Overview of Irrevocable Trusts in Florida

Written by Nataline Garcia, Esq.

When determining your estate planning needs it is essential to understand the differences between an irrevocable trust and a revocable trust. In this blog article I will discuss the fundamental benefits and drawbacks of an irrevocable trust, and how it may, or may not, be beneficial for you.

Who are the parties involved in a Trust?

First it is important to understand the parties involved in a Trust, this is applicable for both an irrevocable trust and a revocable trust. Generally there are three people involved in a Trust: 1) the grantor; 2) the beneficiary; and 3) the trustee. The grantor is the person who establishes a trust and contributes assets to it. The beneficiary is the person, or people, who will ultimately benefit from the assets in the trust. The trustee is the person, or organization, who is responsible for seeing that the trust is administered as intended.

What is an Irrevocable Trust?

A trust becomes “irrevocable” if it cannot be revoked. This means that during your lifetime, the grantor will lack the power to take back any assets transferred to the trust. The grantor cannot unilaterally amend or modify the trust, change beneficiaries, transfer property, or even terminate the trust. On the other hand, a revocable trust allows the grantor to make any amendments, modifications or changes during their lifetime. An irrevocable trust provides for less control of property and assets, as opposed to the revocable trust. Although it seems as an irrevocable trust would never be appropriate, as why would someone desire to lack control over their trust, at times less control may be beneficial. Of course, every situation is different.

For example, if you wish to minimize estate taxes, transferring assets to an irrevocable trust effectively removes them from your estate, not making them subject to the same tax a revocable trust would be subject to. Additionally, an irrevocable trust provides a layer of legal protection from creditors because under an irrevocable trust you no longer own the assets, the trust does. 

It is worth mentioning that in some limited circumstances, an irrevocable trust may be altered after its’ creation, but generally the grantor cannot make this decision unilaterally. In Florida, an irrevocable trust, may in limited circumstances, be modified through a Florida power of appointment or by Court action if all beneficiaries are in agreement. Generally, once an irrevocable trust is formed and the trust is funded, the named trustee will manage the assets for the beneficiaries’ benefit, making distributions as instructed by the grantor. A beneficiary is generally a third party, but can also be the grantor.

What is the Bottom Line on Irrevocable Trusts?

If you are considering creating an irrevocable trust, be 100% sure and consult with an experienced estate planning attorney. Although irrevocable trusts have their advantages, it is important to ensure you are certain of your intentions prior to creating one. If you have any questions regarding the creation of an irrevocable trust please contact the Law Office of Ray Garcia, P.A., at 305-227-4030 or via email at legal@raygarcialaw.com for a free consultation.