Living Trusts in Florida
Quick Summary
- You can use a living trust to leave your property to whomever you want without probate.
- A living trust in Florida does not provide any asset protection benefits.
- A person with a living trust still has a last will and testament—the will leaves everything to the trust (called a pour-over will).
What Is a Living Trust?
A living trust is a legal document created during a person’s lifetime that allows them to transfer ownership of their assets into a trust.
The person who creates the trust, known as the grantor, can manage and use the assets during their lifetime. Upon the grantor’s death, the assets are transferred to the beneficiaries designated in the trust without going through probate.
Most living trusts require the trustee to distribute the assets to the beneficiaries upon the grantor’s death, but some trusts provide for the beneficiaries over time.
A revocable living trust allows the grantor to make changes or even revoke the trust entirely during their lifetime. In contrast, an irrevocable trust cannot be changed or revoked once established.
Elements of a Living Trust
A living trust in Florida has several parts. The grantor, also known as the trustor or settlor, creates the trust and transfers assets into it. The trustee, who can initially be the grantor, manages the trust assets according to the terms in the trust document. Successor trustees are named to take over management if the original trustee becomes unable or unwilling to serve.
The trust document itself outlines the terms of the trust, including how the assets should be managed and distributed. Beneficiaries are the individuals or entities designated to receive the trust assets, either during the grantor’s lifetime or after their death.
The trust must comply with Florida law. That means it must be in writing and signed by the grantor, two witnesses, and a notary.
How Do You Create a Living Trust in Florida?
A living trust is a great way to avoid probate and provide for minor children. To create a living trust in Florida, you must (1) decide on the type of trust, (2) choose a trustee and successor trustee, (3) sign the trust document, and (4) transfer ownership of assets into the trust.
Because the living trust is revocable, you can still change its terms after it is created. After your death, the living trust becomes irrevocable, and the trust beneficiaries and successor trustees may not alter any of the trust provisions.
What Are the Benefits of Living Trusts?
A living trust avoids probate, which can be time-consuming and costly. It ensures your assets are distributed quickly and according to your wishes.
Living trusts can help manage your assets if you become incapacitated, as the successor trustee can step in without court intervention.
A living trust also provides privacy, as the trust details are not made public like a will.
For families with younger children (minors or adults), a living trust helps protect the trust assets from mismanagement after your death.
What Are the Disadvantages of Living Trusts?
Living trusts do have some disadvantages. They can be more expensive and complex to set up than a simple will.
A living trust also does not offer the same level of asset protection from creditors as some other legal arrangements, such as irrevocable trusts.
How Much Does a Living Trust Cost?
A typical living trust costs between $2,500 and $3,500. The price depends on the attorney’s experience.
Can You Get the Homestead Exemption in a Living Trust?
Yes, you can get the homestead exemption for a property placed in a living trust in Florida.
The key is to ensure that the trust is properly structured and that you, as the grantor and primary beneficiary, maintain the right to live in and use the property as your primary residence.
The Florida Constitution allows homeowners to benefit from the homestead exemption even if the property is held in a revocable living trust, provided these conditions are met.
Asset Protection for Living Trusts
A Florida living trust does not protect living trust property from the trustmaker’s creditors.
A living trust is a “self-settled” trust. A self-settled trust is one where the person who creates and funds the trust is also a trust beneficiary. Florida law unequivocally provides that a living trust that a trustmaker creates for their own benefit is not protected from the beneficiary/trustmaker’s creditors.
A living trust can provide substantial asset protection benefits for future trust beneficiaries, such as the trustmaker’s own children. If a living trust provides that upon the trustmaker’s death, the remaining trust property is held within the living trust, or in separate sub-trusts, for the benefit of the trustmaker’s spouse, children, or other beneficiaries, the money can be shielded from these beneficiaries’ creditors. A customized living trust may prohibit any payments to the beneficiary’s creditors or a former spouse.
Many married couples own their principal assets jointly as tenants by entireties. Tenants by entireties provides asset protection against the individual debts of either spouse. Spouses may lose entireties asset protection if they transfer their assets without careful planning. If a husband and wife create two separate living trusts, any entireties assets transferred to either spouse’s individual trust will lose tenants by entireties protection.
Transfers of entireties assets to a joint living trust can also forfeit entireties protection if the trust agreement is not properly drafted. A Florida joint living trust should include “entireties savings” provisions to show the trustmakers’ intent to retain tenants by entireties ownership as joint trustees of the couple’s joint living trust.
Frequently Asked Questions
Does a living trust need to be recorded?
No, a living trust does not need to be recorded. Unlike a will, which becomes a public document once it enters probate, a living trust remains a private document. It does not require recording with any government entity.
Does a living trust need a tax ID number?
A revocable living trust does not need a separate tax ID number during the grantor’s lifetime. The grantor’s Social Security number is used for tax purposes, and the trust’s income is reported on the grantor’s personal tax return. However, if the trust becomes irrevocable, such as after the grantor’s death, it will require its own tax ID number.
Do you need to get a new living trust once you move to Florida?
Florida recognizes the validity of a living trust created in another state so long as the trust has been properly executed under the laws of the state of formation. Therefore, people moving to Florida do not necessarily have to redo their living trust for its testamentary provisions to be enforceable under Florida law.
Is a living trust revocable or irrevocable?
The type of trust that most people label as a “living trust” is typically a revocable trust. However, the term “living” trust just means a trust created during the trustmaker’s lifetime.
About the Author
I’m a nationally recognized attorney specializing in asset protection planning. I graduated with honors from the University of Florida Law School and have practiced law for almost 50 years.
I have been recognized as a legal expert by media outlets such as the New York Times and the Wall Street Journal. I have helped thousands of clients protect their assets from creditors.
