What Type of Trust is Right for Your West Palm Beach Estate Plan?
Trusts continue to become a more significant part of many Florida estate plans and for a good reason. There are numerous types of trusts, each of them serving a different purpose. Because no two Florida estate plans are the same, it’s essential to understand the different types of trusts available. If you need assistance with your estate plan, it’s best to speak with an experienced West Palm Beach estate planning attorney.
One of the biggest mistakes people make when setting up their trust is not speaking with an attorney first. Trusts are not necessarily easy to properly fund. If you don’t do it correctly, the trust could be declared not valid, and your estate would need to go through probate anyway. That means you just lost all the financial protection you thought you had in place to ensure the maximum amount of your estate was distributed to your intended beneficiaries.
Here’s a look at some of the most commonly used trusts in Florida estate plans. Not every one of these will be right for your situation. When you speak with a Florida estate planning attorney, you can explain your financial goals to know what trusts to recommend.
A living trust is created during your lifetime and happens by transferring property to a trustee. In most cases, you will retain power as the grantor to revoke or change the trust. When you die, it becomes irrevocable. One of the reasons they are so popular is because they can help your estate avoid probate. However, there are some limitations with a living trust. Creditor claims are possible concerns as are making sure you don’t lose any protections if you have a Florida “homestead exemption.”
Irrevocable Life Insurance Trusts
The irrevocable life insurance trust (ILIT) is funded with your life insurance policies. The trust will own and be the beneficiary of the policy. However, your intended recipients can be the trust’s beneficiaries. When you die, the trust will become funded through the applicable life insurance policies. However, there are also stipulations with this one. The grantor must have lived for a minimum of three years after transferring the life insurance policies; otherwise, they will not be excluded from the estate. Depending on the overall value of your estate, this could cause a wealthy family to be on the hook for hefty estate taxes ultimately.
A testamentary trust becomes valid after you die. It’s a trust that is established per your instructions in your last will and testament. There will be a named trustee responsible for distributing assets to your beneficiaries that you specified in your will. These are often used for protecting your spouse’s future by making sure they have lifetime income or children you may have from a prior marriage.
Contact a Florida Estate Planning Attorney
Numerous other types of trusts deal with a wide variety of financial goals. When you meet with our West Palm Beach estate planning attorney, we will sit down and go over your entire financial situation. We will explain exactly what types of trust best suit your needs and goals. If you haven’t established a trust, now is the time. Contact the Law Offices of Larry E. Bray, P.A., to learn more about how we can help.