Polk County Trust Attorneys Who Care
In addition to a Last Will and Testament, many people choose to create a trust as part of their estate plan. Despite its reputation for being associated with the ultra-wealthy, trusts are frequently employed as a tool in many “normal” or “moderate” sized estates. As you’ll read below, there are a number of reasons for this, and trusts may serve as a way for you to both protect and distribute your assets in a way that you see fit.
What Is a Trust?
A trust is a document that transfers ownership of assets from one individual, the grantor, to another individual, the trustee. In return, the trustee has a fiduciary responsibility to appropriately distribute the trust’s assets according to the provisions of the trust.
This concept is a bit difficult to grasp, so distilling it down to a real-life example – say jewelry – can help many better understand how trusts work. Many of us own at least some form of jewelry (valuable or not), which are frequently stored in a box for safe keeping. Now imagine taking that box of jewelry and giving it to your lifelong trusted friend or relative for safe keeping. This friend/relative in turn promises to keep your jewelry safe and only to give it back to you when asked. This, in effect, is the baseline structure of how a revocable trust operates. In this example:
- You: Are the grantor;
- Your trusted friend/relative: Is the trustee;
- The jewelry: Is your asset that is to be held in trust;
- The jewelry box: Is the trust itself, which retains title and ownership over the jewelry;
- The explicit promise to return the jewelry: Are the terms of the trust that must be followed.
The above is just one example of one type of trust. And, there are a myriad of ways to structure a trust, each with their own advantages and disadvantages. Creating a trust, though, is often more complicated than creating a Last Will and Testament. But a trust can afford the grantor significant advantages that a Last Will and Testament simply cannot offer.
Trusts Can Save on Time and Money
One of the main reasons that someone may choose to create a trust is that the property put into the trust avoids probate in its entirety. Avoiding probate can provide two potential advantages: time and money.
Probate is the court-supervised administration of an individual’s estate following his or her death. The probate process is created and dictated by Florida state law, and its purpose is to transfer assets from the deceased individual to his or her beneficiaries. The probate process can take time. Even when someone passes with a Last Will and Testament in place, the court retains a limited role in overseeing the distribution of those assets and settling of the estate. This process can take several months in the best of scenarios, resulting in the delayed transfer of the deceased’s assets to his or her beneficiaries.
Most personal representatives will also retain legal counsel to assist with the administration of the deceased’s estate. Filings need to be made, creditors need to be paid, and taxes (yes, even after death) still need to be filed. Depending on the size and complexity of the estate along with the personal representative’s time commitment and overall understanding of both the process and the estate itself, legal and court fees can slowly start to compound. The estate generally pays for these expenses, meaning the amount distributed to the beneficiaries is affected.
Trusts are not considered part of the estate because it’s the trust – not the deceased – that owns the assets. As such, the assets included in a trust avoid probate entirely. Instead, a trust can name a beneficiary that, upon death, assumes ownership of the assets contained therein. No court involvement or approval is needed and any legal fees associated with the transfer of these assets are going to be a fraction of what they otherwise would have been in probate.
Trusts Can Save On Time and Money
One of the main reasons that someone may choose to create a trust is that the property put into the trust avoids probate in its entirety. Avoiding probate can provide two potential advantages: time and money.
Probate is the court-supervised administration of an individual’s estate following his or her death. The probate process is created and dictated by Florida state law, and its purpose is to transfer assets from the deceased individual to his or her beneficiaries. The probate process can take time. Even when someone passes with a Last Will and Testament in place, the court retains a limited role in overseeing the distribution of those assets and settling of the estate. This process can take several months in the best of scenarios, resulting in the delayed transfer of the deceased’s assets to his or her beneficiaries.
Most personal representatives will also retain legal counsel to assist with the administration of the deceased’s estate. Filings need to be made, creditors need to be paid, and taxes (yes, even after death) still need to be filed. Depending on the size and complexity of the estate along with the personal representative’s time commitment and overall understanding of both the process and the estate itself, legal and court fees can slowly start to compound. The estate generally pays for these expenses, meaning the amount distributed to the beneficiaries is affected.
Trusts are not considered part of the estate because it’s the trust – not the deceased – that owns the assets. As such, the assets included in a trust avoid probate entirely. Instead, a trust can name a beneficiary that, upon death, assumes ownership of the assets contained therein. No court involvement or approval is needed and any legal fees associated with the transfer of these assets are going to be a fraction of what they otherwise would have been in probate.
Trusts Offer Flexibility That Wills Simply Cannot Provide
Unlike a Last Will and Testament, which transfers assets upon an individual’s death without the ability to provide detail on how those assets will be distributed in the medium to long term, a trust can provide additional control that not only dictates the amount of assets a beneficiary will receive but also when or under what circumstances they can be distributed. This unique level of control that a trust offers allows an individual to influence his or her beneficiaries long after the creation of the trust and even after the grantor’s death.
For example, the grantor can state that a beneficiary shall not receive an asset until a specific time in the future, when her or she believes it more appropriate. Frequently, this is a strategy used when concerns arise regarding the potential age of a beneficiary (minors). A trust can also dictate the amount and/or the manner in which payments are made. A trust can require that certain conditions be first met prior to a limited distribution. For instance, a grantor may construct a trust which distributes half of the assets once the beneficiary graduates college and the other half once they have placed an offer on a house. Setting conditions for distribution literally allows the grantor to continue to control their money after death, ensuring that their assets are used in a way that they find agreeable.
A trust can be particularly useful if the grantor is concerned about providing long-term support for a family member or loved one with special needs. Appropriately called a Special Needs Trust, the individual with special needs is named as the beneficiary, and because they do not legally own the assets contained within, they can receive government benefits for long-term care. Here, the flexibility of the trust again serves as a powerful tool. It (1) preserves the assets; (2) avoids probate and potential creditors; (3) names a competent individual to manage the assets; (4) allows the special needs individual to receive long-term care from the government; and (5) provides additional support for the named beneficiary. Most importantly, it has provided peace of mind to the parents that their special needs loved one will be taken care of even when they are no longer here.
Trusts Are Not Part of the Public Record
A last key advantage of a trust worth briefly mentioning is that they offer the grantor additional privacy that a Last Will and Testament does not provide on its own. In Florida, once a Last Will and Testament is filed with the court during the probate process, it becomes part of the public record that can be viewed by anyone who is interested in viewing it. In contrast, a trust remains a private legal document throughout the administration of an estate. This can be valuable for individuals who would like to keep the details of the estate’s assets a secret or who would like to keep his or her specific instructions private.
Mint Law Can Assist With Your Trust
At Mint Law Firm, we are committed to helping you protect and distribute your assets in a way that reflects your intentions. Our experienced attorneys will work closely with you to determine whether a trust is the right tool for your estate plan and, if so, which structure best serves your needs and goals. Whether you are looking to avoid probate, shield assets from creditors, provide long-term support for a loved one with special needs, or simply maintain a greater degree of privacy and control over your estate, we are here to help. Contact Mint Law Firm today to begin the process and ensure that your hard-earned assets are protected and passed on exactly as you intend.