* by Susan Boesger, Esq.
I. Considerations in Use of the Florida Model Simple Revocable Trust
The Model Revocable Declaration of Trust is a "one party" trust. [A trust created by written instrument which is otherwise valid and complies with F.S. § 736.0403 will not be held invalid or an attempted testamentary disposition because the settlor is, at the time of the execution of the instrument, or thereafter becomes, sole trustee. F.S. § 689.075(1)(g).] It is used where a client wishes to be the initial trustee (the "grantor-trustee") to continue to manage his or her property as long as he or she is able and to provide for continuity of management by the appointment of a successor trustee or trustees in the event of incapacity or death. It is intended to be the grantor's primary document in the estate plan, and contains the majority of the dispositive provisions.This simple revocable trust is ideal for the small- to medium-sized estate or for the estate of the less-wealthy spouse whose total estate plus prior taxable gifts is less than the applicable exclusion amount, or where a couple has combined assets plus prior taxable gifts that exceed the applicable exclusion amount by a modest amount, and it is probably not desirable to mandate that the applicable exclusion amount be held in a credit shelter family trust for the survivor.COMMENTARY: Simple revocable trusts are best for individuals or couples whose estates are not expected to exceed the applicable exclusion amount. These trusts provide no estate tax planning, and therefore should not be used if it is expected that the federal estate tax will be imposed upon the estate of the grantor. Typically, in estates of this size, it is desired that the spouse receive the assets of the trust outright at the death of the grantor, although in some cases it may be desired that the spouse receive the assets in trust (such as in instances of second marriage, when the spouse is not the parent of the grantor's surviving children). Children may also receive assets outright, if they have reached the age of majority or another specified age, although it may be desirable or necessary that the children of the grantor receive assets in trust, especially if those children are minors or it is desired that the receipt of assets be delayed until children reach specific ages.The spouse may be uncomfortable with a family trust disposition because he or she is not entitled to receive property outright. The Model Trust provides for an outright distribution of the trust fund at the death of the grantor to the surviving spouse.The Model Trust provides that the trust property be distributed to the surviving spouse at the death of the grantor, or in the event that the spouse has predeceased the grantor, outright to the grantor's children at death. This trust provides for outright distribution to the spouse at death, and therefore care should be taken to ensure that the grantor does not desire to provide assets directly to children at death (especially if the spouse is not the parent of the grantor's children).
[A] Primary Advantages
The primary advantage of the simple revocable trust is its ease of administration and management. A couple whose combined estates is less than (and not expected to exceed) the applicable exclusion amount may still benefit from the use of revocable trusts for the management of their respective assets. A well-funded revocable trust can assist in limiting or eliminating the need for estate administration at the grantor's death, [The elimination of estate administration as a necessity for an individual who establishes a revocable trust is dependent upon two factors: first, that the grantor's assets are fully funded into the revocable trust or otherwise pass by operation of law, and second, that there is not another reason to file documents with the probate court, such as the existence of homestead property in the estate, or the desire to file a Notice to Creditors to foreclose creditors' claims sooner than the two years provided for under Florida law.] potentially allowing the transmission of assets sooner than what may be possible pursuant to an estate administration, and reducing the amount of attorney's fees that may be necessary due to an estate administration upon the death of the grantor.
[B] Primary Disadvantages
The primary disadvantage of this plan is that, in the event the grantor and/or surviving spouse approach the applicable exclusion amount (whether through the accumulation of assets or a reduction of the applicable exclusion amount), the trust provides no way to take advantage of a credit shelter trust for tax planning, unlike the Model 608 Disclaimer Trust. As a result, care should be taken to reinforce with the grantor the need for vigilance with respect to the accumulation of assets, as well as the need to have the plan reviewed frequently for changes which may become necessary. If this trust is used, the grantor and his or her spouse should also be instructed about the importance of seeking legal advice as soon as possible after the death of the first spouse to die.
* Susan Calistri Boesger, Esq. is the update author for Florida Will and Trust Forms Manual, Fourth Edition.
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