There are several different types of trusts here in Florida and picking the right one for you will be largely dependent on what your goals are for the trust. These could range from protecting your family home so that it stays in the family or protecting your finances from a nursing home so that your children can still get an inheritance.
To cover all of these we will first briefly look at what a trust is before turning our attention to the types of trusts available in Fort Lauderdale. Afterward, we’ll discuss which trust is best for you and provide you with a resource to take the discussion further based on your specific and unique needs.
What is a Trust?
A trust is a type of fiduciary relationship where one party gives another party the right to hold onto titles to property or assets for the benefit of yet another party. The party which creates the trust is the trustor; we refer to the party holding the titles as the trustee; the final party is the beneficiary.
The purpose of creating a trust is to provide legal protection to the assets of the trustor. In addition to this, a trust can also help to ensure that assets are distributed according to the trustor’s wishes, reduce the amount of paperwork necessary for the distribution, or to reduce or even avoid inheritance taxes.
We’ll look at the different types of trusts below but each fits into one (or more) of these categories:
- Living: A trust in which the assets are used for the individual’s use during their lifetime before transferring to their beneficiaries at the time of their death.
- Testamentary: A trust which focuses on how the assets will be designated after death.
Revocable: A trust which can be changed or terminated by the trustor during their life.
- Irrevocable: A trust which the trustor cannot change after establishment or which becomes irrevocable when they die.
- Funded: A trust which has assets placed into it by the trustor during their life.
- Unfunded: A trust which consists only of the trust agreement itself and lacks funding.
You can read more about trusts in Florida in Section 736.0103 of the Florida Statutes.
What Types of Trusts are there in Fort Lauderdale?
There are many different types of trusts and so we’re going to focus on the five most common trusts that people set up here in Florida. We’ll be revisiting a few of the categories above in this discussion but more specifically you’ll be able to see how multiple categories can come together for a single trust.
Keep in mind that setting up a trust can be a complicated process and picking the right trust for you can be quite challenging because there are a lot of laws and regulations to be considered. We’ll speak more about how you can get help setting up a trust below. First, let’s take a look at the five most common trusts here in Fort Lauderdale:
- Land Trusts: Land trusts are used to help keep asset ownership private for things like your family home so that they can’t become part of lawsuits filed against you. They can also help to prevent the property from entering into probate.
- Revocable Living Trusts: Probably the most common trust in Florida. As the name suggests they are set up in your lifetime and available for use during the time, and they also allow for the trust to be amended or revoked. They are good for getting around the probate court system.
- Irrevocable Living Trusts: Similar to the last but with the exception that they can’t be changed after being set up, an irrevocable living trust protects your beneficiaries from probate and estate taxes.
- Testamentary Trusts: A type of trust that goes into effect upon your death, testamentary trusts are used to leave assets to a beneficiary but upon a set time period. For example, if you want to leave assets to your children but don’t want them to receive them until after their 18th birthday then a testamentary trust would be the way to go.
- Medicaid Trusts: A type of trust that is used to ensure that your children will get an inheritance even if you end up having to spend a long time in a nursing home. It shelters assets so they cannot be taken to pay for the nursing home costs.
Which Trust is Right for Me?
Determining which trust is right for you will greatly depend on the goals that you have for the trust. For example, if you are getting up in age and are beginning to consider admittance to a nursing home in the future then it is a good idea to create a Medicaid trust to protect your assets for your children’s sake.
If you don’t own any property then it doesn’t make sense to set up a land trust but a testamentary trust might be a good option if you’re looking to pass along assets to your children once they’ve reached a certain age. Of course, a testamentary trust goes into effect upon your death and so it doesn’t make sense to set one up if you are confident that you’ll still be alive when they reach the age you want them to be to receive the assets.
Because there is so much that goes into setting up a trust and there are so many different types, the best way to determine which type of trust is best for you is to speak with an experienced estate attorney.
How do I Reach Out to an Experienced Estate Attorney?
Getting a consultation with an experienced estate planning attorney is as easy as calling (954) 248-4068 and speaking to one of our trusted team members at the law firm of Marc Brown, P.A. With years of experience, our attorneys can help you to better understand how each of these trusts works so that you can make an informed decision about which is right for your specific circumstances.