Is It Time to Add an Irrevocable Trust to Your Florida Estate Plan

Did you know that irrevocable trusts can offer unique benefits?  How do you determine if it is time to add an irrevocable trust to your Florida estate plan? 

First, let us look at what makes a trust irrevocable. Trusts are either revocable or irrevocable. The primary difference is that a revocable trust can be revised or revoked by the creator at any time. In contrast, an irrevocable trust is more final in that after an irrevocable trust is created, the creator cannot change or revoke the trust, except under very limited circumstances.

Next, let us take a look at the benefits of an irrevocable trust. First, under Florida law, the creditors of beneficiaries of an irrevocable trust cannot reach the trust’s assets, if the trust is created as an irrevocable spendthrift trust. A spendthrift trust is formed when the creator of a trust wishes to leave assets to a person, but has concerns about that person’s ability to handle the assets independently. Perhaps, the intended beneficiary has substance abuse or gambling issues or even lacks money management skills. The trustee of a spendthrift trust has the authority to make discretionary disbursements and, should a beneficiary get into financial trouble involving creditors, the trustee could deny disbursements in order to prevent the trust’s depletion. 

Another benefit of an irrevocable trust may be that assets can be excluded from the calculation for Medicaid eligibility. When qualifying for Medicaid, the trust assets will likely not be considered in the eligibility determination. Given the extraneous cost of long-term care, an irrevocable trust may be a smart financial move for asset preservation. Assets held in the irrevocable trust can be used to support the grantor during his or her lifetime, and then pass to his or her loved ones, rather than all of the money going to the cost of a nursing home.   

Additionally, irrevocable trust assets are not subject to estate tax. When the creator passes away, the property, because it no longer is deemed property of the creator, will not be subject to estate tax. 

If the financial benefits of an irrevocable trust appeal to your financial interests, our office can take a closer look at your situation and assist in navigating the laws to determine the best trust structure to meet your needs. Please reach out to our office today to schedule an appointment.