Trusts

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Welcome.  A trust is an agreement under which money or other assets are held (owned) and managed by one person for the benefit of another. Different types of trusts may be created to  accomplish specific goals. Each kind may vary in the degree of flexibility and control it offers.

Some of the common benefits that trust arrangements offer include:

  • Providing personal and financial safeguards for family and other beneficiaries;
  • Postponing or avoiding unnecessary estate taxes;
  • Establishing a means of controlling or administering property; and
  • Meeting other social or commercial goals.
  • Avoiding Probate

A Trust is created, in a manner similar to a Will. The formalities of signing are identical. The document is called either a “Trust Agreement” or “Declaration of Trust.” It typically is named after the individual who creates it, such as the “John Smith Revocable Living Trust.” The person making the trust is known as the “Grantor” or “Settlor” or “Trustor.” The Grantor will usually also serve as the “Initial Trustee”. One can think of the Trustee as the administrator, who normally has sole discretion to decide how and when to distribute money to the beneficiaries. The terms of the trust provide a blueprint. Typically a trustee is charged with using the money in trust for the “health, support, maintenance and education” of the beneficiary. The Trust Agreement typically contains names of successor Trustees, to serve when the initial trustee can no longer do the job. Trusts are useful when money is inherited by minors, or young adults who may not be able to make the best financial decisions at a young age.

A living revocable trust, is different than a testamentary trust. A testamentary trust, is a “trust within a Will or Trust”, that does not come into existence until the decedent dies. The terms of the “future or contingent” trust in contained within the Will. A living revocable trust is an entity which owns your property when you are alive. In your capacity as Trustee, you have complete control over the assets owned by your trust. The essential component of having a trust is to “fund it.” This means changing the title of the deed or account from your name to the name of the trust. While having a trust is more work up front, it saves the beneficiaries of your property from having to open a probate, if that is important to you.

A living revocable trust is advisable when folks own real estate in both Florida and other states. This strategy avoids having to open two separate probate actions, one in each state.

Once a trust has been established, a periodic review of the terms of the trust is
advisable. Like a Will, a Trust may be in existence for many years. A trust is easily amended to add or change Trustees, Successor Trustees, Beneficiaries, or other needed changes, as life moves forward. Events that may herald a need for an amendment to your Trust or Will, are marriage, death, incapacity, birth of a child or grandchild, or divorce.