Trusts

Establish a trust to avoid probate and estate taxes following your death and give your loved ones peace of mind that your affairs are in order.

Talking about death isn’t easy for anyone, but it is sometimes a necessity, especially when it comes to your property and final wishes. It’s amazing the number of people (almost half of all Americans) who have no will or any sort of trust to distribute property to heirs or provide instruction for medical decisions in the event of incapacitation.

What may seem like a stressful situation at the time can mushroom into an even bigger situation that loved ones will be left to deal with. Without good planning, your spouse or children will end up spending a lot of time in probate court (… even if there are no disputes), and possibly a lot of money in taxes, probate and attorney fees.

It’s imperative for you to be proactive in planning your estate so your family is not left to make tough choices or face undue burdens in the event of your death.

The first thing that pops into most people’s minds when thinking about estate planning is a will, but as we’ll explain, a trust can provide additional protection and peace of mind to your family.

Trusts help your heirs avoid probate and taxes and can be used to direct how your assets are treated.

Fidelity Investments defines a trust as “… a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.” Trusts in Florida are governed under Chapter 736 of Florida Statutes.

There are several reasons why a trust is beneficial for you and your family. These include: better control of your wealth, protection of assets from creditors, privacy since probate is a public proceeding, and savings on probate and taxes.

There are essentially two types of trusts – revocable and irrevocable.

  • Revocable trust – allows you to make changes later on and to access property and assets while you are still living. It is created by you, the “grantor” or “settlor,” to manage assets while you are still living. It also lets you provide detail on how you want your assets distributed after your death. The “trustee” is the individual appointed by you to manage the assets. While you can serve as your own trustee, this person is authorized to manage assets, pay bills and make investment decisions on your behalf. The trustee is also the person responsible for paying any remaining bills and taxes after your death.

If you do not have a trust or an appointed trustee, a guardian will be appointed by the court.

  • Irrevocable trust – this type of trust cannot be changed or terminated. Once it is set up, it is done. An irrevocable trust is typically for higher net worth individuals to reduce tax liabilities and protect property. For example, a high-net worth individual may set up a charitable trust so they can reduce income and estate taxes.

Or, one can be set up for an heir who is unable to manage money. Irrevocable trusts are also set up for those with special needs and ensure a loved one will be taken care of upon your death.

Trust Administration: Appointing a “trustee” to handle your affairs and implement the provisions in your trust.

The “trustee” is a very important person. He or she is who you want handling your affairs after you’re unable to or after your passing.

Like we described above, a trustee can execute the terms of your trust without court supervision. Although you can serve as your own trustee, it’s important you appoint one before you are unable. The trustee can be a spouse, an adult child or even an attorney. Upon your passing, the trustee will be responsible for:

  • Gathering all trust assets
  • Paying all legitimate claims from creditors
  • Paying any outstanding taxes
  • Paying funeral and any other final expenses
  • Distributing trust assets to heirs

Although administration of the trust is governed by the document itself, there are a few rules in Chapter 736, Florida Statutes that the trustee must fulfill before executing their duties. And while a trustee’s duties can be fulfilled without court supervision, it is strongly recommended they consult with an attorney to ensure all procedures are properly followed.

Consult with a qualified, experienced trust attorney at Florida’s Shigo Law Firm in Gainesville.

A trust is a preferred means for many to protect their property and ensure their assets are handled according to their preferences.

Although Florida’s probate process is easier than in many states, it still takes a good bit of time for everything to go through.

Setting up a trust for your assets is one of the easiest ways to help your family during the difficult time of your passing. Not having to handle court appointments and other costs will lift a huge burden off their shoulders.

We strongly urge you to consider setting up a trust and general estate planning. To learn more or to discuss your individual situation, contact attorneys Thomas and Lynne Shigo at The Shigo Law Firm in Gainesville or Ocala today.