Trusts are documentary arrangements whereby a person is appointed as Trustee to hold legal title to property or funds for the benefit of another person. Think of a Trust as its own entity that is able to own property and other assets, under the control and decision making power of the Trustee.
Our clients set up trusts for many different reasons. A trust can help avoid the costs and complications of probate, simplify the distribution of assets upon your death, avoid exposure of your assets to creditors, minimize tax liability.and provide no public record of your assets or their distribution.
Testamentary Trusts are created in a Will and take effect upon the testator’s death. The Trust allows the person creating it to exercise control over their property long after they have passed away. For instance, a Testamentary Trust can be setup so that the beneficiary may only receive his or her inheritance from the Trust when they reach a certain age.
A Living trust is created during the creator or Trustor’s lifetime. When the Trustor, also known as the settlor, passes away, the Trust’s assets need not go through probatesince the Trustee already has title to the property. By avoiding probate the Trustor not only avoids the cost of probate itself, but also minimizes their tax exposure. Many people place all their assets into a Trust and avoid a Will, so that all their property can be passed without the necessity of probate.
A Trustor, however, relinquishes control and ownership of their property once it is transferred to the trust. The Trustee can invest the property for the benefit of the beneficiaries and owes them a fiduciary duty. The Trust instrument can permit the Trustee to distribute income earned on property in the Trust if it so dictates.
A Living Trust is normal revocable. This mean that the Trustor can make changes to the Trust during their life time. Those changes include transferring property back into the Trustor’s name or terminate the Trust entirely. So long as the Trust contains certain language, the Trustor will be able to maintain their homestead tax exemption and their homestead constitutional protection even though ownership has been passed to the Trust. However, a revocable trust, unlike an irrevocable trust, does not provide asset protection.
An Irrevocable Trust is different than a Living Trust because once it is created, the Trustor no longer has the power to change the terms of the Trust, terminate the Trust, or have property that was transferred to the Trust returned to the Trustor. So once an asset is transferred to the Trust, the Trustor permanently looses all ownership rights. Because of this, an irrevocable trust is a good asset protection tool. It can minimize your taxe liability and protect property from personal creditors.
Other types of Florida Trusts include Children’s Trusts, Charitable Trusts, Special Needs Trusts, Insurance Trusts, and Pet Care Trusts, among others.
Trusts are complicated legal instruments that have tax and other implications, which a Trust lawyer from the Morey Law Firm, P.A. can properly advise you on and draft according to your needs and interests. Setting one up the right way can save you and those you care for considerable headaches as well as savings.
If you are in the Orlando area or in the counties of Orange, Seminole, Osceola, Hillsborough, Pinellas, Polk, and Alachua, contact a Trust attorney from the Morey Law Firm, P.A. at 407-426-7222 today.