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Many people think of trusts as something a wealthy person uses to provide for young adult children. However, trusts serve many important purposes beyond those portrayed in novels and on television. Florida law provides for the creation of many different types of trusts, to achieve many different goals.
What Is A Trust?
A trust is an entity created to hold property for the benefit of specific people or organizations. Although there are many different types of trusts, the core structure is consistent:
A grantor places money or other property into the trust, for the benefit of the designated beneficiaries;
A trustee is appointed to manage the trust for the benefit of the beneficiaries, according to the terms of the trust;
One or more beneficiaries receives benefit from the trust, though the type of benefit received and the conditions for receipt will vary depending on the type of trust established and the terms of the trust.
A simple example might involve a grandparent placing money in trust for a grandchild’s education. The grandparent would be the grantor, providing the trust assets. The grandchild would be the beneficiary, receiving contributions for their education from the trust. The grandparent could play the role of trustee himself, appoint one of the grandchild’s parents as trustee, or appoint a neutral third party such as a trust company. The trustee would then manage the trust assets and make distributions according to the terms of the trust—in this case, only for educational purposes.
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Revocable & Irrevocable Trusts
While there are many different types of trusts in Florida, each falls into one of two categories: revocable or irrevocable. The difference is significant, and it is important for anyone establishing a trust to understand the benefits and drawbacks of each type of trust. Attorney Gary L. White can help you determine which type of trust is right for your needs.
A revocable trust, as the name suggests, is a trust that the grantor can terminate at will, reclaiming the property that has been placed in the trust. When the trust is revocable, the grantor may play the role of trustee. In fact, when a living trust is used as a succession planning tool, the grantor is typically both trustee and beneficiary during his lifetime.
However, because the grantor retains control of the assets, a revocable trust does not provide all of the protections an irrevocable trust might. For example, assets in a revocable trust remain accessible by the grantor’s creditors.
An irrevocable trust is typically created for a very specific purpose. For example, Florida law allows for the creation of special needs trusts to provide for disabled loved ones without jeopardizing their access to medical benefits. However, these trusts must be irrevocable. That is, the grantor surrenders control of the assets and cannot take them back at will, nor serve as trustee.
Learn More About Florida Trusts
To learn more about how you may be able to use a trust to protect assets, provide for loved ones, or pass property without probate, contact Elite Estate Planning today.