flexibility and are a lot better entities and a lot better, holding than some other ways to do things.

David: Right, well, thank you very much, Jill. And thank you everyone for watching and we’ll see you next time.