All Floridians should regard trusts as viable estate planning tools. As the term implies, a “trust” is an artificial entity into which valuable holdings are transferable. Tax avoidance is the main motivation for trust establishment.
Once a trust has formally assumed legal ownership of property, such asset(s) are no longer the former owner’s legal possession. Therefore, should that person die during the trust’s existence, all assets contained therein are legally excluded from his or her estate. Consequently, heirs have no estate tax liability.
Basic Trust Structure
Every trust involves at least three parties: Trustee, Settlor, and Beneficiary. The trustee is the party entrusted to manage, disburse, and oversee transferred assets. This is typically an attorney with specialized trust establishment and maintenance expertise. The “settlor” establishes and makes periodic contributions into the trust. “Beneficiary” denotes the recipient(s) of any entrusted assets or increase earned there from.
All the terms and conditions of trust creation and operations are set forth in a Trust Agreement. A properly executed Trust Document has the same legal effect as a will when the Settlor dies. The Trustee is legally bound by these terms throughout his or her tenure. Florida law imposes many additional fiduciary obligations on Trustees.
Types of Trusts
A “living trust” is the trust category most commonly employed for estate planning purposes. The two main living trust subcategories are “revocable” and “irrevocable.” As the respective terms imply, the Settler may revoke the former type of trust at any point during his or her lifetime.
Living Trust Benefits
The two main estate planning benefits of living trust establishment include: 1) assuring adequate asset administration in event of the Settlor’s incapacitation and 2) probate avoidance upon the Settlor’s death.
Modern-day medical advances have greatly extended human longevity. It is therefore common for elderly people to be stricken with various debilitating disorders that destroy or severely diminish the mental or physical capacity necessary to manage one’s own affairs.
In such instances, a living trust ensures that hard-earned assets are not wasted due to neglect or mismanagement. Just as wills are “paper voices” by which the deceased express their desired asset divisions, trusts are “legal faces” for the administration of living parties’ assets.
Avoiding probate is a major strategic estate planning advantage of trusts. Conventional wills must be filed in a court of competent jurisdiction before any property distributions thereon. This process can be lengthy, complicated, and costly. Living trusts eliminate such eventualities by direct asset distribution to heirs upon the Settlor’s demise.
Estate planning is an especially dynamic legal field. New trusts are being devised constantly. Different trusts feature different legal requirements and are designed to serve various purposes. Moreover, individual circumstances change over time that may dramatically affect your ideal estate planning strategy.
A qualified lawyer should prepare all living trusts. Indeed, the Florida Supreme Court has decreed that the preparation of living trusts by any party other than a licensed Florida attorney constitutes the unauthorized practice of law. This criminal offense is punishable by fines and/or imprisonment.
Consult a competent, qualified estate planning attorney in Florida today. Do not delay taking affirmative steps to secure the best future for yourself and your loved ones another moment.
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation. It’s a Wild world. Are you protected?