There is a misconception that only wealthy people with large inheritances to give away can benefit from creating a trust. However, trusts can be beneficial to estates of all sizes. If you are considering creating a trust, an estate planning attorney can advise you on whether you should include one in your estate plan.
What is a trust?
Trusts are an estate planning tool that allows you to protect your assets and control how they will be distributed upon your death. As the creator or grantor of the trust, you will assign a third party, or trustee, to hold certain assets until it is time for your beneficiaries to gain access to them.
Advantages of a trust
There are many potential advantages to setting up a trust. Some of these advantages include:
- Avoiding probate: Probate is a lengthy, costly and public process during which the court ensures that the deceased person’s debts are paid and assets are properly distributed. Assets in a trust do not have to go through probate, making it easier for your beneficiaries to gain access to their assets.
- Controlling your assets: Trusts allow you to have control over who gets your assets and under what conditions. For example, you may say that your beneficiary cannot access the money in the trust until they turn 18 and put limitations on how the money is used.
- Flexibility: Revocable trusts can be modified or cancelled at any point during your lifetime.
Reduce taxes: By transferring some of your assets into a trust, you will be reducing the size of your estate, which in turn can reduce your federal and state taxes.
- Privacy: Trusts allow for more privacy for grantors and beneficiaries.
While there are many advantages to trusts, they are not necessary or beneficial for all Florida estates. An estate planning attorney can review your assets and help determine what estate planning tools are best for you.