However, there are different types of trusts, each one to serve a distinct purpose. Before proceeding to create a trust, it is crucial to sit down with a Florida estate planning attorney to assess your case and determine the best option.
In this article, you will discover the four main types of trusts in Florida.
What is a Trust? – Back to Basics
In essence, a trust is a legal arrangement to transfer ownership of property for the benefit of a third party (beneficiary). It begins when a trust maker (designated as a “grantor” or “settlor”) creates a trust to transfer ownership to a trustee.
The trustee is the person responsible for holding the title of the assets held within the trust, managing them to benefit the grantor and the beneficiary (the individual(s) chosen by the grantor to receive the assets upon death or disability).
Although trusts are useful tools in terms of asset protection, using a trust strategically depends largely on how an estate plan is structured. Generally, most people use trusts as a way to avoid probate and safeguard loved ones from unnecessary stress.
What Are the Four Major Types of Trusts in Florida? – The Essentials
The most popular trusts used in Florida are revocable trusts. A revocable trust is a legal arrangement in which it is possible to alter, cancel, and amend provisions, or even revoke the trust altogether.
This way, the grantor of a revocable trust enjoys flexibility, being able to alter provisions, remove or add beneficiaries to the trust, etc. Besides, the grantor receives all income earned from the assets held within the trust up until his/her passing.
A revocable trust permits grantors to name themselves as trustees, holding both roles simultaneously. Consequently, the trust maker retains control of the assets within the trust as long as he/she lives.
Upon its grantor’s passing, a revocable trust becomes irrevocable. Then, the trustee (or successor trustee) will distribute the assets to each beneficiary according to the provisions in the trust agreement.
As its name suggests, an irrevocable trust is a legal arrangement that can neither be altered nor changed once it is signed into creation by the grantor. Eventually, all trusts become irrevocable upon their grantors’ passing. Yet, it is possible to create an irrevocable trust while the grantor is still alive.
After transferring ownership of an asset to an irrevocable trust, a grantor no longer has control over it. Usually, it is used mainly for purposes associated with asset protection, estate tax planning (e.g., gifted assets), and Medicaid-related estate planning.
Many wealthy individuals believe in charity as a way to contribute to their community’s well-being and help other individuals to thrive as well. In this sense, it is possible to create a charitable trust to benefit both a charity and beneficiaries simultaneously.
Typically, charitable trusts are used to reduce estate taxes or even avoid them completely.
Ensuring the best outcome for the family upon death is a major concern for most people. In this case, a life insurance trust would be a good option, as it permits you to remove the insurance policy benefit from your insured’s taxable estate.
Overall, it is an excellent tool to transfer wealth to beneficiaries without exposing it to heft taxes. Usually, an insurance trust is an irrevocable trust, to avoid changes or amendments after it is created.
Identify the Ideal Trust Solution for Your Case – Work with an Expert Estate Planning Attorney
Before setting up a trust, it is crucial to have your case assessed by an expert trust attorney to ensure a positive outcome. Waste no time and money with uncertainty. Call Attorney Romy B. Jurado today at (305) 921-0976 or email Romy@juradolawfirm.com to schedule a consultation.