If you’ve taken the time out of your busy life to engage in estate planning, then you probably have specific ideas about what you’d like to happen with your property once you pass away. What you may not realize is that many of your Florida assets have to be probated unless you take time to place them in a trust. There are so many options to choose from though. Testamentary and living trusts are two asset protection tools that you may want to learn more about.
There are two types of living trusts: revocable and irrevocable.
Individuals who set up revocable trusts are called grantors. That person has the right to dissolve the trust, add to or sell off its assets and change beneficiaries at any point that they want to. Revocable trusts turn into irrevocable trusts when grantors die.
A grantor must give up their control over a trust if they set up an irrevocable trust. That trust creator isn’t allowed to serve as a trustee of the trust nor can they make withdrawals from it once they fund it. The only instance in which the grantor can do this is if they’re listed as a beneficiary to the trust. Many tax benefits come with a grantor not having control over an irrevocable trust.
Testamentary trusts are quite different from revocable or irrevocable living trusts.
Individuals who set up testamentary trusts often do so as a way of providing for the long-term needs of their young children or those with special needs. Grantors often set up testamentary trusts to award beneficiaries with smaller, graduated payments. This protects beneficiaries from unnecessarily losing their government assistance.
Testamentary trusts avoid probate, but the details surrounding them go on the public record. A grantor generally outlines details about the assets that they’d like to fund a testamentary trust in their will. It’s often the executor’s responsibility to place those into it per the rules that you’ve outlined in this legal document.
There are many aspects to trusts that can make it more prudent for you to choose to set up one type over another. You should sit down with an attorney to discuss your financial situation, your family dynamics and other personal matter. It’s only by doing so that your Miami lawyer can hone in on the most appropriate asset protection tool for you and your situation.