As you reflect on the resolutions you made for the new year, did you include creating a Florida estate plan? We believe creating an estate plan is one of the most important New Year’s resolutions you can make this year. With an estate plan in place, you can be protected both during life and at the time of your death. When you meet and begin to work with your Florida estate planning attorney, together you can create a plan that ensures your choices for your health care and finances are honored by your chosen decision maker. In addition, your Florida estate planning attorney will also show you how you can ensure that your family will be provided for when you are no longer here with them.
As you work with your attorney, he or she may suggest that you consider adding a trust to your estate plan. There are different types of trusts, and it is important to be familiar with the basic types. In the following paragraphs, we will discuss and explain some of the basics about different trusts.
First, who are the parties involved in a trust? The trustor, grantor, settler, or creator is the person who creates the trust. The beneficiary is the person who receives distributions from the trust. The trustee is the fiduciary who manages the trust property. A single person can serve in more than one role at a time. A person may be the trustor, trustee, and beneficiary simultaneously. In the alternative, more than one person can have the same role, as in co-trustees or co-beneficiaries.
Who has the authority over a trust? Trustees have discretionary or non-discretionary authority over distribution according to the terms set forth in the trust document. A beneficiary can receive income or dividends from money earned by the trust or may be a remainder beneficiary, who receives what is left after the primary beneficiary passes away. This is very important to remember: A trust is a legal document, but the trust is not deemed created until property has been transferred into the trust.
Below is a list, with explanations, of the four most common types of trusts.
A revocable trust can be changed or revoked. It can serve in place of (or better yet, in addition to) a will and is often used to avoid probate following the trustor’s passing.
An irrevocable trust (unlike the revocable trust above) cannot be modified or revoked. However, it can be structured to provide many benefits, including tax benefits, protection of assets from creditors, and utilization in long-term care planning to exclude a person’s assets from his or her eligibility determination for Medicaid.
A special needs trust is a vital trust that is created to provide for an individual who needs assistance for life, often a child of the trustor. The key to a special needs trust is that it ensures the beneficiary can receive financial support from the trust without being disqualified from government programs for those with special needs.
A spendthrift trust is an irrevocable trust. It limits the beneficiary’s access to the trust principal. The beneficiary and the beneficiary’s creditors generally cannot force distributions. The spendthrift provision is often used when the trustor wants the beneficiary’s spending monitored, such as in the case of a person with a substance abuse disorder.
Armed with the knowledge of the different types of trusts used in estate planning, it is a great time to meet with an experienced Florida estate planning attorney to discuss the right trust for you. An estate plan must be fluid to adapt to the typical lifestyle changes that naturally occur over a lifetime. Our board-certified Stuart estate planning lawyer and associates take a very different approach from what you might have come to expect. Our goal is to create lifelong relationships with each of our clients and to guide and assist with changes to your estate plan for years to come. Please contact our office to learn more.