This is the next post in my series on how a living trust may be utilized by Melbourne, Florida residents in their estate planning. My last article provided an overview of topics which this series will be addressing. It also stressed the need to speak with an attorney if you are planning for the future. Speaking with counsel is crucial, as a mistake in your estate plan can lead to negative consequences and infighting amongst your heirs. This article continues the discussion by explaining how a living trust can serve as a vehicle for investment real estate. If you or a loved one are in need of assistance then contact my office today to speak with a lawyer.
Investment real estate will typically pass to a spouse upon death if the deceased and the spouse owned the property as joint tenants with rights of survivorship. There are situations, however, in which such property may still need to go through probate. Also, if the investment home is titled in the name of an LLC or corporation then the deceased’s shares in the ownership entity will typically need to go through probate. Titling the property under a trust can often be preferable to either of the aforementioned options. Upon the passing of the trustee (typically the person who made the trust and placed the property in it), a successor trustee will take over management of the trust and the real estate within it. This allows for the management of the property to continue in accordance with the terms of the trust and without involving the Probate Court.
The utilization of a living trust provides an advantage in that it allows for a more simple way of managing investment real estate as an ongoing concern. Consider the following example. Jack and Jill own several rental properties. They place the properties into a trust and Jack is named as a trustee. The terms of the trust require the properties to be managed as rental units with Jack and Jill receiving the proceeds. Upon Jack’s death, the trust requires that their oldest son, Joe, take over as trustee and continue to manage the properties. At that time, the trust requires that fifty-percent of rental proceeds go to Jill for the remainder of her life, with the rest being equally divided between the children and grandchildren. The trust also contains a provision stating that if the homes ever appreciate to the point that they are a certain multiple of monthly rent proceeds, then they are to be sold with the sale proceeds being distributed. This type of arrangement can allow for the properties to avoid probate and for ongoing management and income generation for many years. While somewhat simplified, this example shows the benefits of using a living trust for investment real estate.
As with other assets in a living trust, the original owners of an asset can continue to utilize it during their lifetime. Under the scenario above, Jack and Jill will continue to manage the properties and have complete control over them during their lifetimes. Depending on the terms of the trust, they could buy, sell, or otherwise dispose of the properties in a way which makes the most sense. Setting up a trust, so that it has the proper level of flexibility, allows one to reach these types of objectives without having to deal with the probate process.
If you are considering placing investment property into a living trust then contact my office today to speak with a Melbourne estate planning lawyer. I understand that no two situations are the same and my firm will ensure that your plan is crafted to your specific needs. I pride myself on providing the highest level of service and I look forward to speaking with you. Contact us online or by telephone to schedule an initial consultation. My firm also services Florida clients in the Brevard County cities of Titusville, Cocoa, Palm Bay, Grant, Valkaria, and Rockledge, as well as in the Indian River County areas of Fellsmere, Sebastian, Vero Beach, Indian River Shores, and Orchid. We are also able to virtually work with clients throughout the state.