Many Florida residents utilize trusts in their estate plans to protect their assets. Trusts are valuable tools in estate planning because they are so versatile.
The concept of a trust dates back to 4,000 B.C. when ancient Egyptians used trustees to manage other people’s property. In the Middle Ages, knights who went to fight in the Crusades used trusts when they had others care for their land during their absence. Many of the same principles that were developed in the English common law are still used today.
A trust is formed by a document that separates the legal ownership of property (or trust principal) from the beneficial enjoyment of the property. The person who is responsible for managing assets held in a trust is known as a trustee. Beneficiaries are the individuals or entities that receive the proceeds or benefits from a trust.
The person who establishes a trust by placing assets into it is known as the grantor. The grantor must decide which assets should be designated for placement in the trust. Trusts may be established during the lifetime of the grantor, which are called inter vivos trusts. They may also be established upon death which is called a testamentary trust.
An attorney with experience in estate planning may be able to help a client decide which type of trust best suits their needs. The type of trust utilized will depend on the goals of the trust grantor. Some people create trusts primarily to protect their assets from the creditors of beneficiaries while others want to save money on estate taxes.