What Critical Assets Should Be Funded Into Your Trust?

When it comes to funding your Florida trust agreement, it is important to work with your experienced Florida estate planning attorney to navigate the intricacies involved. Both crafting a Florida trust agreement and funding it correctly are strategic endeavors in the realm of estate planning. It’s not just about establishing a Florida trust to protect the legacy you wish to leave your loved ones but also ensuring the right assets are placed within it. 

Placing key assets into your Florida trust is a process known as “funding the trust”, and it can significantly influence how your wealth is managed and distributed. However, deciding which assets to fund into your trust requires careful consideration, and the counsel of an experienced Florida estate planning attorney becomes indispensable.

One of the foundational pieces of advice for many married couples, especially those in stable first-time or long-time marriages, revolves around the ownership structure known as “tenants by the entirety” (TBE). Under this ownership model, both spouses own the property wholly. In simpler terms, neither has a divisible interest; both own one hundred percent. 

This approach can offer notable asset protection benefits. For example, if either spouse is sued individually and not jointly, then assets owned as TBE are not at risk and receive protection.  In addition, when one spouse passes away, the asset (e.g., property, account, etc.) ownership seamlessly transfers to the surviving spouse without the complexities of probate. Although every planning opportunity is unique, we often find that only after this first death, for a stable marital situation, do we recommend funding the survivor’s trust. This strategy ensures that the unique protective features of TBE ownership are maximized during the couple’s joint lifetime. It’s essential to note that these protective characteristics might not be retained if assets are owned in a joint trust or separate trusts.

While trusts are versatile tools in Florida estate planning, they are not always suitable planning options for all asset types. For example, even when we are working with a single individual or there is no living spouse, we typically recommend against funding assets such as automobiles, boats, and RVs into trusts. There are a couple of reasons for this. First, transferring the title of these assets post-mortem is normally straightforward without delving into probate. Secondly, placing these assets into trusts can create challenges with insurability.

With the above caveats in mind, the critical assets you might consider for trust funding include, but are not limited to, the following:

• Real estate. Properties, especially those not covered under TBE, can benefit from being in a Florida trust, simplifying the transfer process and potentially avoiding probate.
• Bank accounts. Financial assets, including savings and checking accounts, can be funded into a Florida trust for more straightforward management and distribution.
• Investment accounts. Stocks, bonds, mutual funds, and other investment vehicles can be integrated into a trust structure, allowing for organized management and potential tax advantages. IRAs are more complex in their structure and, if you are contemplating leaving these to your trust agreement, you should first speak with your Florida estate planning attorney.
• Business interests. If you have shares in a business or own a business outright, placing these within a Florida trust can ensure that the enterprise’s continuity isn’t disrupted and that your beneficiaries are protected.
• Valuables and collectibles. Art, jewelry, and other items of significant value can be placed in a Florida trust, ensuring they are passed down as you wish.

A Florida trust is more than a legal document; it’s a strategic vessel for preserving and protecting your legacy. The task of deciding which assets to include is not one to take lightly, but by working with an experienced Florida estate planning attorney, you can craft a Florida trust that aligns with your unique needs, circumstances, and future aspirations, ensuring peace of mind for you and your loved ones.

We know this article may raise more questions than it answers. Our estate planning law firm takes a very different approach from what you might have come to expect. Our goal is to create lifelong relationships with each of our clients, to guide and manage your legacy for the rest of your life. Please contact our offices in Stuart and in Palm City to learn more.