Estate Planning: Trusts
Similar to wills, Trust Law is different from state to state. In Florida, a valid trust requires a settlor who delivers the trust property to a trustee with the intention to create a trust, for the benefit of designated beneficiaries and for a lawful purpose. No writing is required for the creation of a trust unless an interest in land is involved; however, a writing is very strongly advised.
The following is a break down of the different requirements to form a valid trust in Florida.
- Settlor: The settlor (aka: grantor or trustor) is the person who creates and moves his property to the trust. He must have capacity to create a trust. He must have an ability to understand the extent of his property, whom his heirs would be and the nature of the disposition of his assets.
- Trust Res: This is the property that is held in trust. This must be delivered to the trust personally or via a designated third party.
- Trustee: Trustees must be of legal age, competent, and have capacity to enter into contracts.
- Beneficiary: Trust must have a definite, ascertainable beneficiary, capable of being identified by the time their interests vest, with certain restrictions; such as a charitable or honorary beneficiary.
- Lawful purpose: Trust may be established for any purpose that is not illegal. This means, that a trust may not require a trustee to perform acts that are criminal, tortuous or against public policy.
Some advantages of using a Trust in your estate planning:
- Providing funds for a specific purpose: Trusts can be set up for a specific purpose, ie: for education and can have specific guidelines for release of funds. This limits the risk of abuse by immature children or greedy family members.
- Trusts help avoid the hassle and delay of probate: Moving estate property to trusts allows for the avoidance of hassle, cost and delay that going through the probate process creates.
- Privacy: There is no public filing requirement for trusts, which allows for the passing of assets with privacy.
- Using wills in conjunction with trusts allows for the possibility of incurring fewer taxes: Trusts incur less "death" taxes than passing property using a will and probate.
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