We have the tendency to gather assets throughout our lifetime. Even if some of our assets will have huge economic value to other people, all of our assets will need to get a new owner after we leave this world. The trust laws in Florida provide individuals with the capacity to manage their assets while they are alive so that there is a simple transition after they are gone.
What are Trusts?
Trusts are estate-planning documents that can substitute or complement wills, as well as support the management of assets during lifetime. A trust controls the allocation of an individual’s property by giving its benefits and responsibilities to different individuals. There are several motives for creating trust, making this assets distribution system a common choice for many individuals when making an estate plan.
Creating a Trust
The fundamentals of creating trust are easy. To create a trust, the owner of the assets (also known as the trustor, grantor, or settlor) handovers the legal possession to someone or an organization (known as the trustee) to take control of that asset for the profit of another individual (known the beneficiary). The trustee often accepts a reward for his or her supervision. Trusts generate a “fiduciary” connection moving from the trustee to the beneficiary, this means that the trustee has a duty of acting exclusively in the best interests of the beneficiary when managing a trust asset. If a trustee is not capable of performing his or her duty, then the trustee is legally responsible for any damage to the beneficiary’s benefits.
The trustor may play the role of the trustee himself or herself and maintain the possession rather than transferring the assets to someone else, but he or she must maintain the fiduciary capacity. The grantor or trustor can also be one of the beneficiaries of the trust. However, for any trust preparation, the trust won’t be effective till the trustor handover the asset to the trustee.
For instance, a trustor sends money to a bank as trustee for the trustor’s kids, with the financial institution instructed to give the children’s school fees as desired; the bank judiciously manages the money to guarantee there is money existing for this purpose. The kids do not have control of the money and cannot use the money for any other thing.
Testamentary and Living Trusts
Trusts can be divided into two major classes, which are living trusts and testamentary trusts. A testamentary trust handovers property in the trust only when the grantor dies. Since a trust permits the grantor to determine the conditions for receiving the benefits and to spread the release of benefits over a certain period of time instead of giving the property as a single gift, many individuals choose to add a trust in their wills to strengthen their favorites and goals after passing. The testamentary trust is not instinctively made at death but is usually stated in a will and also as a will provision, the trust assets will go through probate before creating the trust.
For instance, a father states in his will that upon his death his property should be given to a trustee. The trustee takes care of the property for the benefit of his kids until they get to a certain age that the father has confidence that they will be capable of managing the property.
On the other hand, living trust, also known as “inter vivos” trust, begins while the trustor is alive, but may be intended to continue after the trustor is dead. This kind of trust can be used to avoid probate if all properties subject to probate are included in the trust before the death of the trustor. A living trust is divided into two categories, which is revocable and irrevocable. The trustor of a revocable living trust can revoke or modify the conditions of the trust any time after the trust was made. In contrast, the trustor of an irrevocable trust permanently transfers the right to make modifications after the creation of the trust. A revocable trust usually used as a supplement to a will, it can also be used as a means to name an individual to be in charge of the trustor’s businesses should he or she become debilitated. Even a revocable living trust normally states that it is irrevocable after the death of the trustor.
Transferring Assets with a Trust
Irrevocable trusts handover properties before death and therefore avoid probate. Nevertheless, revocable trusts are more prevalent as a way of dodging probate. If an individual transfers all of his properties to a revocable trust, he doesn’t have any property after his death. Hence, it is not required to transfer his properties via the probate process. Although the trustor of the trust is dead, the trust didn’t die, so it is not necessary to probate the properties in the trust. Though, trusts can only avoid probate if all or most of the late grantor’s properties had been added to the trust while the individual was living. To make provision for some of the properties that were not transferred, many of the revocable living trusts are joined with a pour-over will, which states that after death, all properties not possessed by the trustee should be given to the trustee of the trust.
For instance, if a mother creates a revocable trust, which specifies that after her death, her assets should be shared equally to her children. This woman handovers her properties to the trust, but does not handover some rental property she keeps. After her death, the trust can share the properties without the probate process, then the rental property will need to be probated. In accordance with the statement in the will, the probate court will direct the rental property to be given to the trustee, who will then share the property based on the terms of the trust.
Naming a Successor Trustee
Even though a trustor may make himself a trustee of a trust while he is alive, it is advisable for him to name a successor trustee to take over when he is incapacitated or dead. At the trustor’s demise, the successor trustee will share the properties of the trust in accordance with the instructions stated in the trust. Certain persons must be informed after the death of the trustor in many states.
Transferring Property Without Difficulty Through Florida Trust Laws
While the basics of forming a trust may not be problematic, Florida trust laws request certain procedures and creation necessities in order to make a trust legal. There are also several types of trusts in the State. This is trusts where the beneficiary is a friend, a family member, a help, or even a domestic pet.
The following categories summaries the details of Florida trust laws:
- Florida trust laws state that a trust is formed only if:
- The trustor has the right to create a trust.
- The trustor specifies an intent to make the trust.
- The trust has a specific beneficiary or is a trust for a charitable purpose, a trust for the safety of a pet, or a trust for noncharitable goals.
- The trustee has certain responsibilities.
- The same individual is not the only trustee and only beneficiary.
Means of Creating Trusts
A trust can be created by:
- Transfer of assets to another individual as trustee while the trustor is alive or by will or other nature taking effect after the trustor’s death;
- Pronouncement by the holder of property that the owner holds distinguishable assets as trustee; or
- Exercise of a power of appointment for the benefit of a trustee.
What is the Purpose of a Trust?
According to Florida trust laws, a trust can be formed only if the purposes of the trust are legal, not conflicting to public rule, and possible to achieve. The terms of a trust must be created for the benefit of its beneficiaries.
A trust can be created for charity. These include, but are not limited to:
- The relief of poverty;
- The development of technology, education, sciences, arts, or religion; and
- The advancement of health, administrative, or public purposes.
Trust of the Care of Animals
In the Florida trust laws, a trust can be created to take care of a living animal during the trustor’s lifetime. The trust ends after the death of the last living animal named in the trust.
Overall, deciding where your assets will go after your death is a vital process while you are alive. If you are interested in creating a trust, you should contact a Florida trust lawyer to assist you with the process.