Are Florida Revocable Trusts Really Private?

An oft-cited benefit of creating a revocable trust is the “privacy” it affords over a traditional will. The reasoning goes something like this: When a will is filed for probate in Florida, it becomes a matter of public record. Indeed, the probate proceeding itself is public, so anyone can learn the contents of the will. A trust, in contrast, does not need to be filed with the probate court and therefore may remain private.

But are trusts really private? In most cases, they are for all intent and purposes. There are, however, some important caveats to keep in mind.

Real Estate Transactions

Revocable living trusts, which are commonly used in Florida estate planning, allow a grantor to transfer assets to a trustee–normally themselves while they are still alive–who then holds formal legal title to the property. For many such trusts, a key asset is the grantor’s home or other real estate holdings. And this is where some of the privacy protections afforded by a trust can start to break down.

Any transaction involving real estate, including a transfer to a trustee or a sale by the trustee after the grantor’s, must be recorded under Florida law. In practice, this does not necessarily require recording the entire trust. Common practice is to record a certificate or “abstract” of the trust declaring that the trust exists and identifying the current trustees.

Litigation

Another circumstance that can lead to public disclosure of part or all of a trust is litigation. If someone sues the trust, that can lead to the terms of the trust becoming a matter of public record. This can include not just cases where someone is challenging the terms of the trust or the trustee’s potential breach of fiduciary duty. It may also cover a situation where a creditor is looking to collect against the trust.

Indeed, it is critical to understand that revocable trusts do not protect the individual grantors against creditor claims. In other words, say you create a revocable trust and fund it with your assets. If a creditor then sues you for a personal debt, they could force you to disclose the existence of the trust and its terms.

Beneficiary Disclosure

A final consideration is that trusts governed by Florida law–and indeed the laws of most states–require the trustee to provide a complete copy of the original trust instrument to any qualified beneficiary of that trust upon request. And there is then nothing to necessarily stop the beneficiary from making a public disclosure of the trust. So even if you, as the grantor, intended for the trust to remain private, after you die and the trust becomes irrevocable, your beneficiaries may choose to ignore your wishes.

Contact a Pompano Beach Trust Litigation Attorney Today

If you are involved in a legal dispute involving the validity of a trust or any other trust-related matter, contact Pompano Beach estate & trust litigation lawyer Mark R. Manceri, P.A., Attorney at Law today to schedule a consultation.