As most Florida residents are aware, estate planning involves the creation of documents that can be used upon a person's incapacity or death. The most commonly known of these types of documents is a last will and testament. While wills are an extremely important part of estate planning, other documents can play a role as well, including medical proxies and powers of attorney. Another tool that Floridians should consider when planning for the future of their assets is the trust.
Trusts can be beneficial in several ways. First, certain types of trusts, such as irrevocable trusts can avoid estate taxes. This is most important for those with large estates, as estate taxes tend to kick in at high value levels. Assets in an irrevocable trust would not generally be counted for estate tax purposes, but once placed there, the grantor cannot get those assets back.
Smaller estates can also make use of trusts for various reasons. Living trusts can be used to keep estate planning decisions private. While wills are recorded with court clerks and open to public scrutiny, trust documents tend to be seen only by the trustee and beneficiaries. A will can simply state that all assets are to be placed in the living trust, and that all the public would be able to glean from the will document.
A third use for trusts is to protect the grantor's assets from beneficiaries' creditors. In the case of a living trust, the death of the grantor makes it irrevocable, and if the correct clauses are in place in the trust document, it can ensure that the assets go to the individual intended by the grantor.
Trusts also allow some semblance of control over when the assets will be paid to the beneficiary. While overly specific rules may not be valid, general age limits and other requirements for payouts can keep the assets from going to a beneficiary that may be too immature to handle them well.
Finally, placing assets in trust will help them avoid probate court, and the time and costs associated with it. Because of backlogs in Florida, it can take varying lengths of time to shepherd a will through probate and, of course, fees tend to rise with the amount of time spent. Assets in a trust, however, are not subject to probate and can avoid these delays and costs.
Any Florida resident wishing to ensure that assets are disbursed according to his or her wishes after death should look into the legal advantages and consequences of placing some of those assets in trust. All estate planning steps should be taken with care and with good information at one's disposal.