Essential Basics to Know Before Setting Up a Florida Trust
Trusts can be a powerful tool in your Florida estate plan. Many people assume trusts are just for the ultra-wealthy. That couldn’t be further from the truth. Trusts are created as a way to allow your money to be useful after you pass away. You’ll find there are multiple kinds of trusts, and they serve a wide variety of purposes, depending on your needs and long-term goals. However, if you don’t set a trust up correctly, it will not function as intended. That is why retaining an experienced West Palm Beach estate planning attorney is crucial.
Parties in a Florida Trust
Before you set up a trust, it’s essential to understand some of the terminology used in estate planning and trust creation. Some of the most common terms you will hear include:
- Settlor: If you are the one who is creating the trust and funding it, you are the Settlor. Other terms for Settlor can include trustor or grantor.
- Trustee: The trustee is the person you name to maintain the property you put in the trust and make distributions.
- Beneficiaries: Beneficiaries are the person, people, organizations, or even pets, who will benefit from your trust. There is no requirement that the beneficiary exists before the trust is created. For example, if you have a child after creating the trust, you could add your child as a beneficiary.
- Trust Property: The trust property is what the trust is funded with. It can be personal or real property, tangible or intangible.
- Trust Purpose: Trusts must have some legal purpose when they are created. Most trusts serve to provide financial support to beneficiaries, protect your assets, reduce tax liability, or be charitable.
Common Types of Trusts in Florida
One of the reasons to retain an experienced Florida estate planning attorney is to have someone who understands the different trust options. Depending on your goals, some trusts may be better for your situation than others. The most common types of trusts we see include:
- Revocable Trust: A revocable trust will allow you to maintain sole control of it. You can withdraw funds or cancel it whenever you choose. One downside is there are no tax benefits.
- Irrevocable Trusts: You will give sole control to the trustee. It can also be altered or revoked before it comes to an end if all beneficiaries and the trustee agree.
- Living Trust: This is created to benefit another person while you are still alive. It’s also known as an inter vivos
- Testamentary Trust: Your will creates this trust. When you die, your property will transfer into the trust.
- Discretionary Trust: This is a trust where you give the trustee power to determine how and when to distribute property to the beneficiaries. This trust could provide significant tax benefits since beneficiaries don’t have any interest in the trust until distribution.
Contact a West Palm Beach Estate Planning Attorney
There are numerous reasons to create a trust. Picking the right trust is extremely important. To learn what options are right for you, and best protect your assets, speak with a skilled West Palm Beach estate planning attorney before setting anything up. Contact the Law Offices of Larry E. Bray, P.A. today to schedule an initial consultation.
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