Florida Trusts: Terminology And What It Means
If you are just starting the estate planning journey and want to know whether a trust is the right fit, a good starting off point is getting to know the important terminology. A helpful resource is the definitions section of the Florida Trust Code, which covers the essential parties to a trust. The settlor or grantor is the person who creates and funds the trust, and the trustee manages assets held by the trust in accordance with the trust documents. Beneficiaries are those entitled to receive distributions of trust income and/or principal from the trust.
However, there is a lot more to understanding trust terminology aside from the parties. The details impact what type of structure would work for your situation, especially considering the wide array of options available to achieve certain goals. You can count on a Dade City trusts attorney for guidance, but familiarity with the essential terms is important.
Living v. Testamentary Trusts
You can create a trust that becomes effective when you sign and fund it, so it exists during your lifetime. There are multiple reasons you might consider a living trust, since you no longer individually own the assets you place in its name. Avoiding probate and privacy concerns are key benefits.
A testamentary trust is one that you create through your will. You can include provisions on trust management and how distributions to beneficiaries work, giving you some control over your legacy after your passing.
Revocable and Irrevocable Trusts
When you want the option to modify or terminate a living trust, you would opt for a revocable trust. However, you might consider an irrevocable trust under certain conditions. You cannot alter the arrangement once you create an irrevocable trust, so:
- You may benefit from advantageous tax treatment;
- You could qualify for Medicaid or other public benefits; and,
- You might be able to protect assets from creditors and/or the government.
Pour Over Will
Avoiding probate is an important benefit of a living trust, but the structure will only protect the assets in the trust once you pass away. Anything not in the name of the trust must go through probate – unless you also create this special type of will. A pour over will automatically deposit anything you own individually into the trust at death.
Additional Trust Terminology
There are some other terms that might come up when considering trusts, such as:
- Special needs trust, in which you can provide for a disabled individual without disrupting their eligibility for public benefits;
- Spendthrift trusts that prevent creditors from reaching a beneficiary’s interests in the trust; and,
- Asset protection trusts, which must usually be irrevocable to realize the benefits.
Set Up a Consultation with a Florida Trusts Lawyer Today
Understanding key terminology regarding trusts is useful, but it is wise to retain experienced legal counsel for help in creating a suitable estate plan. For more information, please contact The Law Office of Laurie R. Chane in Dade City, FL. You can call 352-567-0055 or fill out an online contact form to set up a consultation. After learning more about your objectives, we can discuss trust options.