Trusts are commonly used estate planning and disability tools.
What is a trust?
A trust is a fiduciary relationship where one party gives another party assets to hold for the benefit of beneficiaries. A trust is created by the owner of the property. The creator is called the settlor or grantor. The property is transferred to the trustee. The trustee is responsible to manage and hold the property for the benefit of the beneficiaries.
What is the purpose of a trust?
Setting up a trust allows you to determine not only who receives your assets, but how they receive the assets. A settlor can decide if a beneficiary receives money every month, yearly, or in lump sums at specified ages. A settlor can also specify for what purpose a beneficiary receives assets. Perhaps the settlor wants a beneficiary to receive assets only for the beneficiary’s health, education, maintenance, and support. Or, a settlor can make receipt of distributions contingent on a beneficiary doing certain things, such as staying sober. Terms can be included to influence a beneficiary to act a certain way in order to receive their distributions.
By creating a trust, a settlor can also avoid probate. The trustee distributes assets according to the trust’s terms, without court supervision. Creation of a trust can save you, and your beneficiaries, the fees and uncertainty that can be associated with probate.
What is the difference between a will and a trust?
The main difference between a will and a trust is a critical one. A trust can be effective once it is created and funded. A will, however, is only effective upon death and after it is admitted to probate by the court. A will is ambulatory and can be changed at any time before death. If a trust is revocable, it can also be changed, but if it is irrevocable, it cannot.
Revocable v. Irrevocable
A revocable trust can be revoked or amended during the settlor’s lifetime. Most of the time the settlor, trustee, and beneficiary are all the same person. Only upon the settlor’s death do the duties of a successor trustee and the rights of additional beneficiaries vest. A common purpose of a revocable trust is to plan for when the settlor becomes incapable of managing the settlor’s assets. Another purpose is to avoid probate when the settlor dies.
An irrevocable trust can generally not be revoked or amended by the settlor after its creation. It is commonly used to move assets out of the settlor’s name and control. Assets will be eventually transferred to the beneficiaries. An irrevocable trust can also be used to reduce an estate for estate tax purposes.
Who Can Act as Trustee?
A settlor can decide who serves as trustee. State laws generally do not control who is allowed to serve as a trustee. However, the settlor should give careful thought to the selection of trustee. It is important to select someone trustworthy, who will follow the trust’s terms and honor the settlor’s directives. The trustee must be able to manage the assets in a prudent way. Another important factor in choosing a trustee is to select someone who does not have conflict with the beneficiaries. The more neutral the relationship, the easier management will be. Often, selecting a family member to serve as trustee can be problematic. Even the most agreeable of families can experience turmoil when money is involved. Selecting a neutral friend or company to serve as trustee can sometimes avoid unnecessary drama.
Find Information About Trust Laws in Your State.
Florida Trust Administration and Litigation Deadlines & Timelines Download the Florida Trust Administration and Litigation Deadlines Guide TYPE OF FILING DEADLINES AUTHORITY Notice
A Florida probate court and the appellate court have dealt with a number of problems regarding the administration of a trust managed by JP Morgan
Can a trust protector amend a trust in the middle of litigation, after the trial court has ruled adversely, to reverse the trial court’s decision?
When trustees fail to perform their duties as trustee, the Florida Trust Code provides a number of remedies, including removal of the trustee. In Kountze
In Fintak v. Fintak (2013 Fla. App. Lexis 13472), the Florida appellate court ruled that the settlor of a self settled trust need not renounce
In Harrell and Dake v. Badger, (Fla. 5th DCA June 12, 2015) the Florida court reversed a final judgment discharging the Trustee and an award
In MacIntyre v. Wedrall, 12 So.3d 273 (4th DCA 2009), the Court dismissed a challenge to the settlor’s removal of funds from her revocable trust
Generally, a beneficiary is required to adhere to what is called the “qualified renunciation rule” when challenging a Trust. The “qualified renunciation rule” requires a
The attorney-client privilege is the oldest confidential communication privilege in the Florida common law and is codified by statute and contained in the Florida Evidence
At first glance, Florida statutes appear to clearly distinguish the law of trusts from that of guardianships, devoting one chapter (Ch. 736) exclusively to trusts