One of the questions that we receive regularly is whether it is worthwhile for an estate planning client to create and fund a revocable trust as the primary part of their estate plan. While there are many benefits to a revocable trust, such as avoiding probate, one of the less talked about benefits is potentially avoiding litigation. 

As we have discussed before, a trust in Florida could be described as a “secret document.” Under section 735.0813, Florida Statutes, a trustee must provide qualified beneficiaries with information on the trust’s existence, the trustee’s name and address, and that the trustee accepted his or her duties. Further, the trustee must provide a copy of the trust document upon request, identify the settlor (person who created the trust), the right to receive accountings of the trust finances, and information that is relevant about the trust. 

It is important to be clear, however, the trustee only has to provide this information to qualified beneficiaries, not to any person. They don’t have to provide this information to creditors or to people related to the settlor who are not qualified beneficiaries, for example. This means that a trust can be considered a secret document. People who may have claims against the trust or may be unhappy with the outcome of the decedent’s estate plan don’t have much information about the trust or the assets that are in it. Only the trustee and qualified beneficiaries have the legal right to that information. 

It’s this secrecy that helps a trust and its beneficiaries avoid litigation. Whenever a person is looking at whether litigation is appropriate for being left out of an estate or trust, one of the first items they will look at are the assets in the trust. It wouldn’t make sense to spend several thousand dollars on an attorney to file a lawsuit against a trust if there aren’t a significant amount of assets inside. This lack of information may deter a potential litigant from taking a shot in the dark and filing a lawsuit against a trust. 

The same consideration is contemplated by a potential creditor to the decedent’s estate. A creditor, since they are not a qualified beneficiary or a trustee, cannot obtain information about the assets of the trust. Creditors are only entitled to a notice of trust, which simply notifies the creditor that a trust exists. A creditor will need to open probate, get a personal representative appointed, and seek discovery against the trustee in order to find out if there are sufficient assets to pay the creditor’s claim. Again, this will cost several thousand dollars in attorney’s fees and still has the uncertainty where the creditor does not know whether the endeavor will be economically worthwhile. Therefore, a revocable trust can be a deterrent to creditor’s claims as well as other litigation as discussed above.

Now, revocable trusts are not a bulletproof way to deter litigation. It will not be 100 percent effective. A determined creditor or litigant can still opt to pay an attorney to take the steps to file a case and attack the trust. There are always ways that a determined attorney may be able to bring a claim. But in our experience, this does not occur frequently. A revocable trust and the resulting secrecy of its contents provide an additional speed bump to overcome for a person looking to litigate against a trust and may be enough to make someone decide against it. 

We always recommend talking to a Florida estate planning attorney before making a decision to create a revocable trust or other estate planning documents. Our estate planning attorneys will look at your unique situation and be able to make recommendations to best suit your goals. For instance, instruments like enhanced life estate deeds or ladybird deeds, can provide both protection from creditors and avoid probate. Contact us today to schedule a free consultation so that we can discuss your estate planning needs today