Revocable living trusts can have many estate planning benefits for Florida residents with a significant amount of assets. A revocable living trust holds assets during a person’s lifetime and then passes those assets to the named beneficiaries after the settlor dies. During their lifetime, settlors are able to maintain full control of the revocable living trust, moving assets in and out of the trust as they see fit.
A common misconception about revocable living trusts is that they have the power to protect assets from creditors and civil judgments. In reality, a revocable living trust cannot protect a person’s assets from liability risk. A wealthy individual or a person who has a high liability exposure should use other financial tools to lower the risk of losing assets to civil judgments.
Liability insurance is an important tool that can be used to protect assets. This type of insurance may be purchased through a homeowner’s or auto insurance company and and is relatively inexpensive Married homeowners may also protect their real estate assets by becoming tenants by entirety in states that recognize that classification.
A lawyer may be able to help an individual or couple to create an estate plan that takes asset protection into account. Asset protection may be especially important for professionals with a high risk of liability due to the work that they do. During estate planning, a lawyer may help clients to understand how much liability insurance they need to protect their assets and what other asset protection tools are available to them.