What Are the Benefits of Having a Trust?

Category: Trusts

What Are the Benefits of Having a Trust

When you think of estate planning, you probably think about having to create a will in order to designate who you wish to leave your assets and property to. But did you know that there are a number of other options available to you besides a will?

Depending on your particular estate and what you intend to do with it, you might want to consider a trust. A living or revocable trust is a written document – also called the trust agreement – that you create to manage your assets during your life and then to distribute the remaining assets after your death.

Since you’re the one making the trust, you are called the grantor or settlor. The person who will manage your trust is called the trustee. The trustee can be yourself, or you can designate another person, bank, or trust company to be the trustee instead. It is also called a revocable trust because you can alter the trust or terminate it while you’re still alive, as long as you are competent and not incapacitated.

There are a number of benefits in creating a trust for your assets, so let’s look at three of the most common ones.

Avoiding probate. A trust can save your family from having to deal with probate. Probate is the court proceedings that take place when someone dies in order to distribute and transfer your assets to your beneficiaries. Probate can be expensive, time-consuming, and stressful for your family and beneficiaries. Assets in a trust, however, don’t have to go through probate.

In addition, the court appoints a personal representative to manage your estate during probate. But with a revocable trust, there is already a trustee who is authorized to handle your trust assets when you die. The court doesn’t need to appoint anyone.

Guardianship. If you become incapacitated in Florida, the court will appoint a guardian to manage your property and make legal decisions for you. You may be able to avoid a court-appointed guardian by having a trust. If you become incapacitated at some point, your designated trustee is allowed to continue managing your assets, paying your bills, and making investment decisions. So, your trustee can also be a guardian of your choosing in the event that you need a guardian.

Hollywood FL Trusts Lawyer

Saving on taxes. A revocable trust is usually not included on your federal income tax return while you’re still living. Instead, the deductions and income from the trust are reported on your individual income tax return using your social security number as the trust’s tax identification number.

A trust can also be granted a deduction for any distributions made to beneficiaries. In doing this, the trust income and deductions are passed on to the beneficiaries, who will then be taxed on their personal, individual income tax returns. If there is any income that isn’t distributed to a beneficiary, then it is taxable to the trust.

A trust can also be written to reduce the effect of estate taxes but not eliminate the estate tax entirely.

If you’re interested in creating a revocable trust, the first thing you should do is contact a knowledgeable Florida estate planning attorney. An experienced attorney who understands the ins and outs of Florida law in regards to trusts will be an essential asset in making sure your trust is sound and in proper order.

 

About the Author:

Christopher Q. Wintter is the founder of Wintter & Associates, P.A. and a board-certified expert in Trust and Estate matters by the Florida Bar. With more than 24 years’ experience as a practicing attorney, he also serves as an instructor and faculty member for the National Institute of Trial Advocacy (NITA)—the nation’s leading provider of legal advocacy skills training to practicing attorneys—and has earned the AV® Preeminent™ rating with LexisNexis Martindale Hubbell. He was also selected for inclusion in Florida Super Lawyers for 2011 and 2012 in Estate and Trust Litigation.