As many Florida residents may know, the establishment of trusts is a key element in many good estate plans. The use of a trust to allocate assets to beneficiaries has several advantages over using only a last will and testament. These advantages include: the ability to keep assets out of probate court, and thus, private, the protection of assets from being squandered by irresponsible beneficiaries, some protection from creditors and taxation and the ability to place certain requirements on beneficiaries before receiving their share of the trust's assets. There are, however, some important considerations to keep in mind while contemplating utilization of a trust in one's estate plan.
What type of trust to use is the first issue to consider. There are several kinds of trusts, but the two basic types are revocable trusts and irrevocable trusts. Revocable trusts can be changed or withdrawn at any time by the trust's creator. However, irrevocable trusts can, generally, not be changed by anyone, including the creator, until some condition, such as the passage of time, has been met. In either case, it is important to choose the correct trustee to administer the trust. The trustee is the individual who will have the authority and the fiduciary responsibility to see that the trust's assets are managed well, that the beneficiaries receive their correct allotments and that any conditions required by the trust instrument are fulfilled. While a good trust document should be very specific with regard to how assets are to be handled, there are inevitably situations that arise that will require interpretation. Therefore, it is important to choose a trustee who the creator, well, "trusts."
Finally, it is important in all estate planning matters to ensure that the plan is kept up-to-date. Every change in potential beneficiaries, such as newborn family members, divorces or the acquiring of new assets, should prompt a reexamination of the plan and any trust documents included. Some people within the estate planning community also recommend reviewing the plan periodically, even if no drastic changes have occurred. In this way, one's trusts and the rest of the estate plan will have the best chance of carrying out the creator's actual wishes.
Source: The Seattle Times, "Trust, but verify your trust is up to date ," Pamela Yip, May 31, 2014