Estate planning involves a lot of different relationships and documents, all carefully chosen to ensure that you and your beneficiaries receive the maximum amount of benefits with the least amount of hassle and tax liability. One of these types of legal relationships is called a trust. What exactly is a trust, and should you ask your estates and trusts attorney in Miami, FL to set one up for you? Read on to learn more.
How a trust works
A trust is a relationship between at least three people: first, the trustor, who wants to give property or money to a second person, the beneficiary. The third person is the trustee, who “holds” that property for the beneficiary until the terms of the trust have been satisfied—for example, when a minor child reaches the age of majority, or when a trust passes to the beneficiary upon the trustor’s death.
The trustee is considered the legal owner of the asset, but they are bound in a fiduciary relationship to manage the asset for the benefit of the beneficiary. In most states, they are presumed irrevocable unless stated otherwise.
What can you put in a trust?
You can put any type of tangible or real property, investments, insurance policies, retirement accounts and other financial assets into a trust. However, you cannot use a trust to provide your end-of-life wishes, care for your minor children or other intangible directives. Those are better suited for advance care directives, wills and other estate documents.
Benefits of using a trust
The biggest benefit of using a trust is avoiding probate. The trust “outlives” the trustor, so the assets don’t have to go through probate. Depending on the terms of the trust, they may automatically pass to the beneficiary or continue to be held in trust until conditions are met. Probate court can be expensive and time-consuming, so this helps save the beneficiary a significant amount of hassle and money.
The other major benefit of using a trust is to keep your wealth private. A will is made public when it goes through probate, and all assets pass into the executor’s hands until they are distributed according the will. If you would prefer to keep your assets private and protect the interests of your beneficiaries, using a trust is the way to go.
Finally, using a trust allows you a certain measure of control. After all, if you leave several million dollars in assets to a 16-year-old, you’d need restrictions on how they can spend it, or expect your life savings to be spent on BTS concert tickets or another equivalent—fun, but perhaps not the stable foundation you hoped to provide for your child. Using a trust ensures that the trustee will be in charge of managing the assets until the child reaches age 25, for example.
Estates and trusts attorney in Miami, FL
Set up your estate when you call Ruben J. Padron, PA. Our firm has been offering estate planning services for over a decade—call today to find out more.
Categorised in: Estate Lawyer