What is a Trust?
What is a Trust?
This article is intended for informational purposes only and is not intended to be legal advice.
According to Florida Statute 731.201, a “Trust” means an express Trust, private or charitable, with additions to it, wherever and however created. It also includes a Trust created or determined by a judgment or decree under which the Trust is to be administered in the manner of an express Trust.
According to Florida Statute 736.0103, a “Trust instrument” means an instrument executed by a settlor that contains terms of the Trust, including any amendments to the Trust.
In summary, a Florida Trust is a legal document which sets forth the terms for how you would like your assets managed during your lifetime and upon your death. The creator of the Trust is called the Grantor or Settlor and the person responsible for the management of the Trust is known as the Trustee. A Trustee can be yourself during your lifetime or another person, a bank, or a Trust company. Another option is to have a Co-Trustee serve either with you, or whoever your Trustee may be. After your life, your Successor Trustee will manage the assets in the Trust as you have directed in your Trust. These assets may be distributed to your beneficiaries outright or periodically according to the terms set forth in the Trust. A Revocable Trust, during your lifetime, is revocable. This means that you may amend or terminate the Trust during your lifetime. Upon your death, the Trust becomes irrevocable, and the Trust may not be amended or terminated.
Why is a Trust important?
Although every situation is unique, Trusts are important to ensure your wishes are carried out, your family is protected, and to avoid lengthy and costly probate proceedings. This may sound similar to a Will; however, unlike a Will, Trusts may avoid both the probate and guardianship processes. Trusts may entirely avoid the probate process by retitling certain assets into the Trust’s name. This may circumvent the probate process and may allow for your assets to be distributed without court intervention. Additionally, beneficiary designations in your Trust may remain private, unlike a stand-alone Will, which should be filed with the Clerk of Court upon death. This means that a Will is public record, and your Trust is not public record. Trusts may also avoid guardianship in the even that you are ever deemed incapacitated during your lifetime. A Trust allows your Trustee or Successor Trustee to continue to manage your assets as you have set forth in your Trust following incapacity.
Additionally, if you have property in another state, you may transfer that property into the Trust. This may avoid ancillary probate administration, which is a probate proceeding that occurs in a state where your property is located, in addition to the probate proceeding that may occur in the state where you were domiciled. In other words, this may prevent having two, three, or more probate proceedings going on at once.
Do I still need a Will?
Everyone should still have a Will. Instead of a traditional Will, typically when a Trust is drafted, a Pour-Over Will is created. Pour-Over Wills name your Trust as a beneficiary of any assets that were not already placed into your Trust, rather than traditional beneficiaries. Pour-Over Wills also protect designations in a Will from becoming public, since minimal information will be left in it.
Everyone’s situation and goals are unique and it is best to have a Florida attorney review your current estate plan and discuss your goals to ensure that your wishes will be met.