It’s never pleasant to think about how your worldly possessions will be distributed when you pass away, but consider the alternative: family feuding, unnecessary taxes, and probate. These problems and others can be avoided by setting up a trust. In basic terms, a trust is a legal entity established to hold, distribute, and control all your assets. A trust is traditionally used for minimizing estate taxes and can offer other benefits as part of a well-crafted estate plan.
No matter whether you have $500 in your checking account or you own a home worth millions of dollars, creating a trust can be a great tool for anyone who wants a tax-savvy means of passing their estate onto their heirs. Trusts are flexible, varied, and complex. Each type has advantages and disadvantages, which you should discuss thoroughly with your estate-planning attorney before deciding on a trust that suits your needs.
What Is a Trust and Why Might It Be Important to Have One?
A trust is a fiduciary relationship in which one party—known as a trustor—gives another party—the trustee—the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets and to ensure that those assets are distributed according to the wishes of the trustor. Assets in a trust may also be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well. Other benefits of trusts include the following:
- Control of your wealth: You can specify the terms of a trust precisely, controlling when and to whom distributions may be made. You may also set up a revocable trust so that the trust assets remain accessible to you during your lifetime while designating who the remaining assets will pass onto thereafter.
- Protection of your legacy: A properly constructed trust can help protect your estate from your heirs’ creditors or from beneficiaries who may not be adept at money management.
- Privacy and probate savings: Probate is a matter of public record, but a trust may allow assets to pass outside of probate and remain private, in addition to possibly reducing the amount lost to court fees and taxes in the process.
For the trust to best carry out your intentions, decide what type of trust will suit your objectives, follow all the rules for that type of trust, and make sure all the legal requirements continue to be met over time. To best meet these objectives, work with an experienced Orlando trust lawyer who can assist you in setting up and managing your trust.
Common Types of Trusts
A well-crafted estate plan ensures that your assets will be smoothly passed on to your chosen beneficiaries after you pass away. A trust is a great method of doing that. There are many different types of trusts, each suited for unique purposes. Choosing the right one depends on what you’re trying to achieve with your estate plan. When comparing different types of trusts, you might ask yourself questions like how much flexibility or control you want.
Some trusts will serve a single purpose, others multiple. Some are set up to function while you are alive, while others go into effect only after you die. Some can be changed, while others are irrevocable. Each type of trust will fit into the following categories:
Living or Testamentary
A living trust is a legal document created during your lifetime. Just like a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. The big difference is that a will becomes effective only after you die, whereas a living trust bypasses the costly and time-consuming process of probate, enabling your successor trustee to carry out your instructions as documented in your living trust upon your death or at a time in which you’re unable to manage your financial, healthcare, and legal affairs due to incapacity.
A testamentary trust, also called a will trust, specifies how the assets of an individual are designated after their death.
Revocable or Irrevocable
A revocable trust can be changed or terminated by the trustor during their lifetime. An irrevocable trust, as the name implies, is one the trustor can’t change once it’s established. Living trusts can be revocable or irrevocable, while testamentary trusts can only be irrevocable. An irrevocable trust is usually more desirable. The fact that it is unalterable and contains assets that have been permanently moved out of the trustor’s possession is what allows the reduction or elimination of estate taxes.
Funded or Unfunded
A funded trust has assets put into it by the trustor during their lifetime. An unfunded trust consists only of the trust agreement with no funding. Unfunded trusts can become funded upon the trustor’s death or remain unfunded. Since an unfunded trust exposes assets to many of the perils a trust is designed to avoid, ensuring proper funding is important.
Contact an Experienced Orlando Trusts Attorney Today
Whether you want to protect your assets for future generations, need assistance with administering a trust, or have an issue with Orlando probate in court over provisions in a will or trust, there’s no greater comfort than knowing your interests are protected by highly specialized Orlando trust lawyers who have your best interests at heart. At Patriot Legal Group, you can rest easy knowing your trusts are in the hands of a highly experienced Orlando estate planning attorney.
At Patriot Legal Group, we intimately understand how overwhelming this process can feel, which is why we’re committed to standing by your side and protecting your legal rights. Our personal approach removes the guesswork and creates a smooth and pain-free process for you and your family. For all your trust-related needs and to avoid common mistakes that often plague individuals in your shoes, give us a call at (407) 737-7222 or complete our online contact form today!