© Law Office of Leonard A. Barrow, Jr.

The information contained in this web site is intended to convey general information about the law and other sources, which is subject to interpretation and change.

2418 Colonial Drive

Melbourne, FL 32901

Phone:  (321) 725-0045

Fax:  (321) 725-0078

E-Mail:  len@lenbarrow.com

What is a Revocable Trust?

A Revocable Trust is a document (the "Trust Agreement") created by you to manage your assets during your lifetime and distribute the remaining assets after your death.  The person who creates a trust is called the "Grantor."  The person responsible for the management of the trust assets is the "Trustee."  You can serve as Trustee, or you may appoint another person, bank or trust company to serve as your Trustee.  The Trust is "Revocable" since you may modify or terminate the Trust during your lifetime, as long as you are not incapacitated.

During your lifetime, the Trustee invests and manages the Trust property.  Most Trust Agreements allow the Grantor to withdraw money or assets from the Trust at any time, and in any amount.  If you become incapacitated, the Trustee is authorized to continue to manage your Trust assets, pay your bills, and make investment decisions.  This may avoid the need for a court-appointed Guardian of your property.  This is one of the advantages of a Revocable Trust.

Upon your death, the Trustee (or your successor if you were the initial Trustee) is responsible for paying all claims and taxes, and then distributing the assets to your beneficiaries as described in the Trust Agreement.

Your assets, such as bank accounts, real estate and investments, must be formally transferred to the Trust before your death to get the maximum benefit from the Trust.  This process is called "funding" the Trust and requires changing the ownership of the assets to the trust. Assets that are not properly transferred to the Trust may be subject to probate.  However, certain assets should not be transferred to a Trust because income tax problems may result.  You should consult with your attorney, tax advisor and investment advisor to determine if your assets are appropriate for Trust ownership.

What are some disadvantages of a Revocable Trust?

     1.  A Trust provides no legal method of reducing the time period to which a Decedent's creditors can file a

          claim against the assets of the Decedent.

•  Florida law allows creditor's claims up to two years from the date of a Decedent's death.

•  Only by opening a Probate Administration can creditor's claims be reduced to a period of three months.

•  In majority of cases, a Probate Administration is opened with the court despite the existence of a Trust.

     2.  A Trust does not eliminate attorney's fees or Trustee's fees.

•  Initial costs of setting up a Trust are significantly higher than a Will.

•  Under Florida law, the fee schedule for an attorney involved in administering a Trust after the death

   of a Grantor is 75%of the Statutory fee an attorney would be awarded in a Probate Administration

   involving assets of the same monetary value.

•  A Successor Trustee is also entitled to compensation.

     3.  A Trust does not eliminate or reduce taxes or creditor's claims.

     4.  A Trustee of a Trust has no authority beyond the assets in the Trust, while a Personal Representative of

          an estate is granted broad authority to wind up all of the Decedent's affairs.

•  Assets not held in the name of the Trustee of the Trust at the time of Grantor's death are subject to

   Probate Administration.

•  Real estate held in the name of the Trustee of the Trust at the time of Grantor's death often requires

    extra execution of documents or other procedures to "prove" the validity of the Trust or "prove"

    that the Successor Trustee has the proper authority under the terms of the Trust, in relation to the

   interests of the beneficiaries of the Trust, in order to properly convey or sell real property held by

   a Trust.

•  Any dispute or uncertainty arising between the Trustee and the beneficiaries (or any other person

   or entity) would need to be adjudicated in a separate court case, where, unlike a Probate Administration,

   such dispute or uncertainty could be resolved within the context of the same Probate proceeding.