Trusts Lawyer Serving Largo, Clearwater & St. Petersburg FL
You’ve probably heard of individuals and couples creating “trusts” for their children. There are also people who create trusts for charities they care about. Though many mistakenly believe that making a trust is something only rich people do, these instruments are actually a valuable estate planning tool for anyone who has assets – and that likely includes you.
A “trust” is a legal term referring to an arrangement where you let another person hold and manage your assets on behalf of your beneficiary. Think of it as a place where you can put the assets you wish to pass on, with a trusted person overseeing the asset distribution to your loved ones.
Learn about the basics of trusts and why you should consider making one. For further case-specific guidance, please don’t hesitate to talk to us at The Schofner Law Firm. Attorney Ted Schofner is ready to provide clear answers suited to your circumstances and preferences.
Why Make A Trust?
As we enter our senior years, it is utterly important to plan for how our estate is going to be managed and distributed in the future. This is the main purpose of a trust. But why create a trust instead of a will? What are the benefits of setting up a trust?
In particular, it is good to consider a trust if you wish to:
- Have flexibility in distributing your assets. Unlike a straightforward will, a trust allows you to put specific terms and conditions in the distribution of your wealth. For instance, you may instruct that the trust funds to your beneficiary be disbursed in smaller amounts instead of one lump sum. You may choose the time at which distribution starts. You may even specify how the funds can be spent.
- Maintain privacy and efficiency – avoid probate. Wills are settled through a court procedure called probate. This procedure can be costly, lengthy, and transparent to the public. By contrast, a trust does not need to go through probate. Settling the estate can be done quickly and privately by your trustee.
- Reduce taxes. There are many kinds of trusts, and not all of them can minimize taxes. However, there are smart strategies to legally cut your estate taxes through a trust. The most common way is by creating an A/B Trust with your spouse, as the assets placed in this type of trust are not subject to federal estate tax. You may also consider a Charitable Trust, which allows you to gift an unlimited amount to the trust without being subject to gift taxes.
- Protect your assets from creditors. If you place your assets in a trust while you are still alive (Living Trust), are those assets still subject to creditor claims, liens, and judgments? The answer depends on whether that trust is revocable or irrevocable. In an irrevocable trust, you surrender your ability to change the trust terms anytime you wish, but your assets are also safeguarded from creditor claims.
Further, if you choose to create a revocable Living Trust, your assets will not be protected during your lifetime, but they will be upon your passing. This is because a Living Trust becomes irrevocable upon the death of the trust-maker. This means that for future generations, your trust assets are shielded from creditor attacks.
Together with your lawyer, you can strategize on using your trust to protect your estate from creditors, whether during your lifetime or for your future beneficiaries.
- Keep your assets within your family. What if you leave your assets to your spouse upon your passing, and then your spouse remarries? Upon your spouse’s death, would the new spouse be entitled to your assets? What happens to your children who are minors?
This is a very common scenario, but one which you can prepare for. To ensure that your assets are passed on to your own children or family, you can use trust provisions, especially in what is called a Qualified Terminal Interest Property (QTIP) Trust.
With proper planning and creative legal strategies, a trust can be a powerful way to protect your assets and put them exactly where you want them to be. Talk to The Schofner Law Firm about your asset goals. Experienced attorney Ted Schofner can provide sharp advice on how you can meet those goals through a trust.
Components Of A Trust: Parties And Contents
When we talk of transferring assets, there are usually two parties: the giver and the receiver. But when it comes to trusts, there is a third party who manages the transfer of assets between the two. These are the three parties in a trust:
- Trustor – Sometimes called a grantor, this is the person who sets up the trust and appoints a reliable third party to manage their assets. The trustor is the one who sets the terms on how their assets will be managed and transferred.
- Trustee – This is the person whom the trustor appoints to hold and manage the assets. A trustee holds the legal titles to the trustor’s properties and is responsible for managing the assets entrusted to them.
- Beneficiary (or beneficiaries) – These are the people who receive the assets or properties from the trust according to the terms of the agreement. Beneficiaries are usually children of the trustor, close loved ones, and charities.
There are two kinds of assets that a trust can contain: principal and income. The principal is what is directly placed in the trust – for example, you may place money, real estate properties, and stock options in your trust. Meanwhile, income is any earning from the principal – for instance, the money in the account may gain interest, or the real estate may earn from being rented out.
Thus, it is important for a trustor to specify the distribution of both the principal and the income of the trust.
Get Thorough Guidance On Making An Effective Trust
Which type of trust is best for your purposes? What provisions are crucial in your trust? What future scenarios should you anticipate?
These questions and more are vital when you are considering making a trust. For the most effective advice, consult a legal professional who is knowledgeable in the law and experienced in real-world estate planning situations. This is the kind of advice you get from attorney Ted Schofner.
Contact The Schofner Law Firm today at 1-800-891-9996 or through our online contact form.
2117 Indian Rocks Road, Largo, FL 33774
Mr. Schofner is licensed and admitted to the Bars of the State of Florida, Illinois, and the District of Columbia.
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