Trusts

A trust is a separate legal entity generally created by a writing. It has a grantor who creates the trust and transfers assets to the trust. There is the Trustee who holds legal title and has a fiduciary duty to manage the assets as provided by the trust. There are one or more beneficiaries who are the ones who enjoy the use and/or income of the assets and/or who receive the assets.

A trust can be Intervivos, created and funded during the grantor's lifetime. Or the trust can be testamentary, created in the maker's will and funded after death.

A trust can be Revocable, subject to amendment or cancellation by the grantor. Or the trust may be Irrevocable, not subject to change or amendment by the grantor.

The Intervivos Revocable Trust is often used to avoid or limit probate. With it the grantor has a trust instrument prepared which designates the grantor as the trustee and beneficiary for life reserving the power to amend or cancel the trust. Alternate trustees are designated to serve in the event of the grantor's disability or death. The grantor names the beneficiaries who will receive the property after his death. Then the grantor transfers property to the trust. Since the property titled in the trustee's name is no longer owned by the grantor, it does not go through probate upon his death.

The revocable trust does not protect assets from the grantor's liabilities, either during his life or after death. The revocable trust is generally used to hold investments. In Florida, if the grantor transfers his primary residence which is "homestead" to the trust, he will have to re-apply for homestead property tax exemption. The property tax assessment ean be increased to current market value. More significantly, the grantor would no longer have homestead protection from forced sale by judgment holders, as that is limited to natural persons.
IRA accounts and 401 (k) accounts cannot be held by a trust due to the tax regulations which defer payment of income tax.

The testamentary trust (created in one's will) is very beneficial to any parent of minor children. In the event both parents die in an accident, and minor children inherit under the will or intestate laws, Florida requires a court guardianship when assets exceed $15,000.00. The funds will generally be held in a frozen bank account requiring a court order for all disbursements. Upon attainment of age 18, the funds are released to the 18-year-old adult. Legal fees in a guardianship over the years can be substantial. By using a testamentary trust, the parent can designate a trustworthy trustee, direct investments and specify directions for education, investment and ages for distribution other than 18.
For a divorced parent who does not have confidence in his/her former spouse, a trustee other than the former spouse can be named trustee. While preventing the former spouse and natural parent from becoming guardian is very difficult, using the testamentary trust for minor children limits the expense arising from guardianship and provides more flexibility.

Whether you are looking for a comprehensive estate plan or you want help through the probate process, you want a lawyer who will answer your question, handle your concerns, and offer you sound advice based on years of experience.

From her offices in Coral Gables, attorney Susan E. Durré is dedicated to helping her clients make good decisions for themselves and their families. When you walk into her office, you will feel relaxed and ready to make an informed decision.

Coral Gables Estate Planning & Administration Attorney

Please call (305) 444-4042 for further assistance.