Trusts are excellent estate planning tools for those with various assets who want to provide their loved ones with a plan to distribute assets upon their death. Although a Trust can be beneficial, it can also be a fairly complicated legal instrument with various clauses and designations that only knowledgeable attorneys can handle. Our experienced Melbourne Trust attorneys are here to help.
What is a Trust?
A Trust is a legal relationship (normally created by a legal document) between the owner of assets (“grantor”) and the person(s) receiving the assets upon the grantor’s death (“beneficiary” or “beneficiaries”). Trusts also require the designation of a “trustee” to oversee the execution of provisions contained in the Trust, ensuring distribution and management of assets abides by the Trust.
A Trust allows a grantor to provide a legal framework for their assets throughout the remainder of the grantor’s life while also providing beneficiaries an accessible way to be transferred assets (money, real estate, and other valuable property) without engaging in probate proceedings.
Unlike a Will that only provides instructions for the distribution of assets upon a grantor’s debt, a Trust allows a grantor to exert more control over assets while still alive, known as an inter vivos or “living trust.” A Trust can also be created to distribute or manage assets upon a grantor’s death—a “testamentary trust.”
Revocable vs. Irrevocable Trusts
Under Florida Trust law, a Trust can be revocable or irrevocable. Depending on the grantor’s specific financial circumstances, both options come with benefits and drawbacks that should be considered.
A revocable trust, commonly known as a “revocable living trust” or “living trust,” is a type of Trust that exists during the grantor's lifetime. A revocable trust allows the grantor to set the terms for managing and distributing their assets while still alive. Revocable Trust is most often used as a tool for grantors with complete control over their assets and planning for end-of-life care.
However, revocable trusts cannot be used to avoid the high cost of nursing home care or avoid payment of other liabilities that may occur during the estate holder’s lifetime. Finally, revocable trusts will evolve into irrevocable ones once the estate holder has passed away.
An irrevocable trust is a trust that cannot be changed or revoked once established. Irrevocable trusts are most commonly used to shield estate holders from the high cost of nursing home care or avoid losing certain government-funded or tax benefits because of shifts in income. The drawback to creating an irrevocable trust is the loss of flexibility an estate holder has over their assets.
Common irrevocable trusts include:
- Qualified Income Trust: helps to prevent Medicaid ineligibility from shifts in income.
- Special Needs Trust: allows a person with a disability to retain assets while receiving care through Medicaid.
- Asset Protection Trust: allows a person to protect their assets when seeking care from a nursing home.
Contact Us Today
Those interested in exploring options for a Trust suitable to their financial needs can contact an experienced Melbourne trust attorney at Lacey Lyons Rezanka for a consultation today by contacting us at 321-608-0890.