Estate Planning in Florida: Different Types of Trusts Available
Traditionally, people think about wills when it comes to estate planning. However, another option is a trust. A trust is a separate fund that spells out how your assets are to be distributed upon your death. It offers additional benefits like tax minimization, no probate, and the ability to specify who will take care of your children after you die.
There is a mistaken perception sometimes that trusts are just for people who have considerable assets or are very wealthy. This is not true. Trusts are an important tool for estate planning, even if you only have a few assets so far.
If you are interested in learning more about trusts, it’s important to speak with a West Palm Beach estate planning attorney who can advise you about the different types of trusts available and which one is right for you. Trusts can be divided into two main categories — living trusts and testamentary trusts.
Living trusts are typically created by the grantor while they are alive. It can be revocable or irrevocable.
An irrevocable trust is one that cannot be revoked nor can you get the assets back. There is a named trustee who manages the trust and any assets you’ve placed in it. This is a preferable option for most people if the main reason for forming a trust is a way to reduce the amount of assets that are subject to estate taxes. This type of trust can also help shield assets from creditors while you are alive, helping ensure you have something left to leave behind to your heirs. In addition, there are some potential tax benefits that result in no tax liability for income generated by any assets in the trust.
A revocable trust is the option for people who want to have more control over the trust during their lifetime. As the name suggests, you can make changes or revoke the trust at any given time. Changes you can make include adding or removing property to the trust, changing the beneficiaries, etc. Revocable trusts can not only manage assets, but also protect them in the event you are sick or unable to make a decision on your own behalf. If you name a conservator or financial guardian in your revocable trust, it can save your family the time and money of going through the process of having one appointed.
The downside with revocable trusts is that you cannot avoid estate or income taxes because they are still in your control and therefore part of your income.
These types of trusts are set up as part of your will and they go into effect after you die. These trusts are often used to meet specific goals like skipping your surviving spouse as a beneficiary, the preservation of assets for children from a prior marriage, gifting to charity, ensuring a special needs beneficiary is fully taken care of, and more.
Retaining a Florida Estate Planning Attorney
Depending on your estate and financial goals, there are a wide variety of trusts available. Some of these trusts include:
- Family trusts
- Generation-skipping trusts
- Charitable trusts
- Insurance trusts
- Qualified terminable interest property trust
- Creditor shelter trust
Your attorney will discuss your financial goals and potential tax implications to help you decide what is best for your individual situation. Contact the Law Offices of Larry E. Bray, P.A. in West Palm Beach to schedule a consultation. Let us help with all your estate planning needs.