Putting your house in a trust, such as a revocable living trust, offers some estate planning benefits in Florida, but some downsides as well.
A trust has three parts:
- a grantor (you), who sets up the trust
- a trustee, who controls the trust assets (often you as well)
- one or more beneficiaries (typically you while you are living, and often your descendants upon your death.
In Florida, putting your house in a trust avoids having to probate the home upon your death. Probate can be an expensive and time consuming process. However, your homestead is not a probate asset and can typically be disposed of in a simplified process, although one that still often requires an attorney.
Outside of probate avoidance, another benefit concerns your incapacity. A homeowner who becomes ill and unable to manage their own affairs still has full control and responsibiltiy over the homestead while they are alive.
But if the homestead is in a trust, the elderly or ill person can simply resign as trustee, allowing the more able successor trustee to control the home. Even though the successor trustee will have control over the homestead asset, the original homeowner still can remain as the lifetime beneficiary of the trust and the homestead.
Often a successor trustee will be an adult child, who is more likely to be able to maintain the home.
The biggest downside to putting your home in a trust in Florida is the cost. A standard revocable living trust will typically cost between $1,500 and $2,500, depending on whether you update your other estate planning documents at the same time.
Does a house in your trust still qualify for homestead? Yes, a person is entitled to the Florida homestead exemption even after property is conveyed to a living trust.
We typically advise married clients to keep their homestead in personal names and to only convey the home to a trust after the death of a spouse. When a client is married, the home will automatiaclly pass to the surviving spouse, who is gauratneed at least a life estate under Florida law.
Other situations, such as unmarried clients or when the home is not to pass to the client’s children, may warrant transfer to a trust sooner to achieve the client’s estate planning objectives.