In general terms, a Trust is an instrument that creates an artificial entity with the ability to own and hold property and to act in other financial matters. Under the Florida Trust Code, Trusts may contain any number of provisions depending on the intended purpose of the Trust. A Trust is commonly used as another estate planning tool to protect property and direct the disposition of your estate after your death.
The Settlor, the person making the Trust, must decide what property is to be transferred into the Trust, who the beneficiaries are, whether the Trust will pay income to any person, and what restrictions will be placed on removal of Trust assets. There are many other provisions and restrictions that can be included in the Trust, and some that cannot. Due to the complexity of Florida Trust law, it is important to have an attorney draft any Trust instrument and advise you of the options available to you in creating a Trust.
Every Trust instrument must appoint a Trustee, a person to administer the Trust. Many times the Trustee and the Settlor are the same person. The Trustee is responsible for carrying out the provisions of the Trust, including payment of income to income beneficiaries and transfer of property to beneficiaries upon the death of the Settlor.
Trusts can be revocable or irrevocable, depending upon the amount of control the Settlor wishes to retain over the Trust assets. Irrevocable Trusts can also provide more protection from creditors for certain assets.
For estate planning purposes, a Trust can be used to avoid probate administration of a decedent’s estate.
Transfer of property into a Trust can have tax consequences. We will be happy to work with your certified public accountant and/or other tax professional to help you understand any impact on the amount of taxes owed, before and after death, the transfer of property into a Trust may have.