In Florida, estate plans often contain trust documents. Two common types are revocable and irrevocable trusts. The person who creates the trust is known as the “settlor” or “grantor.”
The person responsible for managing the trust is the “trustee.” The trustee may be a relative or another trusted person, bank, or trust company. Of course, it remains vital to enlist the help of an experienced estate planning attorney. This ensures your trust document follows Florida law.
Florida Statutes
The main Florida statutes governing revocable and irrevocable trusts are found in Chapter 736 of the Florida Trust Code. Some primary sections include:
- Florida Statute 736.0601 – This statute deals with the capacity of settlor in revocable trusts. Basically, it states that like a will, a settlor must be of sound mind to create and sign a trust document.
- Florida Statute 736.0602 – This statute lists the methods a settlor may amend a revocable trust. This does not apply to an irrevocable trust which usually may not be amended. A revocable trust becomes irrevocable upon the grantor’s death.
- Florida Statute 736.0603 – Settlor’s duties are explained in this section.
- Florida Statute 736.0604 – Validity time limits of revocable trust are defined in this section. For example, how long may someone contest a revocable trust after the settlor’s death? The time limits are defined in this statute.
- Florida Statute 736.0605 – Creditors’ claims as related to irrevocable trusts are highlighted in this section. An experienced attorney will explain asset protection regarding irrevocable trusts.
- Florida Statute 736.0813 – Requires trustees of irrevocable trusts to keep beneficiaries informed of the trust’s accounting and existence.
In addition to Florida statutes, an experienced attorney knows recent legislation that may affect current statutes. For example, Senate Bill 262, effective 2025 amended Statute 736.04117. Florida Trust law remains complicated and requires an experienced attorney’s guidance. As a result, contact an experienced attorney to set up a revocable or irrevocable trust.
Key Differences Between Revocable and Irrevocable Trusts
Understanding the differences between the two common trusts may help you decide which type works best. The main distinctions include:
- Control and flexibility – With a revocable trust a grantor may modify the trust at any time while alive and competent. This makes this type of trust a solid choice for anyone that may wish to alter the document as life changes. On the other hand, an irrevocable trust may not be changed without court approval or beneficiaries’ consent. Basically, an irrevocable trust is a more permanent option.
- Tax implications – In a revocable trust, assets remain part of your own estate. Since Florida has no inheritance tax, this may not be a burden for smaller estates. High net worth individuals may consider the irrevocable trust due to potential tax reductions. Of course, seek your attorney’s advice on this extremely important and complicated matter.
- Asset protection – Revocable trusts offer no protection from creditors since you legally still own your assets. Your assets will be counted in Medicaid planning with a revocable trust. An irrevocable trust does offer asset protection from creditors. Some may use the irrevocable trust to shield assets, or for a special needs trust.
- Conversion after death – The revocable trust becomes irrevocable upon the grantor’s death. Assets are distributed to heirs without going through probate. The terms of the irrevocable trust are carried out without the need for probate.
In summary, trusts offer privacy and efficiency for transferring assets upon death. This is comforting to heirs during a very difficult, sad time. Additionally, both types of trusts may allow for incapacity planning if a grantor is unable to handle physical, financial or legal matters. Most importantly, contact an experienced estate planning attorney to set up any type of trust.