Orlando Florida attorney L. Reed Bloodworth is managing partner of Bloodworth Law PLLC with offices in Orlando and Winter Haven.
Bloodworth Law is a 2020 and 2021 U.S. News and World Report Best Law Firm. Reed is a 2021 U.S. News and World Report Best Lawyer in Trusts & Estates Litigation and handles estate planning including the establishment of trusts for clients in most Florida cities, counties, and courts.
Should You Establish a Trust?
Should you establish a trust? Trusts are a great tool, for example, if you have a child or grandchild that you want to leave a gift to, but do not want to give it all to them at once. A trust allows the grantor to make the gifts in increments.
Trusts can be simple or complicated, it all depends on what your goals are.
What is a Trust?
What is a trust? A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. A trust is a legal creation of a fiduciary relationship where one person wants to set up a fund with assets to give to others.
A trust is a financial product created by a grantor who wants to give assets to another person, but it is fiscally managed by a trustee. The trustee has a legal responsibility to do what the owner of the trust asks. Beneficiaries are the recipients of the assets that are held in a trust for them.
A trust is an important part of a successful estate plan and its purpose is to hold assets for beneficiaries.
Revocable Trusts are Flexible
Revocable trusts are flexible and tailored to each individual’s needs and goals. If a beneficiary has an addiction problem, the trust can address the distributions and place restrictions on them.
While a Revocable Trust is more expensive to prepare than a basic Last Will and Testament, the process of Probate is usually more expensive than drafting a trust.
Is the Trust Properly Funded?
Is the trust properly funded? If the trust is fully and properly funded, the expense of probate can be avoided, thereby leaving more assets for your loved ones.
If the Trust is NOT Properly Funded
If the trust is not funded, underfunded, or funded incorrectly, the trust will not avoid probate. A trust also protects your privacy.
A Trust is Private
A last will and testament needs to be filed with the Clerk of the Court and becomes public record while a trust does not.
To make sure the trust is fully funded, the grantor must fund the trust by updating beneficiaries and retitling assets such as bank accounts or real estate.
Even if the trust is fully and properly funded, sometimes a probate proceeding is initiated to run the creditor period.
Revocable trusts do not protect from creditors, as long as you are living, you have the ability to change the terms of the trust. You can add to, and delete from, or terminate the trust. But, essentially, you still personally own the assets of the trust.
Trusts Don’t Go Through Probate
A trust does not go through probate, but a notice of trust must be filed, and if there is a creditor, creditors typically have up to two years to file a claim. If a probate proceeding is started, the creditor period is much shorter usually three to four months.
Establishing a trust is a personal financial decision that may not be right for everyone. Talk with Reed about how the Bloodworth Law Estate Planning Team can help you, your family, or your business.Consider sharing this post