Estate planning in Florida leads many to consider how wealth is built with a trust. Trusts are used for a variety of reasons but tend to manage assets and wealth. The legal construction of a trust gives it unique-sheltering potential. Not all trusts are created equal, however. Devising an estate plan for your assets calls for you to develop an original strategy. When considering trusts, ask yourself about your interest in avoiding taxes or growing wealth.
The trust agreement
When estate planning includes a trust, a trustee, grantor and beneficiary are first considered. The legal arrangement of a trust requires a specific person to fund it, another to manage it and the final to inherit it. This transfer of ownership gives a trust the legal right to own property. The trust can therefore protect your assets until someone is ready to inherit them. Trusts are enforced in a court of law and can only be appealed in the rarest of circumstances.
Irrevocable or revocable?
The two types of trusts offer a world of options that fall under an irrevocable or revocable status. Your estate planning may contain both types. A revocable trust is one that offers its grantor flexibility over the assets deposited. An irrevocable trust, however, requires trustors to maintain agreements without much room for a legal change. When choosing between an irrevocable and a revocable trust, start by looking at the structure of your financial portfolio.
Reasons to choose a revocable trust
Floridians are attracted to revocable trusts because, while offering a trustee, the assets they hold are governed less strictly. The owner is still responsible for taxes and other liabilities. Still, not only can you abruptly end a revocable trust, you can rearrange how the trust is managed. You have the following options in a revocable trust:
- Self-named beneficiaries
- Tax sheltering
- Trustee administration
Estate planning in Florida
The freedom trustors have in a revocable trust also has some drawbacks. A financial professional can help estate owners assess their estate strategies. The specific tax or interest benefits you’ll gain from an irrevocable trust could be a part of your final plan.