Choosing the right trust for your Florida estate plan is not always the easiest process. With the variety of trust options available, you may be wondering exactly which type of trust administration tools would fit your estate needs. Experts say that those who are considering using trusts should consider a few key factors before deciding which type of estate planning document to use.

First, you should examine your reasons for pursuing a trust. For many people who are looking to avoid estate taxes, recent modifications to tax policy may make your trust entirely unnecessary. Federal estate tax exemption now reaches up to $5.3 million per person — $10.6 million per married couple — which eliminates many people who would have otherwise chosen to use a trust. If your estate will pass that threshold, you need to decide whether you want to use a revocable or irrevocable trust model.

The key difference between the revocable and irrevocable trust is the amount of control the benefactor has over the assets that are being held. Revocable trusts offer more control and flexibility. They are generally used to accept your financial assets when you are no longer capable of administering your own affairs. Revocable trusts generally transition into irrevocable trusts at the time of the benefactor’s death. It can therefore be used as a partial substitute for other types of estate documents.

Irrevocable trusts require benefactors to surrender a vast amount of control. These holdings are generally reserved for those with a significant amount of wealth and assets who are comfortable setting those items aside indefinitely. Irrevocable trusts can also be used in special circumstances for those who want to ensure the continued care of a disabled dependent, for example.

The differences between revocable and irrevocable trusts are vast and somewhat complicated. It pays to not only do your research, but also to consult with an estate planning professional who can help educate you more about the advantages of various types of trusts. You can avoid excessive taxes and enjoy a variety of other benefits when you integrate trusts into your estate plan.

Luis E. Barreto