The Commitment Phobe’s Guide To Trusts
You know you are old when you start making New Year’s resolutions, because it means that you are old enough to understand that, while not everything is within your control, your actions have an effect on your life satisfaction. The trouble with New Year’s resolutions is that they require commitment, and you are a lifelong commitment phobe. Perhaps there is a woman in your neighborhood who goes on a long walk every day and has been doing so for as long as you have lived at your current residence, but you know yourself well enough to know that you would easily get bored if you tried to adopt such a practice. You do not even want to entertain thoughts of going vegan or eliminating complex carbohydrates from your diet. You want a New Year’s resolution that you can accomplish in a single action, so that you can spend the rest of the year feeling proud of yourself that you did it. Setting up a trust does not take much effort, but are you too much of a commitment phobe to make the move? To find out how much commitment a revocable trust requires, and how much commitment it doesn’t require, contact a Tampa estate planning lawyer.
Revocable Trusts Make It Easy to Change Your Mind
Trusts are a straightforward way to keep large portions of your estate from passing to your heirs without going through probate. Yes, your heirs can get a life insurance payout or be the transfer on death beneficiary of your bank account, but this only gives the beneficiary, at best, a lump sum of tens of thousands of dollars. With you no longer around to give advice, your descendants could easily blow through the money quickly and end up in a worse financial position than where they started.
A trust is its own legal entity that issues payments to the beneficiaries according to the schedule that you indicate in the trust instrument. It does not become part of your estate during probate; it simply does its job, whether you are around or not. If that sounds scary, consider a revocable trust. With this kind of trust, you can make as many changes to the trust instrument as you like, whenever you change your mind about assets, beneficiaries, trustees, or any other matter related to the trust.
The IRS Is Not Impressed by Your Lack of Commitment
A main motivation for establishing an irrevocable trust is that it files its own tax returns, so you do not pay taxes on its assets. You cannot do this with a revocable trust; you cannot have your cake and eat it, too. Instead, the property in your revocable trust legally belongs to you, and you must account for it on your tax returns. A revocable trust becomes irrevocable upon the death of the grantor.
Contact David Toback About Setting Up a Revocable Trust
A Central Florida estate planning lawyer can help you get started on a revocable trust or modify an existing one. Contact David Toback in Tampa, Florida to set up a consultation.
Source:
metlife.com/stories/legal/revocable-vs-irrevocable-trust/#:~:text=Revocable%20trusts%20last%20as%20long,and%20after%20you’ve%20passed.
